Robert Pollin, co-director of the Political Economy Research Institute (PERI) and professor of economics, appeared on The Real News Network to discuss the low minimum wage of the U.S., which, when adjusted for inflation, is lower in 2013 than it was in 1968. Pollin also postulated that, if you corrected the minimum wage for both inflation and increased worker productivity, it should be closer to $25 per hour; the current federal minimum wage is $7.25 per hour.
In an interview on The Real News Network, Professor Robert Pollin states that a lack of national policies aimed at achieving full employment, including stronger minimum wage laws- not the presence of immigrants- is the cause of high unemployment.
UMass Amherst Department of Economics Professor James K. Boyce discusses why GDP is not necessarily a good economic indicator in an interview on The Real News Network.
UMass Amherst Department of Economics professors and researchers at the Political Economy Research Institute (PERI), Michael Ash and James Boyce, release the fifth edition of Toxic 100 Air Polluters, an index ranking corporations by the pollutants they release, the toxicity of those releases, and the number of people exposed.
Robert Pollin, UMass Amherst professor of economics and co-founder of the Political Economy Research Institute (PERI), was interviewed by The Real News Network regarding the U.S. minimum wage and youth without jobs.
The minimum wage in the country right now, at $7.25 an hour, is about $3 an hour–more than $3 an hour below what it actually was in 1968 in this country. In 1968 in this country, the minimum wage, after we properly adjust for inflation, was $10.65 an hour. That means in 1968–let’s take a young girl in Texas walking into her job at McDonald’s on the first day. Legally she would have to have been paid $10.65 an hour. That’s in 1968. So the proposal by Congressman Alan Grayson is basically just to bring the United States minimum wage today back to where it was in 1968.
A new study by UMass Amherst Department of Economics Graduate Student Thomas Herndon and Professors Michael Ash and Robert Pollin refutes the Reinhart and Rogoff analysis that underpins austerity policy around the world; shows no relation between debt and lack of growth. Watch The Real News Network interview with Ash and Herndon.
The following comment appeared in the April 17, 2013 print edition of the Financial Times. It is available online at http://www.ft.com/intl/cms/s/0/9e5107f8-a75c-11e2-9fbe-00144feabdc0.html#axzz2Qk3zV4ww.
Austerity after Reinhart and Rogoff
Robert Pollin and Michael Ash
In 2010, two Harvard economists published an academic paper that spoke to the world’s biggest policy question: should we cut public spending to control the deficit or use the state to rekindle economic growth? Growth in a Time of Debt by Carmen Reinhart and Kenneth Rogoff has served as an important intellectual bulwark in support of austerity policies in the US and Europe. It has been cited by politicians ranging from Paul Ryan, the US congressman, to George Osborne, the UK chancellor. But we have shown that several critical findings advanced in this paper are wrong. So do we need to rethink austerity economics more broadly?
Their research is best known for its result that, across a broad range of countries and periods, economic growth declines dramatically when a country’s level of public debt exceeds 90 per cent of gross domestic product. In their work with a sample of 20 advanced economies in the postwar period, they report that average annual GDP growth ranges between about 3 per cent and 4 per cent when the ratio of public debt to GDP is below 90 per cent. But it collapses to -0.1 per cent when the ratio rises above a 90 per cent threshold.
In a new working paper, co-authored with Thomas Herndon, we found that these results were based on data errors and unsupportable statistical techniques. For example, because of miscalculation and unconventional methods of averaging data, a one-year experience in New Zealand in 1951, during which economic growth was -7.6 per cent and the public debt level was high, ends up exerting a big influence on their overall findings.
When we performed accurate recalculations, we found that, when countries’ debt-to-GDP ratio exceeds 90 per cent, average growth is 2.2 per cent, not -0.1 per cent. We also found that the relationship between growth and public debt varies widely over time and between countries.
So what does this mean? Consider a situation in which a country is approaching the threshold of a 90 per cent public debt-to-GDP ratio. It is not accurate to assume that these countries are reaching a danger point where growth is likely to decline precipitously.
Rather, our evidence shows that a country’s growth may be somewhat slower once it moves past the 90 per cent public level. But we cannot count on this being true under all, or even most, circumstances. Are we considering the US demobilisation after the second world war or New Zealand during a severe one-year recession? One needs to ask these and similar questions, including whether slow growth was the cause or consequence of higher public debt.
What of our present circumstances? Using the Reinhart/Rogoff data, we found that the average GDP growth rate for countries carrying public debt levels greater than 90 per cent of GDP was either comparable to or higher than those for countries whose debt ratios ranged between 30 per cent and 90 per cent.
Of course, one could say that these were special circumstances due to the 2007-2009 financial collapse and Great Recession. Yet that is exactly the point. When the US and Europe were hit by the financial crisis, and subsequent collapse of private wealth and spending, deficit-financed government spending was the most effective tool for injecting demand back into the economy. The increases in deficits and debt were indeed large in these years. But this was a consequence of the crisis and a policy tool for moving economies out of the recession. The debt was not the cause of the growth collapse.
The case for austerity has never relied entirely on Prof Reinhart and Prof Rogoff. But the other major claims made recently by austerity hawks have also not held up well. Austerity supporters circa 2009-2010 consistently argued, frequently in this newspaper, that the large US deficits would lead to dangerously high inflation and interest rates. Neither prediction came true. In fact, both inflation and interest rates on treasuries were at historic lows in the four years, 2009-2012, during which deficits were at their peak.
It is also untrue to say that the large deficits have created an unsustainable burden on the US public finances. In fact, since 2009, the US government’s interest payments on debt have been at historically low levels, not historic highs, despite the government’s rising level of indebtedness. This is precisely because the US Treasury has been able to borrow at low rates throughout these high deficit years.
We are not suggesting that governments should borrow and spend profligately. But judicious deficit spending remains the single most effective tool we have to fight against mass unemployment caused by
severe recessions. Recent research by Prof Reinhart and Prof Rogoff, along with all related arguments by austerity proponents, does nothing to contradict this fundamental point.
The writers are professors of economics at the University of Massachusetts Amherst.
On April 15, UMass Amherst Economics Department Graduate Student Thomas Herndon and Professors Michael Ash and Robert Pollin published a working paper titled, Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff. In the paper the authors examine Reinhart and Rogoff’s research on the relationship between public debt and GDP growth for advanced economies in the post-World War II period. Reinhart and Rogoff argue that the rate of economic growth for these countries has consistently declined precipitously once the level of government debt exceeds 90 percent of the country’s GDP. In recent years, Reinhart and Rogoff’s results have been highly influential as support for austerity policies in both Europe and the United States.
Herndon, Ash and Pollin find that a series of data errors and unsupportable statistical techniques led to an inaccurate representation of the actual relationship between public debt levels and GDP growth. They find that when properly calculated, average GDP growth for advanced economies at public debt-to-GDP ratios over 90 percent is not dramatically different than when debt-to-GDP ratios are lower.
Almost immediately the Herndon, Ash, Pollin findings went viral with lots of social media buzz on Twitter and Facebook. The story has garnered extensive national and international coverage. Below is a list of media coverage to date.
New York Times, 5/22/13
A Keynesian Victory, but Austerity Stands Firm
Socialist Worker, 5/22/13
The end of austerity?
New York Times, 5/21/13
Sharing Abuse Fairly
The New American, 5/21/13
If This Is the End of “Austerity,” When Did Austerity Begin?
All Africa, 5/20/13
Nigeria: Why Country Needs Expansionary Macroeconomic Policies
Business World, 5/18/13
Ultra Mega Data and Their Pitfalls
Daily Star, 5/18/13
Economists aren’t humble, so don’t believe everything they say
The Reporter, 5/18/13
What use are economists?
New York Times, 5/17/13
Europe’s Economics Chief Tries to Peel Off ‘Mr. Austerity’ Label
The Christian Science Monitor, 5/17/13
EU austerity hawks shrug off criticism of flawed academic paper
Orlando Sentinel, 5/17/13
‘I know it when I see it’
Jamaica Gleaner, 5/17/13
Fake Deficit Hawks As Ideological Austerity-Pushers
Oman Tribune, 5/1/13
Errors mar influential economic study on austerity
Huffington Post, 4/30/13
2 More Grad Students Claim To Find Another Flaw In Reinhart-Rogoff Research
UMass economists take on Harvard
The Wall Street Journal, 4/30/13
The Reinhart and Rogoff Distraction
The Economics Earthquake
The New Yorker, 4/29/13
The Rogoff and Reinhart Controversy: A Summing Up
New York Magazine, 4/29/13
How the Media Broke Up With Austerity
New York Times, 4/29/13
Debt and Growth – A Response to Reinhart and Rogoff
UMass Thomas Herndon shines light on austerity and ‘Growth in a Time of Debt’
The Washington Post, 4/28/13
The economist whodunit
Editorial: UMass posts win over Harvard in most esoteric arena
Hindu Business Line, 4/28/13
Research blues in social sciences
The Spectator, 4/27/13
Reinhart and Rogoff’s faulty spreadsheet doesn’t destroy the case for austerity
The Sydney Morning Herald, 4/27/13
Austerity slips out of fashion amid growing recession risk
Financial Post, 4/25/13
Despite Rogoff/Reinhart data scandal, high debt still a problem
The Globe and Mail, 4/25/13
A simple data error, and Europe’s austerity pain
The Chronicle of Higher Education, 4/24/13
‘They Said at First They Hand’t Made a Spreadsheet Error, When They Had’
The Cap Times, 4/24/13
John Nichols: Paul Ryan’s austerity agenda is based on serious mistake
The Washington Post, 4/24/13
The Reinhart/Rogoff Brawl
Colbert turns austerity movement into punch line
National Review, 4/24/13
A Flawed Landmark
The Irish Times, 4/24/13
Economics: Austerity loses an article of faith
Raw Story, 4/24/13
Colbert takes on UMass ‘Poindexter’ who debunked pro-austerity study
Chicago Tribune, 4/23/13
Half-baked theories continue to direct global history
The Wall Street Journal, 4/23/13
The Doctoral Student Who ‘Happed’ Reinhart and Rogoff
The Washington Post, 4/23/13
Austerity doctrine exposed as flimfam
The Colbert Report, 4/23/13
Austerity’s Spreadsheet Error
The Mermaid’s Tale, 4/23/13
A lesson on lessening, from economics
The Hindu, 4/23/13
Beware the nostrums of economists
The Real News Network, 4/23/13
28-year old PhD student debunks the most influential austerity study
European Austerity Yields Meager Results In 2012
Spectrum IEEE, 4/22/13
IT Hiccups of the Week: Excel Spreadsheet Error Heard Around the World
Brisbane Times, 4/22/13
Austerity on trial as debate reignites
Business Insider, 4/22/13
Herndon Responds to Reinhart and Rogoff
More Or Less, Austerity: A Spreadsheet Error?
CNN International, 4/21/13
Graduate student: Didn’t take long to find errors in prominent pro-austerity study
The Independent [Ireland], 4/21/13
In theory and in practice, austerity fails
The Independent [UK], 4/21/13
Osborne should choose his guides more carefully
Financial Times, 4/21/13
Perils of placing faith in a thin theory
Sydney Morning Herald, 4/20/13
The consequences of dodgy data
An economist’s mea culpa: I relied on Reinhart and Rogoff
When wonks burn politicians
The Economist, 4/20/13
The 90% Question
Finance Chiefs Endorse Cuts as Reinhart-Rogoff Challenged
New York Magazine, 4/18/13
Grad Student Who Shook Global Austerity Movement
European austerity programmes based on Excel error?
The Fiscal Times, 4/18/13
Drama over Rogoff-Reinhart Paper Changes Nothing… and Everything
The Courier Mail, 4/18/13
EDITORIAL: Debt can be a powerful tool
The Business Times, 4/18/13
Key study on austerity may be flawed
Seeking Alpha, 4/18/13
Chart of The Day, Reverse-Causality Edition
The Guardian, 4/18/13
Making a comedy of errors: a serious story you may have missed
The Telegraph, 4/18/13
Debunking austerity claims makes no difference to Europe’s monks and zealots
The Economist, 4/18/13
The ivory fortress
Austerity justification study ‘inaccurate’
Despite Flaws, Harvard Economists Stand By Research
FAQ: Reinhart, Rogoff, and the Excel Error That Changed History
New York Magazine, 4/18/13
Meet the 28-Year-Old Grad Student Who Just Shook the Global Austerity Movement
How a student took on two big Harvard economists. And won.
Slate MoneyBox blog, 4/18/13
Arin Dube Demolishes Reinhart/Rogoff Causal Argument
Harvard Business Review, 4/17/13
Reinhart, Rogoff, and How the Macroeconomic Sausage Is Made
Huffington Post, 4/17/13
Reinhart And Rogoff Pushed Partisan Austerity Argument, Now Claim Academic Neutrality
The League of Ordinary Gentlemen, 4/17/13
Reinhart and Rogoff Don’t Matter
Media Matters, 4/17/13
Major Errors Undermine Key Argument For Austerity Frequently Cited By Media
War of Ideas blog, 4/17/13
Reinhart Rogoff redux
Albany Business Review, 4/17/13
Study used to justify budget cuts may contain errors
Boston Business Journal, 4/17/13
Three UMass Profs. expose flaw in Harvard research that underpinned austerity
The Independent, 4/17/13
Harvard economists admit errors in austerity blueprint paper
Investor’s Business Daily, 4/17/13
Debt Study Flawed; Debt Crisis Still Remains
Reinhart and Rogoff’s defense is misleading and here’s why
Mother Jones, 4/17/13
Should We Be Afraid of Debt Levels Above 30%
Reinhart and Rogoff’s second, longer response to critique
Counterparties: R-squared regression analysis
The Guardian, 4/17/13
Rogoff and Reinhart defend their numbers
Why justifying austerity just got harder
CBC News, 4/17/13
Key pro-austerity study based on incorrect math
The Maddow Blog, 4/17/13
Republican response required to Reinhart/Rogoff
The New Yorker, 4/17/13
The Crumbling Case for Austerity Economics
Why the Argument for Austerity Took a Big Hit Yesterday
The Wall Street Journal, 4/17/13
Reinhart, Rogoff Admit Excel Mistake, Reubt Other Critiques
The Washington Post, 4/17/13
Whoops! Turns out debt doesn’t ruin economies
Financial Times, 4/17/13
Austerity after Reinhart and Rogoff
Guest Post: Reinhart/Rogoff and Growth in a Time Before Debt
Slate MoneyBox blog, 4/17/13
Further Thoughts on Reinhart and Rogoff
Boston Herald, 4/17/13
Harvard deficit paper disputed
Financial Times, 4/17/13
Harvard duo defend case for austerity
The Telegraph, 4/17/13
This time is different – thanks to data manipulation
Don’t worry, Prof Rogoff – to err is what makes us human
Row erupts over study into public debt as economists turn on Rogoff and Reinhart
Key research on austerity by Ken Rogoff and Carmen Reinhart ‘contains serious errors’
7 Data Disasters More Embarassing Than Reinhart and Rogoff’s
Reinhart and Rogoff Never Made a Good Case for Austerity
Reinhart-Rogoff on Debt and Growth: Fake but Accurate?
Reinhart-Rogoff Acknowledge Mistake in 2010 Paper Cited by Ryan
Reinhart-Rogoff Paper Cited by Ryan Faulted by UMass Economists
Finfacts Ireland, 4/17/13
Top US economists accused of dodgy calculations on debt impact
Mother Jones, 4/16/13
Quote of the Day: Excel Error Destroys the World
The Daily Beast, 4/16/13
Austerity Guru Voodoo
The Dish, 4/16/13
The Austerity Typo?
UPDATE 2-Influential economic study on austerity may be flawed
Esquire The Politics Blog, 4/16/13
Math is Hard
Think Progress, 4/16/13
What The Austerity Paper’s Intellectual Collapse Tells Us About Modern Journalism
11 Republicans Who Cited a Faulty Study To Push For Drastic Spending Cuts
New Research Undermines The GOP’s Austerity Agenda
The Maddow Blog, 4/16/13
‘The Excel Error Heard Round the World’
The Atlantic, 4/16/13
The Great Debt Delusion: How Math Keeps Proving Austerity Wrong
Economists’ case for austerity attacked
Bloomberg Businessweek, 4/16/13
The Twitterverse Goes Nuts Over Economists’ Clash
GOP’s go-to economics study debunked
UMass study refutes Harvard study on federal debt ratio
Slate MoneyBox blog, 4/16/13
Is The Reinhart-Rogoff Result Based on a Simple Spreadsheet Error?
Reinhart and Rogoff Respond
The Guardian, 4/16/13
How much unemployment did Reinhart and Rogoff’s arithmetic mistake cause?
The Hill, 4/16/13
Researchers claim ‘serious errors’ in GDP study cited by deficit hawks
Huffington Post, 4/16/13
Influential Reinhart-Rogoff Pro-Austerity Research Riddled With Errors: Study
The Washington Post, 4/16/13
Austerity’s foundations continue to crumble
Is the evidence for austerity based on an Excel spreadsheet error?
Financial Times Alphaville, 4/16/13
Raining on Reinhart and Rogoff
Financial Times Money Supply, 4/16/13
Reinhart-Rogoff Initial Response
Marketwatch Markets Stream blog, 4/16/13
The spreadsheet error in Reinhart and Rogoff’s famous paper on debt sustainability
Wall Street Pit blog, 4/16/13
Austerity Research Fail
Oops! Reinhart-Rogoff Research Tripped Up by Typo
The American Prospect, 4/16/13
Reinhart and Rogoff’s Theory of Government Debt is Dead
US News & World Report, 4/16/13
How an Excel Error Helped Lead the World Into Austerity
How a Slip of the Finger Changed the Economic Policy Debate
Foreign Policy, 4/16/13
Were Reinhart and Rogoff wrong about the debt-growth connection?
On the Economy, 4/16/13
Not to Pile On, But…Correcting Reinhart and Rogoff
Lawyers, Guns & Money, 4/16/13
But Austerity Is Science!
The Globe and Mail, 4/16/13
Bad math? Reinhart-Rogoff study on perils of debt called into question
James Boyce, UMass Amherst economics professor and director of the Program on Development, Peacebuilding, and the Environment at the Political Economy Research Institute, is interviewed about the relationship between economic inequality and environmental pollution.
James Boyce, UMass Amherst Economics Professor and Director of the Program on Development, Peacebuilding and the Environment at the Political Economy Research Institute (PERI), and Manuel Pastor, Professor of Sociology and American Studies & Ethnicity and Director of the Program for Environmental and Regional Equity at the University of Southern California, have co-authored a new report which finds that a climate change mitigation strategy would positively impact the health of millions of poor and minority Americans.
The report, Cooling the Planet, Clearing the Air: Climate Policy, Carbon Pricing, and Co-Benefits, found that the same industrial facilities that emit carbon tend to generate other harmful pollutants, such as particulate matter and nitrogen oxides, that actually pose a more immediate and direct threat to the health of nearby residents. Since these facilities are typically located in or near low-income and minority communities, adding these harmful “co-pollutants” to a climate change mitigation strategy would have an almost immediate positive health impact on the health of millions of poor and minority Americans. The research showed that the benefits would be comparable in economic value to the benefits of the carbon reduction by itself.
The peer-reviewed report is the first national level study to take such a careful look at the potential to further reduce harmful air pollution as part of any strategy to lower greenhouse gas emissions and reverse climate change.