Assorted links


re #5. Well, the data are clear: somewhere between 60% and 90% of GDP, the negative association between debt and growth flattens out and starts to reverse. 200% or bust!

Good work, TeamMacro!

And the drug pushers of debt can go merrily on their way, doing God's work, saving us from the pain of (redefined) 'austerity'.

1. If you are going to steal something…

From the press release: “Theft is theft, whether of cash or office supplies,”

Lesson: Don't steal large quantities of office supplies from another thief - steal small quantities.

Regarding #2 - isn't that what the whole job creators shtick and trickle down economics is all about? As Rand Paul stated: "“We all either work for rich people or we sell stuff to rich people" - that's the brave new world of the new Gilded Age.

We have plenty of debt, plenty of ZMP workers, plenty of elite two income families, obviously we just have to bring back indentured servitude. ZMP women can be surrogates, wet nurses, or maids. Plenty of more brawny house work for the loser men. 19th century had it right all the time.

Lol at Andre. I claim dibs on the 19C comparison but other than that, yep! Imagine that, at the time, there was one prostitute per 12 men! ( ) Passes were thus fairly cheap! Happy days!

(unless you were born poor, of course)

Barro: After fixing those problems, they find that “average GDP growth at public debt/GDP ratios over 90 percent is not dramatically different than when debt/GDP ratios are lower.”

Okay, I'm gonna go ahead and call bullshit. R&R are clear in their paper that prior to 90% Debt/GDP growth isn't highly effected. So, ANY error is going to move that inflection point to the right. HOW MUCH?

Re #5: Is it just me, or does it seem totally crazy to believe any quantitative result that is so small in scope it can be computed using Excel?

I hope its just you. Have you ever used Excel? It is quite powerful, although of course not as powerful as many statistical programming languages. It is easy to fit and test linear statistical models to data sets with up to 1000 or 10000 observations or so.

Excel has actually turned out to be a powerful statistical tool, if you know how to use it. and actually it is quite easy to use.

Barro: "Unfortunately for Reinhart and Rogoff, the most notable feature of this chart is not the trend. It is how weakly the data fit the trend."

The whole point of such a Monte-Carlo-like analysis is because there are tons of variables. That scatter plot clearly supports R&R. The point is what is the contribution to GDP solely from the debt ratio. Who claimed it was destiny? It doesn't even have to contradict a SEPARATE Keynesian equation about deficits and GDP. In fact, even the Austrians believe that deficits stave off an ultimately inevitable recalculation. Who in their right mind would expect a tight linear relationship? For example, people have to actually lend the money, so people lending money expect a country to have a non-death spiral. So, of course the outcomes will be variant. What are you guys doing over there in the economics department?

As Barro notes right after the excerpt you quote, "Is this a chart that suggests to you that countries seeking to improve real GDP growth should focus on constraining their ratios of public debt to GDP? Such policies pose significant economic risks and human costs, and yet what this chart tells you is that low debt and poor growth, and high debt and strong growth, are both reasonably common outcomes. Unlike the cliff chart that made the Reinhart-Rogoff paper so arresting, this way of looking at the data suggests that the historical performance of countries with varying debt-to-GDP ratios has little to tell us about what today’s fiscal policies should be."


Yeah, except that he's not really saying anything and he's wrong about what he does say. By looking at scattered data, you can say that that means you might get lucky, but that's not the point of finding a trend line. The trendline is negative. Now for a little theoretical math. The beauty of large numbers is you get the trend line. Barro and others are contending that the trendline doesn't show the inflection point or that it is a weak inflection point. But the problem of the scatterplot is that it might mask an inflection point. If, say, every country at every point in time has its own unique inflection point, emerging markets around 60% and developed countries around 90 or 100%, then plotting all countries will tend to smooth out the line and if an inflection point emerges it will be weak. That does not mean that for the individual country that the inflection point does not exist.

Further, R&R tell us that below the tipping point that there is little or no negative effect on growth. This is the intuitive result. People borrow and lend based on good prospects. So, when Barro says "that low debt and poor growth, and high debt and strong growth, are both reasonably common outcomes" the first part is trivial and intuitive and the second part is the reason for the study. Barro makes it sound like you just wake up one day and randomly find yourself with high or low debt and high or low growth. There are of course relationships. But the purpose of the R&R investigation is to determine if they are just random results or if there is some feedback. NOBODY'S data show that it is just random. ALL results so far show a negative correlation to debt and GDP. Yes, you can have high debt and high growth. Likely that is not just luck, but owes to the situation the specific country finds itself. Likely a fast growing economy engenders lots of investment. That is intuitive. But sometimes that goes wrong and it tends to go wrong slightly more often than it goes right.

Why, by the way, aren't R&R getting credit for claiming that below 90% there is no negative effect on growth? First and foremost, they made a contribution to knowledge where (presumably) none previously existed.


Obviously a misunderstanding of Thatcher: Zizek sees her only as a sophist, a pied-piper who has bamboozled (manipulated, coerced etc) people into agreeing with her. Only on such a basis can he conclude that "we need a Thatcher of the left."

There's no attempt to look at specific Thatcher policies and ask: "well, why did the voters find this appealing and congenial? What was it that resonated with them?" No, for Zizek -- as man of the far left with sympathy for Lenin and Robespierre -- one must only attend to what Thatcher imposed. This is to forget that she was the leader of a democratic nation, elected a number of times.

It also seems wrong to link her to Rand. Rand is a radical individualist, believing in extremely free markets. Thatcher, however, is a conservative in many ways, believing in reorienting the social world along Victorian, tory and commonsense axes. (And some free market axes too of course.) These reorientations worked because of their content as well as their form.

Wasn't FDR the Thatcher of the left

Nobody tacked Zizke yet?
He is hugely entertaining, but completely devoid of any understanding of economics. His popularity is scary for such a radical, but relaxing in its rock star like, shallow flavor. He is the chewing gum of public intellectuals.

I am tempted to say that Zizek is lacking in some philosophical understanding as well. He is basically a performance artist.

Y R != my posts showing up? I will see if this one sticks. Read Dr. Z, and he just seems like a typical 'liberal' (left winger) with the French beret sipping wine on the West Bank (France, not Israel). Note he favors a 'strong' leader--a sign of a non-market-oriented person, and he admires Thatcher for being such a person--for the right.

Every time I read Zizek I feel like I'm reading some random, yet highly skilled, internet troll who's yanking my chain.

I like it.

So does Tyler. I think it is for the same reasons. It can't be for the ratio of ideas to verbiage.

#5 (Zizek)
"Does the same not hold for the Enron bankruptcy in January 2002 (as well as on all financial meltdowns that followed), which can be interpreted as a kind of ironic commentary on the notion of a risk society? Thousands of employees who lost their jobs and savings were certainly exposed to a risk, but without any true choice - the risk appeared to them as a blind fate. Those, on the contrary, who effectively did have an insight into the risks as well as a possibility to intervene into the situation (the top managers), minimised their risks by cashing in their stocks and options before the bankruptcy – so it is true that we live in a society of risky choices, but some (the Wall Street managers) do the choosing, while others (the common people paying mortgages) do the risking."

Does he not know that several of these "top managers" were convicted of felonies and served time in prison? It was in the newspaper, one of them was in the newspaper this past week or so.


Here's a suggested topic. What would the counterfactual of no gas boom look like?

Are there any good studies on the impact of the natural gas boom since the financial crisis began? What would have GDP and unemployment been if gas prices would've stayed at 2005 levels? NPR's 'Marketplace' today, in a piece about R&R's bad data, compared England's 'austerity' to our stimulus and implied the relatively better economy was entirely due to these opposing tactics. However, perhaps the gas boom explains more of the difference.


I am French and I can't stand Zizek. I don't get the appeal even in a shallow, performance-artist way. But, in my defense, I was forced during my childhood to say something intelligent (4 pages minimum) on quotes like "The Real is not equivalent to the reality experienced by the subjects as a meaningfully ordered totality. The Real names points within the ontological fabric knitted by the hegemonic systems of representation and reproduction that nevertheless resist full inscription into its terms, and which may as such attempt to generate sites of active political resistance".

Anyhow, I am more interested in the Chinese credit bubble thing. No one commented on it yet. Seems pretty important to me. But the article seems fundamentally unsure as to whether this is a problem or not (while leaning to 'it's a problem'). Is there a way to measure, well, basically, system-wide leverage? And study the composition of the 'investment binge'... Bottom line: Investments that aren't productive aren't going to be able to sustain a huge debt load. If AD deficit is the issue, investments into further Supply capacity seems like an odd strategy... Any takers for an informed discussion?

Zizek thinks that how we view things is completely arbitrary. All we need is a strong person to change the way we view things. That may be true for some people but certainly not for everyone.

I don't see the need for a Crankerator. If you are that far away from an electrical outlet then you are probably on a long-distance backpacking trek without phone service.

It would be interesting to have a universal charging station built into an electric bicycle.

If, as Dourado says, Kling thinks
"'Progressives' tend to respond most favorably to language that frames issues in terms of oppressed versus oppressor groups. 'Conservatives' tend to respond to a frame of civilization versus barbarism. And 'libertarians,' unsurprisingly, tend to respond most favorably to a frame of freedom versus coercion"
Does that make economists who think in terms of weighting costs and benefits a fourth axis?

Or Kling's three, I orient my thinking more along the "libertarian" axis, but come to mostly "progressive" conclusions, perhaps because on my "economist" axis I tend to weigh costs borne by low income persons (~ "oppressed?) quite high.

Perhaps high debt is a sign of fiscal irresponsibility.

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