12 ms·

Please, bear in mind that Krugman has a very opinionated view against austerity (he seems to be going the Keynes way these days) and this article is not about E

by kfk 14y ago

Please, bear in mind that Krugman has a very opinionated view against austerity (he seems to be going the Keynes way these days) and this article is not about Excel. He just wants to show how right he is and how sloppy the austerity guys are. The way to compete against Excel is actually learning to love the tool (it took me 2 years, but I almost can say I love it... sometimes). EDIT Since I am on HN, I always try to have a serious discussion about Excel and business software. That's why I always try to tie this kind of topic to my general idea: that we need to understand very well the type of work people do in Excel before proposing any solution. But... if we want to talk about austerity, let's talk. What is the real problem with anti-austerity measures today? We could accept a GDP/Debt ratio of 200, 300, 1000, infinity, and let people live their lives, right? Well, hell no. For 1 simple reason: interests. And I am not talking about the obvious problem with interests (that you have to pay them), but the bit that everybody forgets: they are a bet against the future that growth will be high enough to pay them. And that's the problem. We have a low growth rate expectancy (we western countries). And that's why serious economists (meaning: not Krugman) are telling us that increasing our debt exposure is the path to future ruin. Now, you will say, but anti-austerity financed with higher taxes will bring growth! If that were true, we would have had serious growth the last 50 years (a period within which tax ratio on GDP increased pretty much everywere). The truth is that historically public spending has brought much less growth (if any) than private spending. Meaning: for each $ that we take away from privates to the public we are deliberately reducing present and future growth. And why public spending brings less (if any) growth? Well, simply because the market is so complex that we need multiple agents. Giving too many resources to 1 agent (the State) is like betting most of our money on 1 black jack game, does it make sense? No. You need to spread risk and resources, you need to let people make decisions and you need to let people keep most of what they produce.

dnc 14y ago
I have the same impression that the Excel error is just abused so he can reiterate his attack against austerity proponents. The paper in question just fails to provide evidence that 90% is a tipping point of debt to GDP ratio. It does not provide evidence that there is no such a point whatsoever.
- igravious 14y ago
  "" some 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. "" We aren't told how high high is. We don't now which direction it goes in. This debt ratio thing needs to be knocked on the head. Everybody without the correct information will assume that 100% = very very bad whereas it only means a year's GDP. I say only but you get my drift. If the consensus tomorrow was to base the debt ratio off of 3 years GDP then 90% (~10 months) would go down to 30% wouldn't it? 30% doesn't sound that bad! Hey we've only got a 30% debt ratio, let's party!
- woodpanel 14y ago
  He is basically doing the same thing He accuses r&r for: using a chosen snippet of reality, adding his conclusions as facts to support his broader world view.
igravious 14y ago
"" Finally, Ms. Reinhart and Mr. Rogoff allowed researchers at the University of Massachusetts to look at their original spreadsheet — and the mystery of the irreproducible results was solved. First, they omitted some data; second, they used unusual and highly questionable statistical procedures; and finally, yes, they made an Excel coding error. Correct these oddities and errors, and you get what other researchers have found: some 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.” "" Krugman has a very opinionated -->> "other researchers have found" not about Excel -->> "finally, yes, they made an Excel coding error" way to compete against Excel is actually learning to love the tool -->> Irrelevant to the topic at hand really. What might be more relevant is news like this[1]: suicides and murders are dramatically up in Greece in the wake of the austerity measures. Choice quote, "Suicide and murder rates climbed from 2007 to 2009 particularly among men, and unusual outbreaks of malaria, West Nile virus and HIV took clinicians by surprise, said the findings in the American Journal of Public Health." Austerity measures in Europe are having very real and tangible consequences, the vagaries of Excel-wrangling are neither here nor there. Granted the NY Times article title is arguably link-baity and sensationalist. One wonders do R/R worry about how their shoddy research has been parlayed into needless suffering? [1] http://www.thejournal.ie/suicides-murders-rise-as-greek-austerity-takes-health-toll-875916-Apr2013/ http://www.thejournal.ie/suicides-murders-rise-as-greek-aust...
- pc86 14y ago
  So you're saying that austerity measures are causing malaria and HIV? Really? Correlation != causation as I'm sure everyone knows.
  - scarmig 14y ago
    When austerity is cutting into public health measures, there is a pretty clear causative route, however.
    - pc86 14y ago
      Maybe I'm being pedantic, but that's an implementation issue and not a root problem with austerity. Just because I mess up all the config options for Apache doesn't mean Apache sucks. The argument that austerity itself is bad because it's killing babies and giving everyone AIDS is a bit ridiculous. Just to be clear, I'm not arguing for austerity at all. I'm just saying everyone's jumping on the chance to blame austerity for every conceivable problem because they happen to disagree with it politically.
fulafel 14y ago
He does have a very polemical writing style but of the New Keynesian vs Chicago school (or saltvater vs freshwater) camps his side does come out of the post-2008 crisis looking better, if you look at the predictions. Pro-austerity camp have been on pretty weak ice recently, with the IMF admitting the big multiplier and European states (eg. Britain) doing so poorly with austerity. And now this. And yeah, he's not really blaming Excel, just ridiculing the programming error lightly. Hw could be saying Word if it turned out some key wording had been autocorrected to an unintended meaning. Edit: your amended discussion about austerity goes ad-hominem against Krugman ("not serious"?, he's got a Nobel, and is one of the most respected & prolific guys in the field) and is based on counterfactual claims (absence of "serious growth in last 50 years", see eg. http://en.wikipedia.org/wiki/List_of_regions_by_past_GDP_%28PPP%29#World_1.E2.80.932003_.28Maddison.29 http://en.wikipedia.org/wiki/List_of_regions_by_past_GDP_%28...)
- gd1 14y ago
  Exactly what kind of "austerity" do you think is happening in Britain? Government spending has gone up. Saying something doesn't make it true.
  - kfk 14y ago
    Right, I forgot that part. If you look at spending, it's actually quite a challenge to see any real "austerity" going on. Spending is up and did not go down much in most of the western countries during the last years.
  - fulafel 14y ago
    There are lots of references here. Everyone in the UK seems to agree they have a austerity program. http://en.wikipedia.org/wiki/United_Kingdom_government_austerity_programme http://en.wikipedia.org/wiki/United_Kingdom_government_auste... If the spending isn't going down that just means it's not working very well even for its stated purpouse, nevermind its damaging effects to the economy. More people will be falling on the social safety net programs.
  - james1071 14y ago
wazoox 14y ago
The problem is the nature of the creditors. Basically, creditors are proxies for "the rich and the powerful", and the social programs are "benefits for the poor and the powerless". If we simply decided to call for a jubilee and a nullification of all national debts what would happen? The "rich and powerful" would be instantly much less rich and powerful, and everybody else would probably be a lot better.
jbooth 14y ago
The view against austerity was mainstream until very recently. Counter-cyclical spending was a bipartisan point of agreement from the 40s until the year 2009. You never heard anyone accuse each other of being "keynesian" or "hayekian", it was just econ 101 that counter-cyclical policy made sense. Now that we're out of the woods on the economy, we should in fact be trying fix the debt problem -- but without hurting the economy too much in the process. Shrinking the deficit while shrinking GDP doesn't really do much for you.
- MaysonL 14y ago
  And of course the US budget deficit is falling faster at present than it ever has.
pasbesoin 14y ago
Excel is a great tool. Having used it professionally for a number of years, in the midst of other financial professionals, I can say with a somewhat well-qualified opinion that the majority of people using it should not be. Or rather, they should be treated as if they were using a Word processor, which is what Excel essentially is for them: A tablified "Word processor" with a built-in calculator. Who knows what they typed in, nor how they tied it together? For work of any complexity -- no, really, not infrequently even for the apparently simplest of work -- if the result is of any importance, you had better get the original workbook file and check it for yourself. Excel can be used, very well and very efficiently, for enormously complex work. But... you have to know what you're doing. And that takes not only time but significant will and effort to achieve -- something that even many professionals do not have -- have not demonstrated, in my experience. Construct calculations in ways that create robustness. Build in cross checks and alternate paths of calculation to double check your work. Audit your own work and perform manual calculations to verify. Essentially, you've built a software product and you need to test it. You want to know what the results of "programming for the masses" initiatives might look like when applied to society? Well, Excel is one (if not necessarily the best) extant example. It's not all roses. -- P.S. We insist that grade school students "show their work" when doing math. How should this not apply to professional economists?
- james1071 14y ago
  The reason is that the paper was not peer reviewed.

by kfk 14y ago

dnc 14y ago

I have the same impression that the Excel error is just abused so he can reiterate his attack against austerity proponents. The paper in question just fails to provide evidence that 90% is a tipping point of debt to GDP ratio. It does not provide evidence that there is no such a point whatsoever.

igravious 14y ago
"" some 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. "" We aren't told how high high is. We don't now which direction it goes in. This debt ratio thing needs to be knocked on the head. Everybody without the correct information will assume that 100% = very very bad whereas it only means a year's GDP. I say only but you get my drift. If the consensus tomorrow was to base the debt ratio off of 3 years GDP then 90% (~10 months) would go down to 30% wouldn't it? 30% doesn't sound that bad! Hey we've only got a 30% debt ratio, let's party!
woodpanel 14y ago
He is basically doing the same thing He accuses r&r for: using a chosen snippet of reality, adding his conclusions as facts to support his broader world view.

igravious 14y ago

"" Finally, Ms. Reinhart and Mr. Rogoff allowed researchers at the University of Massachusetts to look at their original spreadsheet — and the mystery of the irreproducible results was solved. First, they omitted some data; second, they used unusual and highly questionable statistical procedures; and finally, yes, they made an Excel coding error. Correct these oddities and errors, and you get what other researchers have found: some 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.” "" Krugman has a very opinionated -->> "other researchers have found" not about Excel -->> "finally, yes, they made an Excel coding error" way to compete against Excel is actually learning to love the tool -->> Irrelevant to the topic at hand really. What might be more relevant is news like this[1]: suicides and murders are dramatically up in Greece in the wake of the austerity measures. Choice quote, "Suicide and murder rates climbed from 2007 to 2009 particularly among men, and unusual outbreaks of malaria, West Nile virus and HIV took clinicians by surprise, said the findings in the American Journal of Public Health." Austerity measures in Europe are having very real and tangible consequences, the vagaries of Excel-wrangling are neither here nor there. Granted the NY Times article title is arguably link-baity and sensationalist. One wonders do R/R worry about how their shoddy research has been parlayed into needless suffering? [1] http://www.thejournal.ie/suicides-murders-rise-as-greek-austerity-takes-health-toll-875916-Apr2013/ http://www.thejournal.ie/suicides-murders-rise-as-greek-aust...

pc86 14y ago
So you're saying that austerity measures are causing malaria and HIV? Really? Correlation != causation as I'm sure everyone knows.
- scarmig 14y ago
  When austerity is cutting into public health measures, there is a pretty clear causative route, however.
  - pc86 14y ago
    Maybe I'm being pedantic, but that's an implementation issue and not a root problem with austerity. Just because I mess up all the config options for Apache doesn't mean Apache sucks. The argument that austerity itself is bad because it's killing babies and giving everyone AIDS is a bit ridiculous. Just to be clear, I'm not arguing for austerity at all. I'm just saying everyone's jumping on the chance to blame austerity for every conceivable problem because they happen to disagree with it politically.

fulafel 14y ago

He does have a very polemical writing style but of the New Keynesian vs Chicago school (or saltvater vs freshwater) camps his side does come out of the post-2008 crisis looking better, if you look at the predictions. Pro-austerity camp have been on pretty weak ice recently, with the IMF admitting the big multiplier and European states (eg. Britain) doing so poorly with austerity. And now this. And yeah, he's not really blaming Excel, just ridiculing the programming error lightly. Hw could be saying Word if it turned out some key wording had been autocorrected to an unintended meaning. Edit: your amended discussion about austerity goes ad-hominem against Krugman ("not serious"?, he's got a Nobel, and is one of the most respected & prolific guys in the field) and is based on counterfactual claims (absence of "serious growth in last 50 years", see eg. http://en.wikipedia.org/wiki/List_of_regions_by_past_GDP_%28PPP%29#World_1.E2.80.932003_.28Maddison.29 http://en.wikipedia.org/wiki/List_of_regions_by_past_GDP_%28...)

gd1 14y ago
Exactly what kind of "austerity" do you think is happening in Britain? Government spending has gone up. Saying something doesn't make it true.
- kfk 14y ago
  Right, I forgot that part. If you look at spending, it's actually quite a challenge to see any real "austerity" going on. Spending is up and did not go down much in most of the western countries during the last years.
- fulafel 14y ago
  There are lots of references here. Everyone in the UK seems to agree they have a austerity program. http://en.wikipedia.org/wiki/United_Kingdom_government_austerity_programme http://en.wikipedia.org/wiki/United_Kingdom_government_auste... If the spending isn't going down that just means it's not working very well even for its stated purpouse, nevermind its damaging effects to the economy. More people will be falling on the social safety net programs.
- james1071 14y ago

wazoox 14y ago

The problem is the nature of the creditors. Basically, creditors are proxies for "the rich and the powerful", and the social programs are "benefits for the poor and the powerless". If we simply decided to call for a jubilee and a nullification of all national debts what would happen? The "rich and powerful" would be instantly much less rich and powerful, and everybody else would probably be a lot better.

jbooth 14y ago

The view against austerity was mainstream until very recently. Counter-cyclical spending was a bipartisan point of agreement from the 40s until the year 2009. You never heard anyone accuse each other of being "keynesian" or "hayekian", it was just econ 101 that counter-cyclical policy made sense. Now that we're out of the woods on the economy, we should in fact be trying fix the debt problem -- but without hurting the economy too much in the process. Shrinking the deficit while shrinking GDP doesn't really do much for you.

MaysonL 14y ago
And of course the US budget deficit is falling faster at present than it ever has.

pasbesoin 14y ago

Excel is a great tool. Having used it professionally for a number of years, in the midst of other financial professionals, I can say with a somewhat well-qualified opinion that the majority of people using it should not be. Or rather, they should be treated as if they were using a Word processor, which is what Excel essentially is for them: A tablified "Word processor" with a built-in calculator. Who knows what they typed in, nor how they tied it together? For work of any complexity -- no, really, not infrequently even for the apparently simplest of work -- if the result is of any importance, you had better get the original workbook file and check it for yourself. Excel can be used, very well and very efficiently, for enormously complex work. But... you have to know what you're doing. And that takes not only time but significant will and effort to achieve -- something that even many professionals do not have -- have not demonstrated, in my experience. Construct calculations in ways that create robustness. Build in cross checks and alternate paths of calculation to double check your work. Audit your own work and perform manual calculations to verify. Essentially, you've built a software product and you need to test it. You want to know what the results of "programming for the masses" initiatives might look like when applied to society? Well, Excel is one (if not necessarily the best) extant example. It's not all roses. -- P.S. We insist that grade school students "show their work" when doing math. How should this not apply to professional economists?

james1071 14y ago
The reason is that the paper was not peer reviewed.