Month in Review – April 2013

An Iraqi emigre is trying to restore an ancient swampland that was drained (destroyed) by Saddam Hussein. After single-handedly planting a 1,360 acre forest, in what was previously barren land in north east India over the course of the last three decades, Jadav Payeng announced that he would like to dedicate the next thirty years of his life to creating another forest.

A disproportionate number of American males between the ages of 28 and 38 are (and have always been) in love with Winnie Cooper. Roger Ebert passed away and many Americans learned that in spite of constantly hearing about his erect thumb, he was visceral (and funny) in his negative film reviews. This is a composite image of all 57 girlfriends that Jerry had during the nine seasons of Seinfeld.

Andrea Gjestvang was named the photographer of the year at the 2013 Sony World Photography Award for her work on the survivors of the shooting massacre on Utoeya Island, just outside of Oslo two summers ago. In South Carolina, a wallet was returned to its owner, 23 years after it was stolen.

A scholar at the University of Chicago thinks that the world would be a better place if there were no borders and people could move and live anywhere they wanted to. A Canadian scientist claims that eating boogers may be good for you. Parents in Berlin were upset and felt that their children’s first grade sex-ed book was too explicit. A dog in San Francisco can balance many things.

The Ambassador of the Czech Republic to the United States reminded Americans that the Czech Republic is not ChechnyaHow different would the national response have been had the Tsarnaevs used guns instead of bombs? Paranoia over the “outsider” is not new in America. At the annual White House Correspondent’s Dinner, an older and grayer President Obama joked  “I’m not the strapping young Muslim Socialist I used to be”.

The most prominent academic paper supporting the economic merits of fiscal austerity has been shown to contain crucial errors and omissionsPolice in Dubai now have Lamborghini and Ferrari police cars in their fleet. A man dressed as Spiderman stole a bag containing more than $6,000 in cash in Hollywood. An 80-year-old woman accidentally swallowed a $5,000 diamond at a charity event in Florida.

A man in California has discovered an almost perfectly preserved 14-year-old McDonald’s hamburger in his closet and has, so far, rejected bids of more than $2,000 to buy the burger, claiming that he wishes to hold on to it, for educational purposes. 


But Austerity Perseveres

R&R did not create austerity – discrediting them will not kill it.

If you’ve been reading about the Rogoff and Reinhart incident this week, most everyone outside of the right wing press is claiming that the austerity argument has now been proven false. If only it were that simple. When Paul Krugman (probably the fiercest critic of austerity on this side of the Atlantic) wrote about R&R last week, he closed his column by saying the following:

“So will toppling Reinhart-Rogoff from its pedestal change anything? I’d like to think so. But I predict that the usual suspects will just find another dubious piece of economic analysis to canonize, and the depression will go on and on.”

Essentially, if it wasn’t R&R, proponents of austerity would have found some other paper by some other economist to back their claims. And most folks on the right are admitting that Excel error or not, debt kills economic growth (just a lot less than we thought it would).

Bob Samuelson committed probably one of the most egregious false equivalences in recent years in his column by referring to the fall-out over the paper a “dispute”, in which one side says X and the other says Y – as though X had not already been proven to be factually inaccurate and misleading.

So what now? For once, we seem to have a good set of economic data that millions of people around the world are familiar with. When debt approaches GDP, growth slows down to about 2%. That’s not great, but borrowing money is always painful. Taking a mortgage prevents you from accessing liquid capital in the short-run, but it is often a sound long-term investment.

Peggy Noonan made the mistake in the Wall Street Journal this week of basically making Obama’ argument for him, by claiming that the jobs crisis is much worse than the debt crisis. The Republican Party will likely pivot soon and start blaming the President for not doing enough for jobs, months and years after they blocked any and all legislative efforts to do something about jobs.

This is the Republican game – don’t let facts get in the way of your agenda. Excel errors do not matter. There are scores of other economists who are willing to stand in for R&R and defend the merits of austerity. While it’s true that Herndon’s work at UMass has exposed bad research and briefly given progressives, and Keynesians, and basically everyone other than right wing fiscal conservatives something to cheer about, I’d be surprised if politicians remember this a month from now. I’m a bit surprised that the coverage over an Excel error in an academic paper has lasted a week already.

Austerity Stumbles

It’s not often that an academic paper makes the headlines. Researchers and professors typically write on obscure topics that are read, if they’re lucky, years later, by a handful of graduate students who are working on their own obscure and imminent-to-be-ignored academic works. Ken Rogoff and Carmen Reinhart were superstars in this respect.

The Rogoff-Reinhart paper, entitled “Growth in a Time of Debt”, was the stuff of legend. Policymakers around the world referenced it when making the case for budget cuts and austerity measures, arguing that running budget deficits would cripple economic growth. In particular, they claimed that when debt crosses the threshold of 90% of GDP, national economies would begin to shrink.

The United States has already crossed that threshold (we’re beyond 100% actually), but our economy continues to grow. It’s growing at a flimsy rate and in a way that does not benefit the country as a whole, but grow it does.

Enter UMass Amhert economics grad student, Thomas Herndon, who did what nobody else did (yeah – the paper was not peer reviewed) and looked over the numbers used by Rogoff and Reinhart (check out the interview between Herndon and Stephen Colbert). It seems R&R forgot to include 5 countries (Australia, Austria, Belgium, Canada, and Denmark) in their final analysis. If you include these countries, economic growth crawls along at about 2%, which is to say that they somehow omitted the countries that maintained high growth in spite of high debt. It turns out the R&R committed a simple Excel spreadsheet error (visual approximation below). Unfortunately, this error led to the false conclusions that were used as ammunition to sell austerity measures all over the world! RandR Excel error

This is all very embarrassing for R&R and those who cited their paper, but if you think this means much in term of policy, think again. John Maynard Keynes once wrote:

“The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist.”

Although I respect Keynes, I think we’d disagree on the extent to which economists and their ideas are pawns of politicians. I’ll tell you why tomorrow.

Guilty As Charged

My apologies to the Arab women who were almost tempted by my handsomeness. I’ll think twice next time.

Many of you may be wondering where I have been these past two weeks. Mr Cyriac is not one to abandon his blog without a good reason. Since Miss Dodson was out of town, I thought it would be a good opportunity to head to Saudi Arabia to check out a cultural festival – don’t ask which one.

To my surprise, the authorities were quick to kick me out of the festival and the country. My crime? Being too handsome. The independent Arab newspaper Alaph reported:

“A festival official said the three Emiratis were taken out on the grounds they are too handsome and that the Commission members feared female visitors could fall for them,”

The Police stormed the booth that my associates and I were operating (selling pickled mangos if you must know). Now you may be wondering how this could possibly have been me since all the news reports say the men were from the UAE. Yet another detestable act of profiling – the minute the Saudi officials learned that I was born in Kerala, they sent the three of us on the first plane to Dubai figuring that any Malayalee in the Gulf region must be from there.

If this were the first time I were kicked out of an Arab country for being too handsome, I could almost understand – just a misunderstanding – let bygones be bygones. Let it be known that henceforth, Mr Cyriac will be once again blogging regularly and avoiding any and all cultural festivities in Saudi Arabia. To my readers and the women of Saudi Arabia, I’m sorry.

And one more thing. The pickle stand was operated by four people actually. Our female business partner was permitted to stay. Apparently, her beauty (seen below) was not a problem for the Saudi government.Niqab

Read more about it in the National Post, Deccan Chronicle, and of course, GQ.

The Backlash Against Google

More good April fool’s pranks, but the pesky bad press surrounding Google’s decision to discontinue Reader refuses to go away. 

Google’s unofficial corporate motto is “don’t be evil”. And since the company’s founding 15 years ago, it has managed to maintain a public image of being an anti-establishment good-guy. Given its success it was only a matter of time before the company became too big and was considered an out of touch one-trick behemoth pony – much like Microsoft.

The reaction to Google’s famous string of April fool’s pranks closely mirrors the public’s (dis)contentment with the company. In years past, we all marveled and laughed at the company’s fake new products which included the likes of Gmail Motion.

And 8-bit Google Maps for Nintendo. 

This year, although the pranks themselves weren’t all that different, the reactions were. Continue reading “The Backlash Against Google”