Austerity is justified by an error
Cory Doctorow at Boing Boing writes:
A new paper called Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff by Thomas Herndon, Michael Ash, and Robert Pollin from UMass Amherst tries and fails to replicate the classic work on austerity, Carmen Reinhart and Kenneth Rogoff's 2010 Growth in a Time of Debt.Reinhart-Rogoff is the main research cited in favor of cutting public services and spending in bad economic times. It's a big part of why the local library is shutting down, why they're kicking people out of public housing, shutting down arts programs, slashing education and public transit, and laying off public employees. It purports to show that countries with high debt-to-GDP ratios of 90 percent or more are a "threat to sustainable economic growth."Diagram above is from the original paper; open diamonds are the incorrect figures from Reinhart-Rogoff, filled circles are the correct figures. Here's the analysis from the original paper on the spreadsheet error:
In the new Amherst paper, the authors reexamine Reinhart-Rogoff's original data and conclude that the numbers don't add up. They show that Reinhart-Rogoff cherry-picked which years of high-debt GDP they measure, that they put their thumbs on the scales with "unconventional weighting" and made a "coding error" that "entirely excludes five countries, Australia, Austria, Belgium, Canada, and Denmark." This last error -- literally the wrong formula in a spreadsheet cell -- badly skews the outcome.
Here's the tl;dr: "the average real GDP growth rate for countries carrying a public debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0.1 percent as [Reinhart-Rogoff claim]."
A coding error in the RR working spreadsheet entirely excludes five countries, Australia, Austria, Belgium, Canada, and Denmark, from the analysis. (RR averaged cells in lines 30 to 44 instead of lines 30 to 49.) The omitted countries are selected alphabetically and, hence, likely randomly with respect to economic relationships. This spreadsheet error, compounded with other errors, is responsible for a -0.3 percentage-point error in RR's published average real GDP growth in the highest public debt/GDP category. It also overstates growth in the lowest public debt/GDP category (0 to 30 percent) by +0.1 percentage point and understates growth in the second public debt/GDP category (30 to 60 percent) by -0.2 percentage point.
First Libor, now ICAP: The biggest price-fixing scandal ever
Matt Taibbi at the Rolling Stone continues to uncover unconscionable behaviour by the banks coupled with failure of governments to prosecute.
Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.
You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."
That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.
Science is Vital: Increase Government R&D contribution to 0.8% GDP
We, the undersigned, urge the Government to increase its direct contribution to research and development to at least 0.8% of GDP – the G8 average.
We are asking the Government to demonstrate its long-term commitment to funding science and engineering as part of an overall strategy of innovation and training to boost growth and enable the UK to meet the social and technological challenges of the 21st Century. Committing to this target, endorsed by some of the UK's top scientists, will send a clear message to industry, potential investors and the brightest minds of the next generation that the UK will continue to be amongst the best places in the world to do research now and in the future.
In 2010, the core research budget set by the Department of Business, Innovation & Skills was ring-fenced, but frozen in cash terms. However, cuts to capital expenditure and the R&D spend of other departments, combined with the effects of inflation, have significantly eroded the overall science budget, despite the introduction of substantial additional funds targeted to specific research areas.
We call on the Government to reverse this decline and, by setting an ambitious target to increase its R&D spending, to demonstrate to citizens and investors alike its vision that science is vital for the United Kingdom.
Divestment win at UC Berkeley
Jewish Voice for Peace writes:
Last night, the President of the Associated Students of the University of California (ASUC) announced that he would not veto a UC Berkeley Student Senate resolution in favor of divestment from companies that profit from the Israeli occupation.Sad to say, I think boycott, divestment, and sanctions are becoming the best way forward.
Snoopers' Charter - Tell the Home Office to drop it from the Queen's Speech
Open Rights Group writes:
Nick Clegg and David Cameron are deciding this week whether to keep the Snoopers' Charter in May 8th's Queen's Speech. The Home Office are trying to force their revised internet and email monitoring plans into the speech without asking what anyone thinks about them first.More information on the Snooper's Charter is available from the Open Rights Group and Liberty.
In December, a Joint Committee of MPs and peers set up to scrutinise the Bill told the Home Office that they had been wrong to publish draft legislation without first consulting the public. Now it seems like the Home Office are doing their best to make the same mistake again.
Please write to the Home Office now to ask them to drop their surveillance plans. It'll just take a couple of minutes.
keynote at the Fourth Annual Scala Workshop, in Montpellier, colocated with ECOOP, ECFMA, and ECSA. I'm looking forward to an update on developments in the Scala community.
Two tributes to Kohei
Lawrence Lessig: We the People, and the Republic we must reclaim
"There are a thousand hacking at the branches of evil to one who is striking at the root."—Henry David ThoreauLawrence Lessig of Rootstrikers describes the one problem Americans must solve before we can solve any others.
There is a corruption at the heart of American politics, caused by the dependence of Congressional candidates on funding from the tiniest percentage of citizens. That's the argument at the core of this blistering talk by legal scholar Lawrence Lessig. With rapid-fire visuals, he shows how the funding process weakens the Republic in the most fundamental way, and issues a rallying bipartisan cry that will resonate with many in the U.S. and beyond.Lawrence Lessig: We the People, and the Republic we must reclaim
Lawrence Lessig has already transformed intellectual-property law with his Creative Commons innovation. Now he's focused on an even bigger problem: The US' broken political system.
Fix the CFAA, or become a racketeer
In Swartz's memory, responsible members of the US Congress proposed a new bill to fix the Computer Fraud and Abuse Act (CFAA), the legislation under which he was prosecuted. Now, the Judiciary Committee is moving to amend the bill to make it worse, not better. Violating those innumerable service agreements will now be classified as racketeering, on a par with the activities of the Mafia, entitling the government to sieze your assets as well as send you to prison. There may be a move to pass the amendment this week. If you are a US citizen, go here to learn more and send a message to your congressman. Or shortly you, me, and everyone else will be eligible for the same treatment as a mobster.