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View Diary: Has economics found its Andrew Wakefield? (37 comments)

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  •  Seems to me (4+ / 0-)
    Recommended by:
    IADave, happymisanthropy, radarlady, caul

    that whatever truth there is to R&R is due to getting the causal link backwards- when growth declines, revenues fall off the table and governments have to use debt to continue operations. This doesn't seem like a helpful observation.

    Small varmints, if you will.

    by aztecraingod on Wed May 01, 2013 at 02:08:38 PM PDT

    •  There is more to it than a problem with (1+ / 0-)
      Recommended by:
      radical simplicity

      confusing cause and correlation, and anyone who knows anything about economic history (if only economic history of the U.S.) could have spotted a glaring error immediately upon reading R-R's paper.  Krugman makes the point best:

      What happened with R-R was that they came out with a sloppy paper that played to the spirit of the times. The sloppiness was immediately obvious from the way they highlighted slow US growth in the late 1940s as an illustration of the price of debt overhang, somehow missing the point about postwar demobilization. It took only a few days for critics to point out the correlation versus causation issue too.
      But by that time it was too late for the co-authors to backtrack on their paper's conclusions, as they immediately became the darlings of deficit hawks, austerians and proponents of "starve the beast."
      Now, that was the point where R-R should have said, OK, we’ve been careless here, we need to rethink this, and backed off. But the paper was also a huge immediate hit with the austerians, and they got sucked in.

      Notice, however, that the problem with the original wasn’t that it failed to convey the nuances. The problem was that it was just plain wrong — wrong about America after the war, wrong about what a debt-growth correlation means. (It turns out that there was other wrongness too, but that was enough).

      "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

      by SueDe on Thu May 02, 2013 at 07:00:04 PM PDT

      [ Parent ]

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