Carmen Reinhart and Kenneth Rogoff’s 2010 debt study inspires austerity around the world, but grad student Thomas Herndon debunks the results.

Austerity’s Spreadsheet Error

Colbert Report, April 23, 2013 07:43

 

Graduate student Thomas Herndon identifies little staggering omissions in a prominent academic paper, “Growth in a Time of Debt.”

(04:19)

Category: Really, really bad calls, Taxes and Policy, Video

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Colbert Demolishes Reinhart & Rogoff”

  1. VennData says:

    Harvard needs to drop these clowns.

    There’s a couple of openings at the Rand Paul campaign for such brilliant cherry picking. Of course none of them would ever, cut down the cherry tree, and if they did, could eschew peer review as they drive away in their clown car for another hyperventilation on Fox.

    • gman says:

      Harvard has stuck with Niall Ferguson.

      • raholco says:

        I listened to Ferguson’s Reith Letcures on Auntie Beeb-he gets some of it right, but he totally fails in other areas. Like Taleb he rants about things needing to become anti-fragile.

        Here’s a clue for Ferguson and Taleb: Anti-Fragile systems can never exist for the simple reason that for systems to work, they must be able to produce the required output with 100% accuracy of the data they are fed-and in a twist to the anti-fragile meme, systems that are stressed are supposed to degrade gracefully. In other words, it takes longer to get the same result, but it’ still the SAME RESULT-just delayed.

  2. qmandtm says:

    UMass > Harvard

  3. AtlasRocked says:

    If FDRs 1937 return to fiscal sanity – austerity – is any indication, then the post-stimulus results for Obama and the Democrats will mimic FDRs example of how stimulus never creates payback revenue or health – in fact, it makes it impossible to determine when the economy is healthy, due to massive, false demand shifts.

    You see, FDR and his administration incorrectly surmised the economy was healthy in 1936, which means it could sustain itself without massive gov’t spending, so they tried to balance again.

    “By 1936, GDP had climbed back to pre-1929 levels but unemployment was still a problem. … Taxes were raised, FDR attempted to balance the budget….. The huge gains made in 1936 and most of 1937 were lost and the economy reversed itself.”

    So in addition to stimulus not fixing the economy (sound familiar?), FDR proved the stimulus hid the true health, instead it created an illusion of health (sound familiar?).

    Don’t believe it? Go find all the cases where stimulus was ended in the correctly measured, healthy year, and an economy recovered – without a war. Go find any year it was ended and the country using it returned to health, paying back the debt created. There are none.

    Stimulus hides organic grow, discourages it, moves the economy away from organic health to serving the gov’t's bidding, and thus it never restores market health, it just make things worse. It fools, it misleads. The Democrats are recommending something that history documents has a 100% failure rate, while scorning the 100% successful policy Warren Harding used.

    http://rationalwiki.org/wiki/Roosevelt_Recession
    http://www.usgovernmentdebt.us/spending_chart_1930_1937USp_14s1li011mcn_H0t

    • Joe Friday says:

      If FDRs 1937 return to fiscal sanity – austerity – is any indication

      Actually, the reversal of FDRs earlier policies to austerity was the mistake that sent the economy back into recession.

      then the post-stimulus results for Obama and the Democrats will mimic FDRs example of how stimulus never creates payback revenue or health – in fact, it makes it impossible to determine when the economy is healthy, due to massive, false demand shifts.

      Unsubstantiated gibberish.

      You see, FDR and his administration incorrectly surmised the economy was healthy in 1936, which means it could sustain itself without massive gov’t spending, so they tried to balance again.

      No, FDR made the mistake of listening to the Republicans call for spending cuts.

      ‘By 1936, GDP had climbed back to pre-1929 levels but unemployment was still a problem. … Taxes were raised, FDR attempted to balance the budget….. The huge gains made in 1936 and most of 1937 were lost and the economy reversed itself.’

      No.

      There was a reversal of both GDP and unemployment in 1937-1938 when spending was cut to try and balance the budget, as the Republicans insisted.

      So in addition to stimulus not fixing the economy (sound familiar?)

      Wrong.

      The national economy had more than recovered by 1936, with GDP having risen to +13% and the Unemployment Rate having fallen to 9%, from the minus 13% GDP and a 25% Unemployment Rate in 1932 that incoming President Roosevelt inherited:

      GDP & UNEMPLOYMENT CHART

      Don’t believe it?

      Who would ?

      Go find all the cases where stimulus was ended in the correctly measured, healthy year, and an economy recovered – without a war. Go find any year it was ended and the country using it returned to health, paying back the debt created. There are none.

      This has been previously documented numerous times.

      The Democrats are recommending something that history documents has a 100% failure rate

      Exactly backwards.

      The Republicans are, for the Umpteenth Time, “recommending something that history documents has a 100% failure rate”.

  4. CSF says:

    Colbert is entertaining. If you want a concise, critical, yet balanced view of the R & R paper, check out Tom Keene’s interview yesterday with Prof. Pollin of U. Mass.

  5. DeDude says:

    “By 1936, GDP had climbed back to pre-1929 levels but unemployment was still a problem. … Taxes were raised, FDR attempted to balance the budget….. The huge gains made in 1936 and most of 1937 were lost and the economy reversed itself”

    I guess austerity didn’t work out so well when applied too early (before unemployment had been solved). But thankfully the FDR stimulus had worked well enough that even with austerity applied at the wrong time the economy did not sink all the way back to the “pre-stimulus” deep dark levels of the early 30′ies – right? Amazing how the classic work of Keynes fit with real world data.

  6. RandyS. says:

    I’m not an economist, but I can read a trend. The corrected result is still not a positive for economic growth. If growing the economy is the preferable mechanism for restoring job growth and increasing spending, then increasing debt service payments, currently 14% of federal spending, would seem to be counter-productive. I’ll let the reader decide where that amount could be better spent/saved.

    It’s a shame that so many insist on playing politics with this revelation. Team A made a mistake, for which they should be called out, but that does not validate the thinking of Team B.