Bad math equals bad politics
Thomas Herndon was given a homework assignment.
His goal was to take a well-known and frequently-quoted economics study and figure out how the researchers came to their conclusions.
Herndon, a graduate student at the University of Massachusetts at Amherst, gladly took that assignment. But he soon found there was a problem. That study’s conclusions didn’t match his. He thought he’d failed. He checked and double checked his results, but he simply came up with conclusions that he couldn’t reconcile.
He had a daunting task, since he was painstakingly dissembling the work of two highly-respected Harvard economists (Carmen Reinhart and Kenneth Rogoff) who’d released their study — “Growth in a Time of Debt,” in 2010.
Republicans immediately latched onto the study, cheering it and using it to frequently bludgeon Democrats with it whenever there were any debates about the country’s national debt.
“Growth in a Time of Debt” is a 25-page document, full of “facts” and figures, that concludes that countries that have debt above 90 percent are doomed to long-term debt crisis.
Or, as Paul Ryan (who is as famous for his inclination to throw numbers around as he is for being a failed vice presidential candidate) said in his 2010 budget proposal: “Even if high debt did not cause a crisis, the nation would be in for a long and grinding period of economic decline. A well-known study completed by economists Ken Rogoff and Carmen Reinhart confirms this common-sense conclusion.”
Well, there you have it. Ryan and his fellow-Republicans, who continue to preach that government should be shrunk to the size of a BB, have been delighting in brandishing “Growth in a Time of Debt” to make their points.
But supposing Herndon was really on to something? That the disparity between his research for a term paper was more accurate than that of two celebrated Harvard economists. Well, that’s exactly what happened.
Ken Rogoff and Carmen Reinhart sent Herndon the spreadsheets they used to compile the analysis for their study. The young UMass grad student found a number of key errors in their thesis. He found mistakes in their arithmetic and methodology.
While the original study was comprised of economic data from 44 countries spanning 200 years, there were glaring omissions that greatly skewed the overall findings.
Instead of a country’s Gross Domestic Product dropping by the -0.1 percent concluded in the Harvard study, the UMass study showed the average growth could be +2.2 percent.
That’s a huge difference. And it certainly doesn’t lend itself to the Republican’s dire predictions that accompany every discussion about government programs they feel need cut.
“Economists, who have studied sovereign debt, tell us that letting total debt rise above 90 percent of GDP creates a drag on economic growth and intensifies a risk of a debt-fueled economic crisis,” Ryan said during a committee hearing on June 23, 2011.
Ryan would never admit the basis for such statements is flawed thanks to an enterprising grad student, who probably knows more about macro-economics that he does.
Nobel Prize-winning economist Paul Krugman has weighed in on the Harvard study flap. He goes lightly on his fellow economists, but he takes to task the Republicans who wave their findings in the face of anybody who doesn’t believe that austerity is the only thing that can save this country.
“The really guilty parties here are all the people who seized on a disputed research result, knowing nothing about the research, because it said what they wanted to hear,” says Krugman.
It’s sad that government belt-tightening has — according to the U.S. Dept. of Labor — has led to 750,000 federal, state and local government jobs being cut since the middle of 2009.
There’s no way of telling if that 25-page study has led to some government pink-slips — but it’s certainly worth thinking about.
Uniontown native Edward A. Owens is a three-time Emmy Award winner and 20-year veteran of television news. Email him at freedoms@bellatlantic.net