Ken Rogoff has just shown how out of touch he is with reality and basic standards of professional accountability, as demonstrated in an interview published in the Frankfuerter Allgemeine, which is best thought of as a center-right New York Times. He’s come as close as Serious People do to foaming at the mouth, accusing those who criticized the discovery of errors in a widely cited austerity-supporting paper he wrote with Carmen Reinhart as being on a “witch hunt” and engaging in an “orchestrated attack…as in the 1950s under McCarthy.”
In the annals of over-the-top displays of a persecution complex, this ranks with billionaire Steve Schwarzman remark on an effort to close a tax loophole that benefitted him: ““It’s like when Hitler invaded Poland in 1939.” But as we’ll see later, this is far from the first time that Rogoff has made vitriolic charges when he’s run out of arguments, but this may be first time he’s had them published in such a high-circulation venue.
Recall the contretemps: Carmen Reinhart and Kenneth Rogoff published a 2010 paper, Growth in the Time of Debt, which based on data from 44 countries that growth levels went negative once government debt to GDP ratios rose over 90%. This article was taken up eagerly by the pro-austerity crowd as definitive proof of the dangers of too much borrowing.
Yet a number of economists tried replicating the Reinhart-Rogoff results for years, with no success. Reinhart and Rogoff refused to share their underlying computations. Five years later, now that the Reinhart/Rogoff work is widely accepted as true, they finally sent their “working spreadsheet” to a graduate student at the UMass Amherst, Thomas Herndon. He found data omissions, Excel errors, and questionable data weightings. A paper authored by Herndon with Michael Ash and Robert Pollin, Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff, created a sensation, which was hardly surprising given the policy impact of the original paper and how extensive the mistakes were.
Dean Baker described the high human cost of the Reinhardt and Rogoff’s snake oil:
This is a big deal because politicians around the world have used this finding from R&R to justify austerity measures that have slowed growth and raised unemployment. In the United States many politicians have pointed to R&R’s work as justification for deficit reduction even though the economy is far below full employment by any reasonable measure. In Europe, R&R’s work and its derivatives have been used to justify austerity policies that have pushed the unemployment rate over 10 percent for the euro zone as a whole and above 20 percent in Greece and Spain. In other words, this is a mistake that has had enormous consequences.
And Reinhart and Rogoff’s responses have been, um, unpersuasive. They tried an initial rebuttal which verged on cringe-making. Even Paul Krugman, who had been striving hard to give Reinhart and Rogoff the benefit of the doubt, called it “really, really bad“. They then went to the New York Times op-ed page and didn’t have much more success. The thrusts of their argument were that other studies had come up with similar results, they can’t be blamed if eager conservatives claimed that their finding of a correlation meant causation, and really, they had never meant to suggest 90% debt to GDP was a big scary threshold.
John Cassidy, writing in the New Yorker, found the reply to be disingenuous, that they had used their paper to argue for the danger of debt and urge deficit cutting, and had not corrected prominent politicians, like the UK’s George Osborne, who had cited their work as justification for spending cuts. He concluded:
In the debate between the Keynesians and the Hooverites, they were clearly on the side of the latter. Trying to rewrite history won’t alter that.
Similarly, Matt Yglesias eviscerated the New York times piece:
But the fact is that this isn’t just some sad case of conservative politicians running around mischaracterizing a sober-minded study and then liberals overreacting in response. Ken Rogoff was writing op-eds drawing strong policy conclusions from this paper. He was delivering congressional testimony drawing strong policy conclusions from this paper. And it’s not as if he’s some political naif who stumbled down from the ivory tower into a partisan controversy he could never have predicted. He was research director at the International Monetary Fund and he knows how the game is played. He’s signed up as a paid speaker for the Washington Speakers Bureau. His “fees vary based on event location” but they promise that in exchange for your money “Kenneth Rogoff reaches beyond the theoretical and delivers quantitative proof from his frequently cited research and best-selling book to explain why our financial history continues to repeat itself-and just where the US and global economies are heading.”
But of course their is no quantitative proof. In a sense there never was, but the University of Massachusetts counter-paper helped expose how little quantitative proof was there. Now under attack Reinhart & Rogoff are retreating to much softer, much milder, much more defensible claims. And good for them. But that shows how much credit their critics deserve.
So what does Rogoff do? Grant an interview in the country that is the most enthusiastic practitioner of austerity voodoo, and ups the ante by branding his critics as partisan hacks (key parts translated in bold):
“A witch hunt” — Kenneth Rogoff over his Excel Mistake
“Eine Hexenjagd” – Kenneth Rogoff über seinen Excel-Fehler
Kenneth Rogoff hat gezeigt, wie schädlich Staatsschulden sind. Dann wurde ihm ein Excel-Fehler vorgeworfen. Jetzt verteidigt er sich: Die Geschichte sei ein orchestrierter Angriff von linken Bloggern gewesen, “wie in den 50ern unter McCarthy”.
He now defends himself: The story is an orchestrated attack from left bloggers,” as in the the 50s under McCarthy.”
Er hatte die intellektuelle Grundlage für die Sparpolitik in den Krisenstaaten gelegt: Kenneth Rogoff. Gemeinsam mit seiner Kollegin Carmen Reinhart hatte er ausgerechnet, dass Staaten mit hohen öffentlichen Schulden kräftig an Wachstum verlieren. Irgendwo oberhalb von 90 Prozent Staatsverschuldung bricht das Wachstum zusammen, so rechneten die beiden aus. Es war eine einfache Zahl, politisch gut verpackt, von einem ehemaligen Chefökonomen des Internationalen Währungsfonds – die halbe Welt glaubte ihm, sogar der deutsche Finanzminister Wolfgang Schäuble. In der Eurokrise einigten sich die Politiker auf Sparmaßnahmen, die viele Länder zu hart fanden.
Doch dann kam ein Student aus Massachusetts und entdeckte einen Excel-Fehler in den Rechnungen von Kenneth Rogoff. Er mischte noch einige eigene Einschätzungen hinein und behauptete, das Ergebnis sei falsch. Reinhart und Rogoff antworteten halbherzig – und verloren das Ansehen ihrer Ergebnisse noch schneller, als sie es gewonnen hatten. (Patrick Welter hat die Vorwürfe im Detail untersucht.)
[This section misrepresents the debate in the US and is a drive-by shooting at the UMass authors. It remarkably says that “student” found a “bug” in the spreadsheet and “mixed up his own beliefs” in the analysis. And it presents the failure of Reinhart and Rogoff to recover from the glaring natures of the mistakes by claiming that they had made only a half-hearted response. Thus the claim is that they lost the debate but really were correct]
Derweil triumphierten die Befürworter höherer Staatsschulden. Vor allem der keynesianische Nobelpreisträger und Blogger Paul Krugman, der sich selbst als links bezeichnet, griff Rogoff scharf an.
[Here Krugman is described as a Keynesian leftist blogger who attacked sharply. They do at least mention his Nobel Prize.]
Jetzt allerdings ist Rogoff in die Offensive gegangen. Er fühlt sich als Opfer einer “Hexenjagd”, sagt er in einem Interview mit dem Magazin “Capital“. „Das war keine Debatte. Das war eine haltlose persönliche Attacke, von Leuten mit einer starken politischen Agenda.” Er sieht einen orchestrierten Angriff von linken Bloggern und Lobbyisten “wie in den 50ern unter McCarthy”, der seine gesamte Arbeit diskreditieren sollte. “Es gab keinen Kampf. Das war ein Massaker.”
“That was no debate. That was an unyielding personal attack, from people with a strong political agenda,” he said in an interview with the magazine Capital. He sees an orchestrated attack from left bloggers and lobbyists, “as in the 50’s under McCarthy,” which should have discredited his whole work. “There was no battle. That was a massacre.”
“Mein Kernergebnis steht: Sehr hohe Schulden sind verbunden mit niedrigerem Wachstum”
Der Fehler sei peinlich, sagt Rogoff, aber er hätte keine große Bedeutung. Seine Gegner hätten ihn “aufgeblasen und bewusst falsch interpretiert und polemisiert”.
His opponents had “distorted and consciously falsely interpreted and polemicized his work.”
Rogoff hält noch an seinem Ergebnis fest. “Der wichtigste Punkt ist, nach der ganzen polemischen Hitze, dass mein Kernergebnis steht: Sehr hohe Schulden sind verbunden mit niedrigerem Wachstum”, sagt er. Und: “Wenn irgendjemand denkt, dass Rekordschulden in Ordnung sind, dann liegt er falsch. Die Geschichte lehrt das Gegenteil”, so Rogoff. Den europäischen Schuldenstaaten rät Rogoff immer noch zu einer schnellen Umschuldung.
Rogoff still defends his results. “The main point is, after all the polemical heat that my main result is: Very high debt is associated with lower growth,” he says. And: “If anyone thinks that record debt in order, then he is wrong. The history shows the opposite, “said Rogoff. Rogoff recommends that the European debt remains on track with rescheduling.
Now this is all remarkable tripe. First, the discovery of the error created a firestorm across the econoblogosphere that extended to the mainstream media; even sites like ars technica wrote about the Excel error. But the fact that the reaction was so fast and pronounced was hardly surprising. There have been other pitched battles among economic blogs; for instance, many aspects of the crisis were debated hotly before the crisis and during it (examples: “how much fiscal stimulus do we need” in early 2009 and the long-running argument over the health of Social Security and Medicare). So rapid dissemination and intense discussion are hardly the sign of a conspiracy; that’s how active Internet communities operate. The reaction was strong because the paper was so prominent and the authors had resisted releasing the underlying data to economists who thought the results looked wrong.
And the idea the left in America is either powerful or capable of acting in a concerted enough manner to warrant the label “orchestrated” is ludicrous. The left spends at least as much time in circular firing squads and debating who is “left” versus “liberal” versus “Vichy left” versus “progressive” versus “Democratic party hack” as it does shooting at the right. The only efforts that rise to the level of being “orchestrated” are when Team Dem rallies the usual suspects like MSNBC and MoveOn to start messaging on specific topics. I suppose no one told Rogoff that Obama and anyone with enough money to pay for serious lobbyists is already on board with the austerity project, so any criticism is by uncoordinated agents, not by the Big Faux Leftie Cabal known as the Democratic Party. And it should also be noted that Krugman’s criticisms were actually pretty mild and well argued.
But Rogoff has gone off the rails before. I strongly urge you to read a post by Bill Black that describes some of Rogoff’s past dustups. Here’s an important extract:
The original feud was most famously between Stiglitz and Rogoff. Stiglitz, who led the movement at the World Bank to throw off its support for austerity, memorably claimed that IMF was staffed with “third rate” economists. Rogoff famously blasted Stiglitz in a July 2, 2002, “open letter” (only months after Stiglitz was made a Laureate) that, inter alia, referred to him as a “loose cannon” who had “slandered” the IMF staff, slammed him for refusing to “admit to having been even slightly wrong about a major real world problem,” suggested he was so arrogant that he doubted that Paul Volcker was “really smart,” admitted that Stiglitz had a few ideas with which the IMF would “generally agree” because most of them were “old hat,” described Stiglitz’s most recent book as “long on innuendo and short on footnotes,” derided him as pretending to see himself “as a heroic whistleblower” when he was actually peddling “snake oil,” described Stiglitz views as being most analogous to Arthur Laffer’s “voodoo economics” (cleverly and deeply insulting on multiple levels), accused Stiglitz of lacking faith in markets and having faith in increasingly democratic governments (“you betray an unrelenting belief in the pervasiveness of market failures, and a staunch conviction that governments can and will make things better”), and ended with a wonderfully nasty “compliment” that compared Stiglitz to a famous scholar who suffers from often disabling mental illness (“Like your fellow Nobel Prize winner, John Nash, you have a ‘beautiful mind.’ As a policymaker, however, you were just a bit less impressive.”) To top off this list, Rogoff told Stiglitz that he should pull his book from publication because it “slandered” a senior IMF official.
But those are only the gratuitous insults that Rogoff launched at Stiglitz. His real attack was that Stiglitz had done incalculable damage to the developing world by criticizing the IMF and by opposing austerity as “battlefield medicine” for nations thrown into severe recessions.
In your role as chief economist at the World Bank, you decided to become what you see as a heroic whistleblower, speaking out against macroeconomic policies adopted during the 1990s Asian crisis that you believed to be misguided. You were 100% sure of yourself, 100% sure that your policies were absolutely the right ones. In the middle of a global wave of speculative attacks, that you yourself labeled a crisis of confidence, you fueled the panic by undermining confidence in the very institutions you were working for. Did it ever occur to you for a moment that your actions might have hurt the poor and indigent people in Asia that you care about so deeply? Do you ever lose a night’s sleep thinking that just maybe, Alan Greenspan, Larry Summers, Bob Rubin, and Stan Fischer had it right—and that your impulsive actions might have deepened the downturn or delayed—even for a day—the recovery we now see in Asia?
Recall that this was written in 2002, so the hilarity of summoning the support of Greenspan, Summers, Rubin, and Fisher for one’s financial policies was not apparent to neoclassical economists. In any event, Rogoff’s claim is that the “impulsive” Stiglitz’s criticism of the IMF during the Asian crisis endangered the economic recovery essential to “indigent people in Asia” because it could have reduced “confidence” in the IMF’s policy of imposing austerity as “battlefield medicine” for Nations that were in sharp recessions.
It’s hard to resist the impulse to consult the a DSM IV after something like that, particularly when you read Rogoff’s diatribe above in combination with his charge of McCarthyism. That’s an insult to the intelligence of anyone with even a passing familiarity with that ugly period of history. Being charged by McCarthy of Communism (or his other target, homosexuality) was often a career-ender and even led to suicides, including those of Robert La Follette and Senator Lester Hunt.
So has Rogoff suffered anything more than a well-deserved dent to his reputation and ego? He’s still a professor at Harvard. He still gets interviewed by top newspapers. I highly doubt the Big Faux Leftie Cabal has managed to deny him media or op-ed slots. Perhaps his speaking fees have fallen off a tad as a result of bad press clips?
It reveals quite a lot about Rogoff’s sense of proportion to see him on about McCarthyism and his misguided sense of victimhood when the policies he helped legitimate produce outcomes like hospitals in Greece running short of medicine and having to reuse sheets, or the exodus of 13% of the population of Latvia to find work, or as many as 146 million Europeans falling into poverty by 2025?
What brought the end of McCarthy’s rein of terror was when the Wisconsin senator smeared a junior member of the legal team representing the Army on national television. The lead counsel Joseph Welch upbraided McCarthy, ending with the now-famous “Have you no sense of decency, sir? At long last, have you left no sense of decency?”
The same question could just as well be posed to Rogoff.