The Colbert Treatment...
Yes, Italy and Japan Have Low Growth and Have High Debt. So?

Noted for April 25, 2013

  • Juan Cole: Report: Highest US Officials Responsible for Use of Torture: "The political reality of the United States in the world is that of blowback…. The US spent the 1980s encouraging Muslim radicals to engage in ‘freedom fighting’ against the leftist government of Afghanistan, and that policy certainly is implicated in the creation of al-Qaeda. We have been suffering with lack of security ever since. And what would have happened if Washington had just left the Communist government in place? Wouldn’t it have gone the same way as the former Communist regime of Tajikistan or Kyrgyzstan? Which of you feels threatened by those former Soviet Socialist Republics?The policy of deliberate deployment of torture by US officials, in Guantanamo, Abu Ghraib (Iraq) and Bagram (Afghanistan), as well as black sites in Poland and elsewhere, during the past decade, has spawned a whole new wave of blowback. The US is not responsible for terrorism against it, and the terrorists are horrible human beings. But let’s just say that a more responsible US foreign policy would make less trouble for the rest of us."

  • Cosma Shalizi: Ken MacLeod, The Cassini Division: "Damn that's good. Ahem. That's not how I meant to begin this. I wanted to say that The Cassini Division is a marvelously intelligent, gripping and lightning-fast book, a witty wide-screen blitzkrieg of an anarcho-communist hard-science space opera with brains to spare. Which it is. And that there are some Deep Issues in politics and ethics here, like the Singularity ("the Rapture for nerds"), post-humanity, conflicts between intelligent species, and how to run a socialist utopia of thirty billion people…. And that I have no idea whether the protagonist is the savior of the human race, the biggest mass-murderer in history, or both. As Constant Readers know, I'm usually good for a few thousand words of agonizing (to read) reflections about that sort of thing. But to hell with that. The Cassini Division made me want to laugh, cheer, sing The Internationale, read everything else by MacLeod, and join the Cassini Division when I grow up. I haven't had this much fun with a book in ages."

Nancy Churchman: Public Debt Policy and Public Extravagance: The Ricardo-Malthus Debate | Lexicon Urthus: A Dictionary for the Urth Cycle | Lawrence Ball: The Case for 4% Inflation | "Casablanca" Script | Simon Kirby: Obsessing about triple dips misses the point. We havent had the recovery yet. | Chinese Restaurant Owner Says Robot Noodle Maker Doing “A Good Job!” | Josh Bivens: How far from full labor market recovery are we? Part I | Dylan Matthews: George W. Bush’s presidency, in 24 charts | Ugo Panizza and Andrea F Presbiteros: Public debt and economic growth, one more time |

  • Robert Solow: "Many people seem to have rushed from the claim that no social science can be perfectly value-free to the conclusion that therefore anything goes. It is as if we were to discover that it is impossible to render an operating-room perfectly sterile and conclude that therefore one might as well do surgery in a sewer."

  • Wolfgang  Münchau: Perils of placing faith in a thin theory: "Reinhart and Rogoff told policy makers what they wanted to hear: John Kenneth Galbraith memorably put down his fellow economist Milton Friedman by saying: 'Milton’s misfortune was that his policies had been tried.' The same observation might be made of Carmen Reinhart and Kenneth Rogoff. Especially in Europe, pro-austerity policy makers have tried policies based on their research with catastrophic economic and human consequences. The Harvard economists’ tragedy is not the misuse of a Microsoft Excel spreadsheet but the misuse of Microsoft PowerPoint. They hyped their results…. [T]he professors have left no doubt that they believe the data show there is a 90 per cent threshold of debt to gross domestic product beyond which economic growth declines rapidly. Many policy makers have interpreted this rule as a call to reduce debt to below that level for the sake of growth. Profs Reinhart and Rogoff have thus become the intellectual godmother and godfather of austerity…. [I]t is worth quoting an extract from a speech by Olli Rehn…. 'Carmen Reinhart and Kenneth Rogoff have coined the "90 per cent rule"', he said. 'That is, countries with public debt exceeding 90 per cent of annual economic output grow more slowly. High debt levels can crowd out economic activity and entrepreneurial dynamism, and thus hamper growth. This conclusion is particularly relevant at a time when debt levels in Europe are now approaching the 90 per cent threshold, which the US has already passed.' Mr Rehn presumably did not read the original papers…. Policy makers, such as Mr Rehn, are always on the lookout for economic theories that seem plausible and accord with their deep beliefs…. If two of the world’s most respected economists then come along and tell them that their gut instincts have been right all along, this is the conservative policy maker’s equivalent of birthday and Christmas coinciding…. The Reinhart and Rogoff thesis… incorporates two separate myths… the 90 per cent threshold… causality. The first was debunked last week by Thomas Herndon, Michael Ash and Robert Pollin.... [N]o matter how you twist and turn this, there is no structural break at a 90 per cent threshold…. [T]his… pulls apart the notion of 90 per cent as some magic number…. Causation could go from high debt to low growth, as the authors suggest; or the other way round; or in both directions. Or the relation might be spurious."

  • Antonio Fatás: The cost of austerity and slow recoveries: "While there can be disagreements about the exact dates or the calculated costs we use in our study, what is clear is that an asymmetric view on business cycles is likely to generate significant costs of these recessionary episodes. In addition, these costs are becoming more skewed towards the recovery phase as opposed to the recession phase. This is an important fact that needs to be taken into account when thinking about the potential costs of economic crisis. The costs do not stop when the recession is over, we still need to go through a recovery phase, one that is particularly longer and painful in the current episode."

  • Erik Brynjolfsson: The key to growth? Race with the machines

  • Aaron Carroll: Financial burdens in the health exchanges: "We’re less than a year away from the implementation of the health insurance exchanges. No one knows exactly what will happen. Massachusetts remains our best predictor, though. A new study in Health Affairs* looks at how the exchanges in Massachusetts are performing with respect to protecting people from financial burdens due to health care costs…. As I’ve said many, many times before, the ACA is mainly about access. It’s a law that is designed to reduce the number of people in the US who lack health insurance. I still believe it will succeed in that regard. But many also hope that it will reduce the cost of health care. I’m not as sure about that."