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The Drumbeat of Half-baked Theories

Monday 17 June 2013

Date 2013/4/24 15:40:00

William PFAFF

Paris, April 24, 2013 – The blood runs cold when one fully appreciates how vulnerable official policymakers and the Western policy community are to slogans and to magical thinking. The Reinhart-Rogoff case is the latest, and certainly will not be the last, in which the credulity and carelessness of experts wreak havoc among ordinary people — in this case, ordinary people by the millions.

The Reinhart-Rogoff error was initially rumor but in the past week has become a scandal. Professors Carmen Reinhart and the former chief economist of the International Monetary Fund, Ken Rogoff, presented in 2010 a research paper which seemed to demonstrate that in a crisis of the kind which the western world is experiencing, when the debt of a country goes above 90% of the country’s gross domestic product, economic growth falls precipitously, or may even regress.

Ah ha!, the economic and governmental policy community in the U.S. and Europe cried! Here’s just what we need! The method to end the debt crisis responsible for the great slump! All we have to do is to starve all the indebted societies, cut government services, eliminate workers, and soon investor confidence will be restored and the crisis will end in a way that vindicates currently dominant economic theory, validates the Chicago School and Reaganism and Thatcherism, and shows the world that economic science always has the answer.

Nobody seems to have checked the Reinhart-Rogoff paper, since it was what governments, politicians and academic economists wanted to hear. The Republican party’s star economist, Paul Ryan, and Olli Rehn, European Commissioner for economic and monetary affairs, both cited it to support their austerity policies, providing the justification for slashing infrastructure and social spending in the US, Western Europe and elsewhere.

Then another professor, at the University of Massachusetts Amherst, gave his students the exercise of reproducing the results of some current economics paper. Graduate student Thomas Herndon chose the Reinhart-Rogoff thesis. But he couldn’t make it work out. Others students tried. Then their professor, Michael Ash, also tried and failed. The professor went to author Ken Rogoff for an explanation. The latter pluckily (or ingenuously) sent the original spreadsheet and documentation. They revealed questionable errors of averaging data, and showed that the authors had left out of the averages five of the twenty countries supposedly being analyzed.

According to BBC News, Reinhart and Rogoff have declined to comment but sent a message thanking Mr. Herndon for having given so much attention to their work and “pointing out an important correction.” They said they would correct the error, and will “redouble” their efforts to avoid such errors in the future. Meanwhile, Greece sees political disorder and crisis; the Irish and Portuguese economies have collapsed. Spain and Italy suffer profound distress. The French government totters; everyone hates the Germans for forcing austerity on everyone else; and the euro may be abandoned and the EU collapse. (“Well,” the expert bitterly says at Harvard, “I told you we should have checked those numbers.”)

I am not writing this simply to pile onto the economists who so casually have put the western world into this mess. I am concerned at this demonstration of the credulity or legerity of policy professionals who accept such propositions even when they seem self-evidently too good to be true, or even when they defy common sense.

In the latter respect there is Marxism itself, which so entranced so much of the European and subsequently Asian (and much of the American) intellectual worlds when it was proposed as a “science” of history. It was, of course, in no sense a science, even as science was understood at the time of the Communist Manifesto in 1848 and of Marx’s major theoretical work, Capital, in 1867.

It was the Bolshevik Revolution that made Marxism famous, but revolution had not followed the course Marxist “science” predicted, since it foresaw worldwide revolution conducted by the industrial working class, which hardly existed in rural Russia, and existed not at all in China – scene of the second of the two great Marxist revolutions. Peasant armies defeated the White and European interventionist armies in Russia after 1918, and under Maoist command peasant revolutionaries defeated Chiang Kai-Shek in China, and later stalemated American armies in Korea.

All one can say about Marxism’s role is that in both places it supplied what might be called a moral message of predicted revolutionary victory which was a motivational factor in those revolutions. That may have been crucial, but Communist doctrine was false.

Moving to our own times, the United States has been spending itself in Southeast Asian wars, and then Middle Eastern and South Asian wars, because of two spurious theories. The first was the domino theory of Asian Communism’s potential for launching worldwide revolution, which American officials and advisors believed had to be thwarted whatever the cost. The current political fantasy behind American policy is the notion launched by Samuel Huntington of a “clash of civilizations” about to break out between Islamic civilization and the West.

This was seized upon by the George W. Bush administration and neo-conservative forces in the U.S. to justify the Iraq and Afghanistan wars, when American had merely been attacked by a small band of religious extremists. Washington’s reckless response eventually convinced a huge audience in the Islamic world that the U.S. today is really waging such a war. Just last week one of the young accused perpetrators of the Boston Marathon bombings was quoted as having said long before the event that the U.S. was “at war” with Islam and had to be stopped. Thus does the contemporary world march to the drumbeat of half-baked theories.

© Copyright 2013 by Tribune Media Services International. All Rights Reserved.

This article comes from William PFAFF

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