In 2010, economists Carmen Reinhart and Kenneth Rogoff released a paper, "Growth in a Time of Debt." Their "main result is that...median growth rates for countries with public debt over 90 percent of GDP are roughly one percent lower than otherwise; average (mean) growth rates are several percent lower." Countries with debt-to-GDP ratios above 90 percent have a slightly negative average growth rate, in fact.

This has been one of the most cited stats in the public debate during the Great Recession. Paul Ryan's Path to Prosperity budget states their study "found conclusive empirical evidence that [debt] exceeding 90 percent of the economy has a significant negative effect on economic growth." The Washington Post editorial board takes it as an economic consensus view, stating that "debt-to-GDP could keep rising — and stick dangerously near the 90 percent mark that economists regard as a threat to sustainable economic growth."

Is it conclusive? One response has been to argue that the causation is backwards, or that slower growth leads to higher debt-to-GDP ratios. Josh Bivens and John Irons made this case at the Economic Policy Institute. But this assumes that the data is correct. From the beginning there have been complaints that Reinhart and Rogoff weren't releasing the data for their results (e.g. Dean Baker). I knew of several people trying to replicate the results who were bumping into walls left and right - it couldn't be done.

In a new paper, "Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff," Thomas Herndon, Michael Ash, and Robert Pollin of the University of Massachusetts, Amherst successfully replicate the results. After trying to replicate the Reinhart-Rogoff results and failing, they reached out to Reinhart and Rogoff and they were willing to share their data spreadhseet. This allowed Herndon et al. to see how how Reinhart and Rogoff's data was constructed.

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/researchers-finally-replicated-reinhart-rogoff-and-there-are-serious-problems

Widening inequality is not inevitable. If we wanted to reverse it and restore middle-class prosperity, we could.

We could award tax cuts to companies that link the pay of their hourly workers to profits and productivity, and that keep the total pay of their top 5 executives within 20 times the pay of their median worker. And impose higher taxes on companies that don’t.

We could raise the minimum wage to half the average wage.

We could increase public investment in education, including early-childhood -- especially in the poor and middle-class communities that now lack decent schools.

We could eliminate college loans and allow all students to repay the cost of their higher education with a 10 percent surcharge on the first 10 years of income from full-time employment.

We could expand the Earned Income Tax Credit.

And we could pay for all this by adding additional tax brackets at the top and increasing the top marginal tax rate to what it was before 1981 – at least 70 percent.

But none of this will happen until the public understands why widening inequality is so damaging. Even the rich would do better with a smaller share of a rapidly-growing economy than a large share of one that’s barely growing at all.
https://www.facebook.com/RBReich/posts/595249310487669

As I discovered when I researched my recent book, Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, financial literacy or capability or whatever you want to call it is a bunch of hooey. It promotes the false equivalence that the victims of the financial shenanigans of the past several years are as responsible for the financial crisis as the financial services sector, the ultimate creator of all those financial products of mass destruction.

<snip>

Oh, and another thing none of these outfits thinks it worth mentioning … financial literacy, even at the most basic level, doesn't work.

Survey after survey shows that high-school students who take mandated seminars in financial literacy know no more about basic financial concepts than students who didn't study the concept at all. As a recent study on the topic put it, these classes have "no impact on credit management outcomes, including: credit scores, credit card delinquencies, or the probability of declaring bankruptcy or experiencing foreclosure."

http://www.guardian.co.uk/money/us-money-blog/2013/apr/16/personal-financial-literacy-capability

That got the attention of the federal government, and led to a raid by the Federal Bureau of Investigation. The company’s CEO insists that The Scooter Store itself wasn’t accused of fraud. Just a few weeks later, the company furloughed all employees, then permanently laid off about 1,000.

An independent audit found that the company had overbilled Medicare and Medicaid somewhere between $46.8 million and $87.7 million. The company had agreed to pay back $19.5 million. The Centers for Medicare and Medicaid Services is one of the largest creditors listed in the company’s bankruptcy petition, which details about $50 million in debt.
http://consumerist.com/2013/04/15/scooter-store-files-for-bankruptcy-after-fbi-raid-and-medicare-fraud-allegations

Every society interprets its children in its own way: The Dutch, for example, liked to talk about long attention spans and “regularity,” or routine and rest. (In the Dutch mind, asking lots of questions is a negative attribute: It means the child is too dependent.) The Spanish talked about character and sociality, the Swedes about security and happiness. And the Americans talked a lot about intelligence. Intelligence is Americans’ answer. In various studies, American parents are always seen trying to make the most of every moment—to give their children a developmental boost. From deep inside the belly of American parenthood, this is so obvious it isn’t even an observation. It is only by looking at other societies that you can see just how anomalous such a focus is.

Looking back at her research, Harkness can trace the history of how we got this way. During interviews with middle-class Boston parents in the 1980s, she and her colleagues kept hearing about the importance of “special time” or “quality time”: One-on-one time that stimulated the child and that revolved around his interests. Nearly every American parent mentioned it, she says. “It was this essential thing that all parents seemed to think they should do—and maybe they weren’t doing enough of it.”

This seems obviously reasonable. I would likely say “special time” with ironic quotation marks, but I still feel pretty much the same way those parents did. How else would a halfway-decent parent feel? But when Harkness talked to other halfway-decent parents in other cultures, even other seemingly very similar Western cultures, they were oblivious to this nagging feeling. Harkness recalls that “in the Netherlands, a father said, ‘Well, on Saturday mornings, my wife sleeps late, I get up with the kids, and I take them to recycle the bottles and cans at the supermarket.’ ” That was their special, stimulating, child-directed time: recycling bottles and cans. Asked if an activity was developmentally meaningful, the Dutch parents would brush off the question as irrelevant or even nonsensical. Why think of every activity as having a developmental purpose?

What you notice reading these accounts is how much more intensive—how much more arousing—American parenting is. Harkness has characterized it as trying “to push stimulation to the maximum without going over the edge into dysregulation of basic state control.” This is true even if you think you’re different—that you’re not like those other parents at the playground. Culture operates at a deeper level than any individual parenting choice. In a survey Harkness and her colleagues conducted of parents in Western cultures, the last question was, “What’s the most important thing you can do for your child’s development right now?” “The American parents almost to a person said, ‘Stimulation—stimulation is what my child needs.’ Interestingly, even the attachment parents, who were very adamant about being different in a lot of ways—they still gave the same answer.” And all the parents meant a very particular sort of stimulation. The parents talked about themselves in almost curatorial terms: They’d create a setting for intellectual growth. It went almost without saying that the actual stimulation came from the toys.
http://www.slate.com/blogs/how_babies_work/2013/04/10/parental_ethnotheories_and_how_parents_in_america_differ_from_parents_everywhere.html

"Much of the conservatives' letter to Priebus stresses the issue of gay rights, and challenges the logic of the Growth and Opportunity Project's advice to broaden the party's appeal. Holding the line against same-sex marriage, the letter argues, would allow Republicans to make better inroads, for instance, into more traditionally-minded corners of the African American community."

The three pitch-black blinds weren’t part of the original purchase; they cost an extra $4,500 collectively and cover a trio of modest-sized windows in the education department’s fifth-floor Downtown office. Custom made, the blinds are needed to accommodate the CISCO TelePresence TX 9000, a video conferencing system made up of three 65-inch screens that works properly only when all natural light is blocked out. The three-screen system cost the state $134,550 -- or, put another way, $11,000 more than the median value of a home in Indiana.

“This has put us between a rock and a hard place,” Galvin said, noting that it is too late to cancel the order but that using the equipment will cost taxpayers another $152,000 in annual software licensing fees. “Really, we’d prefer to not even have this stuff.”

Adding to the political drama, Bennett’s office signed the contract to buy the equipment about 18 months after his one-time chief of staff, Todd Huston, took a job as an education consultant and business development manager at CISCO. Huston, now a state lawmaker representing a Fishers-based district, continued to serve as a close political and policy adviser to Bennett while working for CISCO. In a recent interview, he said he acted as a facilitator between CISCO and Bennett’s office during the deal, but added that he earned no commission from it.

Huston defended the deal, saying it would ultimately help with professional development and allow what are essentially face-to-face meetings that would not require educators and others to drive to Indianapolis from far-flung regions of the state. Those individuals, Huston said, could travel to one of the nine regional service centers for a teleconference if the equipment is finally installed. He said the early installation hiccups will be worked out and added that the rumblings coming from the Ritz administration are a signal that “they don’t understand their job.”

http://www.indystar.com/article/20130412/NEWS08/304120048/Matthew-Tully-What-Glenda-Ritz-got-from-Tony-Bennett-1-7-million-boondoggle

The Wall Street Journal credulously reports on a new paper by Columbia B-school professor Charles Calomiris on why we have lots of banking crises while our friendly neighbors to the north don’t.

Calomiris says that we’ve had 16 systemic banking crises since 1790 while Canada has had none. Like, zero, according to the WSJ’s weirdly bad graphic:



I’m no expert on Canadian banking history, but is it true that they’ve never had a banking crisis? Calomiris himself writes that “Canadian banks, throughout their history, avoided systemic banking crises - with the exception of two short-lived suspensions of convertibility in 1837 and 1839 in response to crises originating in the United States.”

But there was also a severe financial crisis in 1907 where the government had to step into bail out banks, and ninety percent of Canadian banks were insolvent in the 1930s but held afloat by regulatory forbearance, according to Lawrence Kryzanowski and Gordon S. Roberts.
http://www.cjr.org/the_audit/populism_and_financial_crises.php?page=all

"Until recently, the media have pretty much ignored the Chained CPI, and when they have done stories about it, they’ve mostly taken the view that it’s a “technical adjustment”—a characterization NPR’s Scott Horsley allowed the White House spokesman, Jay Carney, to make, without adequately explaining that it is, in fact, more than that.

<snip>

To some extent, NPR flirted with the “greedy geezer” meme about seniors and social benefits. Right after annoucing the president’s new budget, the story reported that “there are already protests about it from seniors and others who oppose reductions in spending for Medicare and Social Security.” That seemed to convey the notion the greedy geezers weren’t about to give up anything.

<snip>

On one side was Marc Goldwein, identified as from the Committee for a Responsible Federal Budget, a group that operates with money from the Peter G. Peterson Foundation. ... The critic from the other side was Max Richtman, who heads the advocacy group the National Committee to Preserve Social Security and Medicare. Horsley summed up Richtman’s thinking, saying “if anything, he says, the current measure of inflation understates senior’s costs, especially for things like healthcare.” Richtman didn’t do much to illuminate potential problems with the Chained CPI. The story became a political piece—with Richtman saying his members want no part in such a compromise, but without making the case why the Chained CPI might not be good for many of them.

<snip>

So there you have it. Listeners in NPR-land may be as confused as ever about a change that maybe be moving beyond a Beltway story and into people’s lives. Surely NPR can do better helping them understand what the fuss is all about."
http://www.cjr.org/united_states_project/chained_cpi_missing_a_link_at.php?page=all