Michael Boskin’s article is riddled with mistakes. For example he claims that the 2009 stimulus costs hundreds of thousands of dollars per job created. The flaw in that argument is that stimulus costs NOTHING IN REAL TERMS. To put it crudely, if government needs to print and distribute $100 to every household to improve confidence and raise demand, that COSTS NOTHING because printing dollar bills costs next to nothing.
The flaw in that argument is that assuming government incurs debt so as implement stimulus, the central bank is very unlikely to let interest rates rise, because the CB will also realise that stimulus is needed. Ergo government borrowing WON’T thwart private sector borrowing.
Michael, You argue, as I understand you, that given excess unemployment, money or credit should be created ONLY to enable entrepreneurs to “invest in innovation”. The first problem there is that in a recession, or at least the first year or two of a recession, there is a SURPLUS of capital equipment. I.e. plenty of capital equipment lies idle. In short, concentrating on investment makes no sense.
Second, even assuming that more investment makes sense, why does that investment need to be confined to “innovation”? That is, given a need for investment, it’s a 100% certain that an awful lot of bog standard, boring and “non innovative” investment will be needed: freeways, office blocks, houses – the list is a long one.
Contrary to your claims that we should not point to Rogoff’s devious motives, what explanation is there for refusing to publish data other than a “devious motive”? And what adds substance to that charge is that Rogoff has published numerous articles which are propaganda rather than cold rational argument: articles aimed at scaring the public about the supposedly disastrous consequences of debts over 100% or so of GDP.
As to the idea that debts over the 100% level are a problem, the UK’s debt ratio was over 200% after the Napoleonic wars and again after WWII. In both cases, growth appears to have been unimpaired. So how did Rogoff deal with that awkward fact? Well as we all know, he just omitted it from his data - or to be strictly accurate he attached the same weight to the UK’s healthy 20 years of post WWII growth as he did to ONE YEAR of New Zealand’s growth (a country a tenth the size). I.e. he all but ignored the latter 20 year UK experience.
In short, Rogoff and Reinhart just fiddled the evidence.
Contrary to your claims that we should not point to Rogoff’s devious motives, what explanation is there for refusing to publish data other than a “devious motive”? And what adds substance to that charge is that Rogoff has published numerous articles which are propaganda rather than cold rational argument: articles aimed at scaring the public about the supposedly disastrous consequences of debts over 100% or so of GDP.
As to the idea that debts over the 100% level are a problem, the UK’s debt ratio was over 200% after the Napoleonic wars and again after WWII. In both cases, growth appears to have been unimpaired. So how did Rogoff deal with that awkward fact? Well as we all know, he just omitted it from his data - or to be strictly accurate he attached the same weight to the UK’s healthy 20 years of post WWII growth as he did to ONE YEAR of New Zealand’s growth (a country a tenth the size). I.e. he all but ignored the latter 20 year UK experience.
In short, Rogoff and Reinhart just fiddled the evidence.
The Debt-Growth Controversy
Michael Boskin’s article is riddled with mistakes. For example he claims that the 2009 stimulus costs hundreds of thousands of dollars per job created. The flaw in that argument is that stimulus costs NOTHING IN REAL TERMS. To put it crudely, if government needs to print and distribute $100 to every household to improve confidence and raise demand, that COSTS NOTHING because printing dollar bills costs next to nothing.
The Debt-Growth Controversy
The flaw in that argument is that assuming government incurs debt so as implement stimulus, the central bank is very unlikely to let interest rates rise, because the CB will also realise that stimulus is needed. Ergo government borrowing WON’T thwart private sector borrowing.
Reckless Caution: The Stress and Strain of Sovereign Debt
Michael, You argue, as I understand you, that given excess unemployment, money or credit should be created ONLY to enable entrepreneurs to “invest in innovation”. The first problem there is that in a recession, or at least the first year or two of a recession, there is a SURPLUS of capital equipment. I.e. plenty of capital equipment lies idle. In short, concentrating on investment makes no sense.
Second, even assuming that more investment makes sense, why does that investment need to be confined to “innovation”? That is, given a need for investment, it’s a 100% certain that an awful lot of bog standard, boring and “non innovative” investment will be needed: freeways, office blocks, houses – the list is a long one.
Open-Access Economics
Contrary to your claims that we should not point to Rogoff’s devious motives, what explanation is there for refusing to publish data other than a “devious motive”? And what adds substance to that charge is that Rogoff has published numerous articles which are propaganda rather than cold rational argument: articles aimed at scaring the public about the supposedly disastrous consequences of debts over 100% or so of GDP.
As to the idea that debts over the 100% level are a problem, the UK’s debt ratio was over 200% after the Napoleonic wars and again after WWII. In both cases, growth appears to have been unimpaired. So how did Rogoff deal with that awkward fact? Well as we all know, he just omitted it from his data - or to be strictly accurate he attached the same weight to the UK’s healthy 20 years of post WWII growth as he did to ONE YEAR of New Zealand’s growth (a country a tenth the size). I.e. he all but ignored the latter 20 year UK experience.
In short, Rogoff and Reinhart just fiddled the evidence.
Open-Access Economics
Contrary to your claims that we should not point to Rogoff’s devious motives, what explanation is there for refusing to publish data other than a “devious motive”? And what adds substance to that charge is that Rogoff has published numerous articles which are propaganda rather than cold rational argument: articles aimed at scaring the public about the supposedly disastrous consequences of debts over 100% or so of GDP.
As to the idea that debts over the 100% level are a problem, the UK’s debt ratio was over 200% after the Napoleonic wars and again after WWII. In both cases, growth appears to have been unimpaired. So how did Rogoff deal with that awkward fact? Well as we all know, he just omitted it from his data - or to be strictly accurate he attached the same weight to the UK’s healthy 20 years of post WWII growth as he did to ONE YEAR of New Zealand’s growth (a country a tenth the size). I.e. he all but ignored the latter 20 year UK experience.
In short, Rogoff and Reinhart just fiddled the evidence.