For most people -- arguably even for most economists -- all that mattered was the knowledge that countries with debt over 90 percent of GDP tend to have slower growth than countries with debt below 90 percent of GDP. Simple and clear. Everyone who received that message recognised it for what it was. In the cloudy consciousness of humble non-statisticians, it was a vital warning on debt issued by two cautious and meticulous researchers - Reinhart and Rogoff.
Public availability of that knowledge exerted pressure upon policymakers to recognise adequately the risks of large debt. The Reinhart-Rogoff data planted seeds of caution in the minds of policymakers under ideological siege from Keynesians clamouring for additional public debit and deficit spending during slow growth.
The discovery of a relatively insignificant “coding error” in the Reinhart-Rogoff data analysis aroused the Keynesian ‘Fourth International’ wolves. They seized on it as a sign of weakness, they circled, and they struck with lighting speed, salivating, and snarling feigned outrage.
Armed with the ‘coding error’ these Debt ‘n’ Deficit Defenders sought to undermine warnings about dangerous debt-to-growth correlations. Joseph Schumpeter may have been the first to notice that a natural constituency of the Keynesians are the anti-capitalist ivory tower intellectuals. This gives the Keynesians great influence in mass media and the academy, and, by extension, a disproportionate hold over public opinion. Luckily, key policymakers, politicians, and central bank chiefs were not fully swept up by Keynesian passion. Chaps like Krugman are angry about that. Right thinking people, however, will feel justifiably aggrieved that pseudo-scandalising about Reinhart-Rogoff data absorbed so much time and energy, so much scarce ‘public space’.