4 ms·

To be clear, the error caused a 'kink' in the graph which made it look like there was a 'tipping point' at a 90% debt-GDP ratio. Correcting this error did not c

by nickff 1y ago

To be clear, the error caused a 'kink' in the graph which made it look like there was a 'tipping point' at a 90% debt-GDP ratio. Correcting this error did not change the overall result, which is that a 'high' debt/GDP ratio caused reduced growth.

janalsncm 1y ago
Given that it doesn’t change the overall result, is it really a “serious” error?
- mathfailure 1y ago
  Yes.
- alephnerd 1y ago
  Yep. It lead to a decade of austerity measures across the EU, which caused most European nations to fall behind the US, despite being head-on-head economically in 2007.
  - deleted 1y ago
    [deleted]
  - roughly 1y ago
    Also some fairly direct ties to the rise of right-wing movements and governments in Europe.
    - alephnerd 1y ago
      Yep. The rise of the far right in Greece due to resentment against the Troika should have been a warning, but hey, they're PIGS, us Dutch and German and Scandinavian voters pulled ourselves up by the bootstraps without any outside help /s.
  - rich_sasha 1y ago
    I'd say his paper was a convenient excuse for people who wanted to do austerity anyway. I mean, no government, with a sophisticated civil service department, including a ministries of finance and central banks packed to the brim with economists and statisticians should do anything based on a paper they didn't reproduce (all the data was public too).
    - alephnerd 1y ago
      I used to be the equivalent of one of those guys when I was a staffer - we don't actually do that much cross verification or due dilligence in that manner (aside from the guys at the CRS doing god's work - would have loved to work there). One of the things to learn is that a lot of "think tank" content (including those at affiliated departments at universities) is just thought leadership used to drive an agenda. I've been guilty of doing that, and so is everyone else.
      - rich_sasha 1y ago
        I sympathise, I would possibly do the same thing, but you can't then turn around and say "we did X because someone made a spreadsheet that told us so".
        alephnerd 1y ago
        Kinda. In these kinds of roles, you're basically making executive decisions every couple hours. You don't have much time to think deeply when you need to execute asap, so you take what info you have and make a call. It's a skill that helped me in Eng, Product, and VC roles, but it gets stressful very quick.
    - tim333 1y ago
      I think you may overestimate the abilities of our leaders. The guy who brought austerity to the UK, George Osborne was kind of a mediocre journalist with a second class degree in history and never much training or depth of understanding in economics. I'm reminded of: >John Maynard Keynes once said: “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” I mean not quite that but people who don't understand economics tend to pick up on something they read without great discernment. See for example Trump and deficits and tariffs.
  - dom96 1y ago
    Austerity measures across Europe are still continuing, just look at the UK
- pessimizer 1y ago
  It did change the overall result. The claim was that there was a tipping point when government debt went higher than annual GDP that would cause growth to suddenly plunge. Turned out here was no discontinuity, it was almost entirely an artifact of motivated reasoning and their failure to use Excel. The pretend claim the debt police went with later is that the paper somehow proves debt is inversely related to growth in some way. This is not an interesting claim, and certainly not proved by showing that low-growth countries are often also high-debt countries. edit: there is absolutely no reason to think that government debt is related to GDP. That's why they resort to making statistical, associative arguments. The balance of payments is the important number, and it's an accounting identity that if holding the balance of trade steady, when government debt goes down, private debt must go up. The only thing you can be sure of when government spending goes down is that systemic investments by governments are being neglected, in favor of individuals borrowing money for personal consumption. Hello Temu.
  - econ 1y ago
    Spending is important, GDP is a nothing burger and national debt means the country was captured by bankers. I like how Richard Wolff put it: There is a reason business school and economics aren't in the same building. But people are deeply invested in these ideas and would rather die than correct the mistakes. The only thing I admire in Trump is his ability to change his mind. Maybe he can beach the ship before it sinks. I hope there is something to eat on the island. That would at least make the infighting worth it.
    - spwa4 1y ago
      You're giving Richard Wolff as an example of someone who'll fix the problem? Listen to him for 5 minutes, he is very much a person that "would rather die than correct the mistakes". He is just on the other side of the argument. His position can be summarized in that he is an extremist advocate of Marxism and the fact that that puts one person in control (ie. dictatorship) he describes as a positive. And he won't discuss ... see point 3. Of course, that is not what he generally discusses, that part of his beliefs (but I'll credit him with at least not lying about it, or "failing to understand" that part). He is an expert economist and will point out every historical moral flaw in international relations in all of history AND blame it on capitalism. First, the criticism "sure, this was abuse, exploitation, but at the end of the exploitation everyone was much better off than at the beginning of it" is a point you can make about nearly every argument he makes (because he only complains about western influences which got us to our current world). Second, he's selectively outraged. For example the Soviets, Chinese and especially Ottomans are, to put it mildly, a LOT worse than the states he complains about. In reality, exploitation is the norm in history, not the exception, but listening to Richard Wolff you will get the opposite impression. Third, the Western societies that he complains did the exploitation are not exactly capitalist societies. They were dictatorships, in the best case mercantile societies. Capitalism had influence in these societies, but the case he makes, that capitalism controlled these societies is ridiculous. And, of course, that the solution he advocates would take us back to authoritarian dictatorships, and it seems there is a lot of historical proof that this, to put it mildly, that won't end exploitation, is never discussed. AND he's dishonest. There's no other word. He's making "American empire has fallen" announcements since the 90s. Add to that that you can't listen to him for 1 minute without cringing. But hey, he's a professor, so I guess that's par for the course.
ajross 1y ago
I don't think that's correct. The "overall result" was originally a marked effect, and the one after correction was pretty much noise. Yes, it pointed in the same direction, but without a notable impact. It's like trying to convince your parents to let you stay home by faking a temperature on the thermometer, then when caught repeating the measurement and shouting about how it actually shows 98.9°F and you really do have a fever! Consensus was and remains that public debt and GDP growth correlate very poorly if at all, and the book that claimed the opposite was simply wrong.

by nickff 1y ago

janalsncm 1y ago

Given that it doesn’t change the overall result, is it really a “serious” error?

mathfailure 1y ago
Yes.
alephnerd 1y ago
Yep. It lead to a decade of austerity measures across the EU, which caused most European nations to fall behind the US, despite being head-on-head economically in 2007.
- deleted 1y ago
  [deleted]
- roughly 1y ago
  Also some fairly direct ties to the rise of right-wing movements and governments in Europe.
  - alephnerd 1y ago
    Yep. The rise of the far right in Greece due to resentment against the Troika should have been a warning, but hey, they're PIGS, us Dutch and German and Scandinavian voters pulled ourselves up by the bootstraps without any outside help /s.
- rich_sasha 1y ago
  I'd say his paper was a convenient excuse for people who wanted to do austerity anyway. I mean, no government, with a sophisticated civil service department, including a ministries of finance and central banks packed to the brim with economists and statisticians should do anything based on a paper they didn't reproduce (all the data was public too).
  - alephnerd 1y ago
    I used to be the equivalent of one of those guys when I was a staffer - we don't actually do that much cross verification or due dilligence in that manner (aside from the guys at the CRS doing god's work - would have loved to work there). One of the things to learn is that a lot of "think tank" content (including those at affiliated departments at universities) is just thought leadership used to drive an agenda. I've been guilty of doing that, and so is everyone else.
    - rich_sasha 1y ago
      I sympathise, I would possibly do the same thing, but you can't then turn around and say "we did X because someone made a spreadsheet that told us so".
      - alephnerd 1y ago
        Kinda. In these kinds of roles, you're basically making executive decisions every couple hours. You don't have much time to think deeply when you need to execute asap, so you take what info you have and make a call. It's a skill that helped me in Eng, Product, and VC roles, but it gets stressful very quick.
  - tim333 1y ago
    I think you may overestimate the abilities of our leaders. The guy who brought austerity to the UK, George Osborne was kind of a mediocre journalist with a second class degree in history and never much training or depth of understanding in economics. I'm reminded of: >John Maynard Keynes once said: “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” I mean not quite that but people who don't understand economics tend to pick up on something they read without great discernment. See for example Trump and deficits and tariffs.
- dom96 1y ago
  Austerity measures across Europe are still continuing, just look at the UK
pessimizer 1y ago
It did change the overall result. The claim was that there was a tipping point when government debt went higher than annual GDP that would cause growth to suddenly plunge. Turned out here was no discontinuity, it was almost entirely an artifact of motivated reasoning and their failure to use Excel. The pretend claim the debt police went with later is that the paper somehow proves debt is inversely related to growth in some way. This is not an interesting claim, and certainly not proved by showing that low-growth countries are often also high-debt countries. edit: there is absolutely no reason to think that government debt is related to GDP. That's why they resort to making statistical, associative arguments. The balance of payments is the important number, and it's an accounting identity that if holding the balance of trade steady, when government debt goes down, private debt must go up. The only thing you can be sure of when government spending goes down is that systemic investments by governments are being neglected, in favor of individuals borrowing money for personal consumption. Hello Temu.
- econ 1y ago
  Spending is important, GDP is a nothing burger and national debt means the country was captured by bankers. I like how Richard Wolff put it: There is a reason business school and economics aren't in the same building. But people are deeply invested in these ideas and would rather die than correct the mistakes. The only thing I admire in Trump is his ability to change his mind. Maybe he can beach the ship before it sinks. I hope there is something to eat on the island. That would at least make the infighting worth it.
  - spwa4 1y ago
    You're giving Richard Wolff as an example of someone who'll fix the problem? Listen to him for 5 minutes, he is very much a person that "would rather die than correct the mistakes". He is just on the other side of the argument. His position can be summarized in that he is an extremist advocate of Marxism and the fact that that puts one person in control (ie. dictatorship) he describes as a positive. And he won't discuss ... see point 3. Of course, that is not what he generally discusses, that part of his beliefs (but I'll credit him with at least not lying about it, or "failing to understand" that part). He is an expert economist and will point out every historical moral flaw in international relations in all of history AND blame it on capitalism. First, the criticism "sure, this was abuse, exploitation, but at the end of the exploitation everyone was much better off than at the beginning of it" is a point you can make about nearly every argument he makes (because he only complains about western influences which got us to our current world). Second, he's selectively outraged. For example the Soviets, Chinese and especially Ottomans are, to put it mildly, a LOT worse than the states he complains about. In reality, exploitation is the norm in history, not the exception, but listening to Richard Wolff you will get the opposite impression. Third, the Western societies that he complains did the exploitation are not exactly capitalist societies. They were dictatorships, in the best case mercantile societies. Capitalism had influence in these societies, but the case he makes, that capitalism controlled these societies is ridiculous. And, of course, that the solution he advocates would take us back to authoritarian dictatorships, and it seems there is a lot of historical proof that this, to put it mildly, that won't end exploitation, is never discussed. AND he's dishonest. There's no other word. He's making "American empire has fallen" announcements since the 90s. Add to that that you can't listen to him for 1 minute without cringing. But hey, he's a professor, so I guess that's par for the course.

ajross 1y ago

I don't think that's correct. The "overall result" was originally a marked effect, and the one after correction was pretty much noise. Yes, it pointed in the same direction, but without a notable impact. It's like trying to convince your parents to let you stay home by faking a temperature on the thermometer, then when caught repeating the measurement and shouting about how it actually shows 98.9°F and you really do have a fever! Consensus was and remains that public debt and GDP growth correlate very poorly if at all, and the book that claimed the opposite was simply wrong.