Krugman, take a victory lap: University Grad Student Debunks Major Austerity Theory by Exposing Flawed Stats


krugman victory lap

Speaking of how austerity is “having a devastating effect on health in Europe and North America, driving suicide,” here is your Daily Dose of BuzzFlash at Truthout, via my pal Mark Karlin:

It's about time Paul Krugman took a victory lap – and he does in his Monday New York Times column:

...People like me predicted right from the start that large budget deficits would have little effect on interest rates, that large-scale “money printing” by the Fed (not a good description of actual Fed policy, but never mind) wouldn’t be inflationary, that austerity policies would lead to terrible economic downturns. The other side jeered, insisting that interest rates would skyrocket and that austerity would actually lead to economic expansion. Ask bond traders, or the suffering populations of Spain, Portugal and so on, how it actually turned out. [...]

Some... see the crisis as an opportunity to dismantle the social safety net. And just about everyone in the policy elite takes cues from a wealthy minority that isn’t actually feeling much pain. [...]

[A] Univeristy of Massachusetts graduate economic student... discovered major statistical errors in the primary research paper (authored by Carmen Reinhart and Kenneth Rogoff) used by advocates to justify austerity measures. [...]

Herndon proved that their database and coding was so statistically flawed as to offer little basis for justifying national austerity measures as a viable economic option.

In an April 19 column, Krugman discusses the torpedoing of the academic austerity touchstone:

... Reinhart-Rogoff ... tipping-point claim was treated not as a disputed hypothesis but as unquestioned fact. [...]

[S]ome correlation between high debt and slow growth, with no indication of which is causing which, but no sign at all of that 90 percent “threshold.” [...]

What the Reinhart-Rogoff affair shows is the extent to which austerity has been sold on false pretenses. For three years, the turn to austerity has been presented not as a choice but as a necessity. ... But “economic research” showed no such thing... Policy makers abandoned the unemployed and turned to austerity because they wanted to, not because they had to.

It took a university grad student to reveal research that powered the likes of Americans for Prosperity, ALEC, the Club for Economic Growth and most of the politicians in DC – when it comes to being cheerleaders for austerity – as highly flawed.

(You can read the University of Massachusetts study that finds the "austerity bible" coding errors here. It was co-authored by Mass U Professors Michael Ash and Robert Pollin.)

Please read the entire post here.