Reinhart & Rogoff: The Rejoinder

There has been plenty of commentary over the past day or so on  insights into the statistical work undertaken by Reinhart and Rogoff in their paper on growth and debt published in the Papers and Proceedings of the 2010 AEA Annual Meeting. 

Their conclusions on public debt are represented in this chart (below the fold) from the paper, with the subsequent emphasis put on the (slightly) negative average growth rate for countries with a Debt/GDP over 90%.

Herndon, Ash and Pollin offer a critique in this paper and here is their representation of the same chart.  In their version the average growth rate for countries with a debt/GDP over 90% is put at 2.2%.

The reasons for the differences are outlined in this post with further links and the full text of the reply from Reinhart and Rogoff on FTAlphaville here.  The reply leans heavily on their 2012 paper (with Vincent Reinhart) from the JEP. 

Reinhart and Rogoff have issued a more detailed second reply.  This admits to the Excel error and includes a table combining figures from the three papers.

This comment by Krugman is right:

It’s important to make a distinction between the R-R book “This time is different” and the paper. The paper got undeserved credibility from the book; now the book may be devalued by the paper. But they’re quite different.

Comments

comments

58 thoughts on “Reinhart & Rogoff: The Rejoinder”

  1. @Seamus

    I think the most important line of that Krugman piece is the last one.

    Again, however, the larger story is the evident urge of Very Serious People to find excuses for inflicting pain.

    The Reinhart-Rogoff paper was popular because it gave a basis of fact to an existing prejudice (based on sound class interests) in right leaning governments and institutions. No one heard of the R&R paper and changed their mind on deficit spending and demand management because of it. Instead there was an unpopular (and failing policy) which needed a justification and the R&R (and Alesina/Ardagna) papers were the only apparently factual basis for it.

    It was never about the economics, it was always about the politics.

    Now if you are a fiscal hawk, or an advocate of austerity (or a fan of weasel words like “fiscal consolidation” or Olli Rehn’s “reform”) that is perfectly fine as long as you are willing to admit that it is position of principle rather than one based on utilitarian concerns about the economy (or wider society).

    There was an interesting column from Simon Wren-Lewis about the continuing usage of language by technocrats to try and restrict the terms of debate about economic policy to a narrowly neoliberal framework. It fits in with the recent discussion of what exactly the purpose was of Draghi’s most recent epistle to the subjects of European Monetary Union.

    Taxpayers money and Fiscal Space at the IMF

  2. Pollin and Ash in the FT

    ‘Austerity after Reinhart and Rogoff’

    “What about our present circumstances? Using Prof Reinhart’s and Prof Rogoff’s data, we found that for the years 2000 to 2009, the average GDP growth rate for countries carrying public debt levels greater than 90 per cent of GDP was either comparable to or higher than those for countries whose public debt/GDP ratios ranged between 30 and 90 per cent.

    “Of course, one could say that these were special circumstances due to the 2007-9 financial collapse and Great Recession. Yet that is exactly the point.”

    http://www.ft.com/cms/s/0/9e5107f8-a75c-11e2-9fbe-00144feabdc0.html#axzz2QjV2BjGA

    Matthew Yglesias in The Slate

    “Further Thoughts on Reinhart and Rogoff”

    “The allegedly interesting Reinhart and Rogoff empirical finding in this regard was the discovery of a debt tipping point that occurs at a debt:GDP ratio of 90 percent. Such a tipping point is difficult to explain in terms of interest rate dynamics, and thus is either a random statistical artifact or else evidence for the existence of dark matter. Since the original publication of their study, R&R have been engaged in a loud and noisy political activist campaign in favor of the dark matter interpretation of their research. What we see not only from their critics but also from their response is that there is no evidence of dark matter.”

    http://www.slate.com/blogs/moneybox/2013/04/17/reinhart_rogoff_further_thoughts_after_reading_their_responses.html

    @ Shay Begorrah

    “No one heard of the R&R paper and changed their mind on deficit spending and demand management because of it.”

    I think there is a large middling ground of people who want to be informed about such things and are open to argument. The 90% figure seemed to offer something solid: a tipping point to be avoided. It may not have changed minds, but it put a bookend there: like the IMF’s semi-mystic 120%, and the fiscal compact’s 3% now I think of it.

    The advice played in different ways, in the US it was taken as a signal to raise taxes and slash spending, at DAVOS, it was taken as a sign that sovereign default was inevitable.

    Which reminds me, a more red in tooth and claw attack from Bill Mitchell pointing out the, you guessed it, difference between a true sovereign and one dealing in a foreign currency, plus:

    “Elementary misuse of spreadsheet data leaves millions unemployed”

    “I should note that when the paper came out in 2010, I immediately tried to replicate the results and failed. I wrote to Carmen Reinhart because I had met her a few years earlier at a function in the US. I requested the data. It appears I was in a queue of researchers asking for the data. I received no reply.

    “As a long-standing researcher you learn that if an author will not send you their data then something is wrong. Perhaps they were too busy. Perhaps they didn’t want anyone getting their exact dataset because they knew what might be found.”

  3. @ Seamus and Shay

    A question for you both!

    The blogosphere is alive with the discussion of the consequences of mistakes made in a paper on the empirical impact of various levels of government debt. ‘Pretty major’ seems to be the answer.

    For five years the intense issue of government debt and default has been centrally placed at the centre of economic debate. The worst thing that can happen if a sovereign goes bust is default and the consequences that flow from that. These issues have been taken very seriously.

    But what about employment? Presumably if unemployment hits 100% in a country we can say that this is a complete and final disaster?

    I’ve quoted Helmut Schmidt in 1972 regarding 5% unemployment as a national emergency. UB40 thought that 10% was a sufficient malaise as to dehumanise people. The EZ is at one in seven now. I’m not sure how far Greek and Spanish youth unemployment in reality are off 100%.

    Are there papers that analyse this? What is the tipping point at which it is all over?

    Are there economists informing the national and European debate that show work that states that if unemployment goes above X, then the consequences are Y? Presumably if employment hits 0% then the chance of the country surviving are, er, nil.

    National debt is one metric, but a quick read of Koo shows that this is only a subset of other debts in flux.

    Where are the works that had/will have as much an impact as Reinhart and Rogoff, that guide decision makers (ugh), to identify certain levels of unemployment as the road to disaster?

    Aside:identifying them is not the same as saying ‘let’s see how far we can push it.’

    I guess I’m looking for a EU compact that will say that an increase of X% unemployment a year is unacceptable and the empirical papers that support that.

  4. @Gavin K

    fwiw my long standing rule of thumb is that 35% unemployment rate (or its obvious approach) is the maximum a population will tolerate without default etc.

    I think it was just a guesstimate from previous examples and cannot direct you to any academic publications. Kevin O’rk might be the guy to ask.

  5. 35% seems very high. I would suspect duration plays a big part. If in 5* years time the unemployment in Spain, Greece remains at 25% then thats a big deal at least to me if not to the troika.

    * would be about a decade of disaster then. People will be getting fairly pissed off at that point and if you’ve lost 10 years and have no hope in front of you then they’ll tolerate default and an awful lot more.

  6. And there I was quoting Rock and Roll as to the unsustainibility of our mere 200,000,000,000 of National debt. Turns out they got it slightly wrong. So we’re ok then..we can grow our way out. But things are looking a bit iffy out there tonight and Ambrose has his work ready?..
    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10001937/Fed-and-Bank-of-Japan-caused-gold-crash.html

    And Jens is his usual optimistic self…we can get out of the fertilizer in the next ten years if we really knuckle down….
    http://www.telegraph.co.uk/finance/financialcrisis/10001631/European-debt-crisis-could-last-a-decade-warns-Bundesbank-chief-Jens-Weidmann.html

    Wonder what’s going on with the Dax and CAC down about 2.5% today. Surely Jens didn’t manage to bring them down on his own.

  7. @ All

    An even better comment!

    http://www.bloomberg.com/news/2013-04-17/reinhart-rogoff-on-debt-and-growth-fake-but-accurate-.html

    Notably;

    “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.”

    Amen to that! Especially for a country such as Ireland which is currently incapable of having one.

  8. One wonders what the policy response in the EZ and the UK will be to the fact that the horse they have been flogging will expire if they keep flogging him.

    The deliberate continent wide cutting of demand never made sense to reason. The bank deleveraging makes even less sense, but its full steam ahead on that too, I suppose.

    Has there been any comment from the EC or ECB on this subject?

  9. @DOCM

    I am unable to make sense out your last two comments.

    But on the home front, Howlin may have had to take a call from the Troika last night. It is beginning to look as if m’luds were able to take their case against CP2 direct to the top, and win.
    Of course, there were many ‘substantive’ issues. It had nothing to do with pay!

  10. @ Joseph Ryan

    To quote H.L. Mencken “When someone says, it’s not about the money, it’s about the money”.

    Unfortunately, we have not got any! Or at least not enough to pay our own way. I hope this comment makes the situation clearer.

  11. @Joseph
    Apparently there was a rumor doing the rounds in the markets that Germany was to be downgraded by Moody’s ….cannot figure why they would even contemplate that with Germany borrowing 10 yr money at 1.28% today. Doubt if car sales alone would account for such a steep drop in the Dax. Maybe the traders are buying gold with the proceeds of the sell off .

  12. @ JR

    I cannot resist another quotation of H.L. Mencken.

    “For every complex problem there is an answer that is clear, simple, and wrong.”

    In this instance, it seems that there may be two.

    To quote the FT;

    “The debunking exercise emphasises perils of drawing conclusions from relatively small sample comparisons of different countries.

    The International Monetary Fund fell into the same trap last October when the Financial Times showed its conclusion that effects of fiscal tightening were much greater than expected, depended entirely on choice of time period and fell apart when the same question was modelled differently. The fund acknowledged the concerns about its work were warranted. The Reinhart and Rogoff controversy shows the fragility of a result in the other  direction.”

    http://www.ft.com/intl/cms/s/0/51099c54-a76a-11e2-bfcd-00144feabdc0.html#axzz2QkiLZV2j

  13. @ DOCM

    People on both sides of an issue use experts’ opinions to bolster their arguments and papers from academics or staff of the IMF or ECB sometimes give the impression of deskbound individuals who don’t for example have familiarity with the countries they are writing about.

    Both Belgium and Italy have had public debt ratios in excess of 100% for most of the period since 1993. However, Belgium had a better growth performance than Italy – – which saw growth falling for 3 straight decades to less than 0.3% annually in 2001-2010. There are always exceptions to a rule!

  14. Austerity was going to run into the wall regardless of the economic papers backing it. It seems to be all about the multipliers as well as elite competence . And contractionary expansion was always a stretch.

    The ECB wallahs kept the banking system more or less intact. There has been no inflation woth talking about. The rest is just collateral damage from their PoV but they are very low on political capital. So where do we go from here?

  15. One of the major topics that doesn’t get enough attention IMO, is the modern belief in financial models. I was at a talk last week about market consistent (WTF) valuation of assets and it was very insightful. One of the boxwallahs present said they had data going back 15 years for bonds, equities, options, swaptions, etc. Most of what is going on now is not even remotely related to 1999 or 2004. It’s 1930s or 1870s stuff that counts . And we have very little data for that.

    Thinking about how many outfits are still using the Efficient markets hypothesis is beyond depressing. But TINA, apparently.

    “The purpose of models is not to fit the data but to sharpen the questions”
    Samuel Karlin

    “One way of looking at the history of the human group is that it has been a continuing struggle against the veneration of crap” ― Neil Postman

  16. Steve Keen has proven that growth is impossible after a certain amount of debt has been incurred by public and AND! private sectors.

    We know from history that collapse follows credit boom. This time is not different.

    The collapse is in hiatus. It is soon to resume, as the collapse in paper gold price is an alarm.

    I am glad not to be an economist. Some readers may wish to re-read the stirring accounts of the French Revolution?

  17. @Michael/DOCM

    Defensive and obfuscatory waffle.

    <sighs>

    The results on both fiscal multipliers and the magical 90% debt level of doom are comprehensively in, the fiscal hawks (soon we hope to be fiscal dodos) got it wrong.

    Claiming that the IMF (and everyone else in the reality based community, Krugman, the political left, etc) have the same credibility as the European Commission, ECB, Merkelists and George Osborn because they both made calculating or forecasting errors is either a sign of a serious deficit in understanding or a foolish attempt at rhetorical legerdemain (college debating society stuff). Only one side’s errors were significant.

    To put it in another context where the situation may be clearer both the IPCC (and environmentalists) and climate change deniers have made occasional errors in calculation but the IPCC’s errors do not contradict their case when corrected. The same can not be said for the theories of the array of right wing extremists and cranks who make up the world of anthropogenic climate change denial (and neoliberals!). One side has a theory that is being constantly refined in light of the evidence, the other side has a case that is being constantly undermined by them.

    The wise in the economic, journalistic and political fraternities will soon be putting some intellectual distance between themselves and tight fiscal rules/debt brakes – many will try to retrospectively join the resistance (good luck to them). Unfortunately for the European Union there are plenty of parties and institutions whose political credibility is too tied up with the mindless pursuit of fiscal targets to consider anything else but a fight to the bitter end. Buti, Rehn, Merkel and the larger feudal network of European neoliberals will need to be defeated in open political battle as the reality based community fights for the core of European policy making.

  18. @Seafoid

    “Most of what is going on now is not even remotely related to 1999 or 2004. It’s 1930s or 1870s stuff that counts . And we have very little data for that. ”

    The point is well made.

    Personally I think it was a creditor driven policy from both banks and countries and sometimes both in unison. Any data that they could latch onto was helpful in lending them credibility. But the policy would have been pursued and will continue to be pursued in the absence of any helpful data; and even in the face of contradictory data.
    The political problem is that the creditor policies have largely worked up to now, as far as the creditors are concerned.
    Others don’t count!
    I am not aware of politicians setting the current crisis in a historical context, either political or economic. That too is surprising.

  19. Shay,
    where are your “reality based” friends going to get the moeny from for a country with the fiscal numbers we have. Or more importantly, what yield would you have to pay for it.

  20. @tullmcadoo

    where are your “reality based” friends going to get the money from for a country with the fiscal numbers we have

    I have discovered a truly remarkable funding strategy which this dialog box is too small to contain.

  21. @Seafoid

    I presume it is mean Rathnure, Enniscorthy, not Rathure.

    The IT property team is a little shy on hurling folklore.

    The Windows are a bit small. Still, it’s a fine place for a man with a spade that is not shy of work.

  22. Two more good pieces on the R&R fallout:

    http://www.nextnewdeal.net/rortybomb/researchers-finally-replicated-reinhart-rogoff-and-there-are-serious-problems
    “They find that three main issues stand out. First, Reinhart and Rogoff selectively exclude years of high debt and average growth. Second, they use a debatable method to weight the countries. Third, there also appears to be a coding error that excludes high-debt and average-growth countries. All three bias in favor of their result, and without them you don’t get their controversial result.”

    http://www.nextnewdeal.net/rortybomb/guest-post-reinhartrogoff-and-growth-time-debt
    “It shows that purely in terms of correlations, a 10 point increase in the debt-to-GDP ratio in the RR data is associated with a 6/10 of a percentage point lower growth in the 3 years prior to the increase, but actually a slightly larger than usual growth in the few years after the increase. During the year of the increase in debt-to-GDP ratio, GDP growth is really low, consistent with the algebraic effect of lower growth leading to a higher debt-to-GDP ratio.

    All in all, these simple exercises suggest that the raw correlation between debt-to-GDP ratio and GDP growth probably reflects a fair amount of reverse casualty. We can’t simply use correlations like those used by RR (or ones presented here) to identify causal estimates.”

  23. Anyone who actually believed the R&R paper’s “findings” has never received good scientific education, or simply didn’t care. There was “convenient statistical tricks” and “reverse causality” written all over it. It’s a useless paper, an unscientific waste of time. It’s quite astonishing that so many people believed it, though I suppose politics and partisanship played a massive part.

    The paper tried to demonstrate what was simply not there. You are a fool if you try to equate that to the IMF study on the fiscal multipliers. If you do, you simply don’t understand the magnitude of R&R’s “errors”.

    And it’s rich that they are now retreating into the “just association, not causality” territory. That was always a cop out. R&R are not fools. That doesn’t erase Rogoff’s history of scaring people into a particular set of policies in the US, the UK and Europe.

    I watched a brief debate between him and Richard Koo from some years ago, and it was embarrassing.

  24. Ambrose has something to say on R&R…but the main thrust of the article is scary…
    http://www.telegraph.co.uk/finance/financialcrisis/10004726/Cyprus-bail-out-vote-stirs-fresh-jitters-as-slump-fears-grow-in-Europe.html

    “In a defiant statement, an alliance of the ECB, Commission and Eurogroup said the “evidence is clear” that EMU crisis policies have been a success and recovery is in sight. “The eurozone has shown a degree of resilience and problem-solving capacity that many observers and policy makers would not have predicted even a year ago.”
    The claims are flatly contradicted by the IMF, which warned this week that the eurozone remains “the epicentre of potential risk” in the world, and is endangering stability by dragging its feet on an EU banking union.
    Steen Jacobsen from Saxo Bank accused EMU leaders of dangerous complacency. “Nothing they say is true. Reality has never been further away. It’s scary,” he said. “We think the eurozone is in far worse shape than they realize. We will see contraction of 1pc this year but it could be as bad as 2pc.”

  25. Specifically, as soon as Koo started questioning the premise of Rogoff’s thesis, he retreated into the “the sovereign debt market is unpredictable” defence – you know, the “black swan” position. Utterly useless. I realised that he had nothing meaningful or useful to say about our situation, regardless of his position.

    Every time the likes of Olli Rehn and Wolfgang Schaeuble mentioned the R&R paper, I wanted to scream.

  26. The ideas of the right can be summarised in the Scottish expression . You cannae polish a turd.

  27. @Fiatluxjrn
    re Telegraph link
    “In a defiant statement, an alliance of the ECB, Commission and Eurogroup said the “evidence is clear” that EMU crisis policies have been a success and recovery is in sight. “The eurozone has shown a degree of resilience and problem-solving capacity that many observers and policy makers would not have predicted even a year ago.” ”

    I don’t understand the legal framework. What is the legal status of the ‘alliance’ being referred to.
    Has there been a coup d’etat in Europe.

  28. JR,
    That statement is straight out of North Korean central drafting.

    Seafoid,
    The funny thing is that most of the build up of debt and off balance sheet promises to pay the voter future benefits occurred on the watch of politicians on the left of the spectrum. Clinton and his golfing partner who headed up Fannie Mae created the US housing bubble. He also repealed Glass Steagal.
    Gordon Broon loved the PPP and encouraged the creation of the UK giants. Our Great socialist from Druncondra brought in benchmarking, allowed Anglo run riot and has left us with as we are.
    It is left to the Centre Right to try, probably unsuccessfully to clean up the mess. Then they will be booted out and replaced by the God knows who who will run around chasing imaginary pools of money.
    At some stage in the next decade, our kids will figure out that we have left the, with a crock of S…. It is at that point that they cut off our allowance.

  29. @DOCM @Tull

    Thanks for the respective non mutually exclusive clarifications re above.

    @Fiatluxjrn

    re: Methinks Ollie is merely his masters voice
    from ‘Ekathimerini’ article.

    “What is certain is that no matter how convincingly Rehn makes his case for fiscal restraint, his critics, including his academic “archenemy,” Paul Krugman of The New York Times, just acquired a new weapon for their arsenal. Rehn’s political position will be further weakened. And critical supporters of his views will keep wondering why he personally accepts exclusive responsibility for the austerity measures implemented in Europe, when EU insiders know that it is Germany, and not Brussels, which has the “wallet” and hence calls the shots. Strangely enough, though, it is Rehn who has found himself in the line of fire of Keynesians. In the meantime, Wolfgang Schäuble, the German finance minister, can comfortably enjoy the debate from the safe distance of Berlin.”

    One wonders if Rehn is a true believer in the policies he espoused, or somebody who is caught up in a drama, from which he is intellectually unable to break free. I feel it is the latter.

    There is one thing for sure. If Germany did not endorse and support the policies being implemented, the policies would have been binned a long time ago.
    The logic of that is that Rehn is clearly doing his master bidding.

  30. JR,
    The only belief one can have in the current policy is that it is the only option for a country with no access to the market…. Ireland.

  31. @ fulcrum

    Where do Rehn or Schäuble mention Reinhart/Rogoff?

    I looked for Schäuble , but didn’t find anything. We have the imbalance scorecard, and that is many parameters and not just one

    I read the w15369, what did they really say, the reply of R/R in the WSJ and FT, within a few hours, addressing all points, and very convincing.

    And then Ash, and Pollin destroyed their reputation by an ill remake of claims already proven false. Data “excluded”, which weren’t there at the time, that the excel mishap had a material impact on the conclusion, that claims were to far, that there special way of selecting data is kind of normal,

    And that R/R would not be well within their right of looking at things, they way they did.

    Ash / Pollin are finished.

    @ seafood

    All those run down sheds in the wilderness are overpriced by a factor of 2 or more.

  32. @Joseph Ryan
    It would appear so.
    To my mind though the biggest policy disaster occurred in Cyprus two weeks ago. Rehn and Barrosso had obviously signed off on haircutting allegedly insured depositors. It was the Cypriot parliament that rejected the notion that you could rob grannies and orphans at will. It is clear that the EU botched this badly and heads should roll… as some in the EU parliament said.
    It would be interesting to know if Noonan signed off on this fiasco.
    Btw, capital controls which were supposed to last a week are still in place.

  33. @ Shay Begorrah

    A latter-day Fred Kite is ready to man the barricades in Berlin!

    It was shocking for the Fred Kites in November 1989 when the vast prison wall in Berlin was breached and thousands surged through from the mythical workers’ paradise. The original Fred Kite had earlier mused: “Ahhh, Russia. All them corn fields and ballet in the evening.”

    It gets even more confusing today when Red China is synonymous with unfettered capitalism.

    A story in the FT today on the tragedy of Italy, shows that the country desperately needs competent and courageous governance, no matter the hue.

    Voters are fed up with a corrupt right and former communists, defending entrenched interests. Beppe Grillo, the former comic and head of the anti-establishment Five Star Movement, who did not stand for parliament, is apparently not prepared to lead.

    The FT says L’Aquila, the heart of the Medieval city that was devastated by an earthquake in 2009, remains in ruins. Gian Antonio Stella, a reporter known for exposing the waste and corruption of the elite known as the “caste”, counts 1,109 laws, directives and ordinances passed to deal with the city’s revival.

    http://www.ft.com/intl/cms/s/0/e7f43eac-a775-11e2-bfcd-00144feabdc0.html

  34. Micheal H
    Beppe Grillo is barred from standing for parliament due to a 1980s vehicular manslaughter conviction. Its not that he “is not prepared to lead” just, he cant from INSIDE the tent. Facts, eh.

  35. As fot the comment : the context is important, no?
    “Gian Antonio Stella, a reporter known for exposing the waste and corruption of the elite known as the “caste”, counts 1,109 laws, directives and ordinances passed to deal with the city’s revival. Some aim to prevent the Mafia – one branch of the Italian economy that is flourishing amid crisis – from taking the spoils of reconstruction.”
    That second sentence does kinda modify this from “mad shiftless olive botherers” to “bureaucrats in a civil law society with decentralized planning trying to stuff fingers in a dyke”
    Honestly….

  36. @ Brian Lucey

    Thanks for that update on Beppe Grillo, but that wasn’t the key point in respect of the role of the FSM movement since the election.

    The rest from you seems petty – – unless your saying that 4 years after the earthquake, the situation in L’Aquila is much better than portrayed in the article.

    The reference to “mad shiftless olive botherers” is pub stool nonsense.

    “The big problem of the economy is a society that combines elements of the Indian caste system with that of the medieval guilds,” Enrico Letta, the PD’s (the centre-left Democratic Party) deputy leader told the Guardian in 2011. “Our watchword is social mobility, particularly for the young, who suffer most if people are co-opted into jobs instead of gaining them by fair competition.”

    Maybe Letta was ‘talking down the economy’ to use an Irish mantra of recent times.

  37. Beppe is an antipolitician. Expecting him to lead is foolish. His WHOLE POINT is the lack of leadership. Its at once a profound comment on the politics of Italy and a meta exposition of the problem. I dunno if hes serious, joking or both. But he is a power in the land.

    My point on L’Acquilia ” theres a reason other than that they are italian why so much red tape. Anyhow, they take a long run. L’Acquilia was destroyed before. Would that please me if I lived there? No. IS that how it is? Yes.

  38. @Tull
    It is also a political crisis. Well observed on Broon and Bertie. They tore the arse out of it. I don’t think left/right makes much difference really. They are all using the same knackered memes. What is the difference between FF/FG/Lab? Answers on a postcard. Expansionary contraction doesn’t materialise. I would probably agree with Martin Wolf on balance. But everything is political innit. And people are afraid of change. There is no magic . It is a big mess.

  39. seafoid,
    agreed, populism gets you elected now & it has no ideology.
    Would any politician be capable of election if he/dshe made a Churchillian “blood sweat and tears” speech of a JFK “ask not… ” address.

    No it would be “I will meet them on the beaches to explore matters of common interest”

  40. 32 trillion dollars + lurking in tax havens – is a trillion 100 or 1,000 billion? – all of the economic gobbledygook re austerity or relaxing austerity is fatuous when the answer lies in grabbing back a very large chunk of that liquid wealth and using the resource to refuel all economies almost instantly…..there is more than enough liquid wealth in the world financial system to sort the current mess out…but then ‘vested interests’ in austerity would lose out…’greed’ would be deeply offended…’leadership’ would have to answer to their elites…..

  41. tull,

    JFK did actually also get elected with a “rocket gap” scare, a billionaire father, and, allegedly, a few hundred thousand graveyard votes from the Chicago machine :- )

  42. Francis,

    at least the US has been a democracy, however imperfect for 200 year.
    I would not attempt to throw stones at other peoples society if I were you.

  43. @tull

    “greed, populism gets you elected now & it has no ideology.”

    Isn’t this the essential problem? Too much democracy? 😉

  44. Sarah,
    Pols are like non exec directors. They are not equipped to run the complex public sector. But at least we can hold them accountable … Like FF.
    The permanent. Govt displays little vision or ability either but they appear largely unaccountable. In addition,ore decisions are driven by EZ real politik where there is no vision, competence, trust or accountability.
    I am not sure if that adds up to too much democracy.

  45. Italians are a strong willed people who derive their strength from strong families. They see the state as being there to serve the people as opposed to the Anglo Saxon idea of the states primary purpose being to strengthen central government and the capacity to control the citizens. Mussolini marched on Rome in 1922 to “restore order” with 30,000 members of his party. This led to the imposition of order by force and the trains running on time. The Germans were already orderly when Hitler took power in Germany in 1931 he had been following Mussolini’s example since 1922. Hitler was elected to implement large public work schemes, he did this successfully putting millions of Germans back to work. Italians value their independence more than they value order, Germans value work more than their independence.

    Beppe Grillo is as Italian as they come. In true Italian fashion he is opposed to selling out to domestic or foreign plutocracies. In Irish this old fashioned idea was known as “selling one’s soul for a mess of pottage”. He has placed the major political parties in a position where they cannot govern effectively but are afraid to call an election. In the eyes of his supporters he is the most powerful politician in Italy. He is their saviour for forcing the EZ/ECB to back off on further austerity initiatives.

    Democracy is an awesome force in the hands of principled people. There are things we can learn from Italy.

  46. @ Mickey Hickey

    Democracy is an awesome force in the hands of principled people. There are things we can learn from Italy.

    You appear to be getting ahead of yourself. Less than one-third of votes does not provide a mandate to govern.

    The Five Star Movement made impressive headway in the elections with 29% and 24% of the votes in the two chambers.

    A coalition headed by a former PM convicted of tax fraud and facing child prostitution charges got 29% and 32% of the votes.

    What are the lessons for Ireland? A confusing one?

    We need a return of a man on horseback to lead a gullible people to a Promised Land e.g a reincarnation of Charlie Haughey or a Fintan O’Toole leading a revived Democracy Now movement, to provide some poetry for a month as a prelude to boring prose and disenchantment.

  47. @MHen

    Not a mandate to govern but a mandate to block.

    In Ireland for over fifty years after independence the urban voters were salivating at the prospect the farm vote would decline to less than 27%. The country was obsessed with the 27% figure it had a hold as firm as 1916 or 1798 (Chnoc Foidh na gCaor). It was widely believed that farmers were holding the Gov’t up for ransom and that as soon as the stranglehold was broken the country would prosper. As it turned out Ireland entered the EU and farm subsidies flowed freely from then on.

    The public attitude to unsavoury political and business practices are about the same in Italy and Ireland. Berlusconi owns a big chunk of popular TV broadcasting and uses it for political advantage. In addition he is known as business friendly. In practical terms he preaches and practices low taxes are good, no taxes are better in addition to reducing regulation of business. He has to be elected in order to escape being tried or jailed. Even business people can hold their noses as they vote for low taxes and less regulation.

    He is not admired so much as barely tolerated. We understand that feeling in Ireland since a lot of us experience it.

    As me blessed sainted mother used to say you have to take people on balance as most of them have redeeming features. The other side of her was displayed when she described the punishment that some public figures deserved as “Shootin’ would be too good for dem feckers, slow hangin’ would be much better”. Women in Kerry do not pussy foot around.

  48. How do economic ideas spread?

    Were Sarah and I watching the contagious spreading of a new consensus, or we at the enjoyable but disconcerting formation of the border of a dissensus? A medium length but very readable read.

    paul quigley to tug at his beret and consider?

    “Consensus, Dissensus and Economic Ideas: The Rise and Fall of Keynesianism During the Economic Crisis”

    Henry Farrell, George Washington University
    John Quiggin, University of Queensland

    “We provide a better understanding of the circumstances (a) under which economic experts influence each other so as to promote consensus or dissensus and (b) under which their ideas have political influence. For the first, we treat the process of reaching `apparent consensus’ (the qualif cation is crucial) as a contagion process occurring across a social network. When all or nearly all individuals across the relevant network of experts have been infected by a given idea of set of ideas, such that they either favor these ideas or do not publicly oppose them, we may say that apparent consensus has been reached. When the network is not saturated by a given idea or set of ideas, but instead is characterized by warring contagions which have captured di fferent parts of the network, we may say that there is dissensus rather than apparent consensus.”

    http://www.henryfarrell.net/Keynes.pdf

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