Austerity's Spreadsheet Error - Thomas Herndon

  • Aired:  04/23/13
  •  | Views: 116,207

Graduate student Thomas Herndon identifies little staggering omissions in a prominent academic paper, "Growth in a Time of Debt." (4:19)

( CHEERS AND APPLAUSE ).

>> Stephen: WELCOME BACK,

EVERYBODY.

THANKS SO MUCH, FOLKS.

YOU KNOW, FOLKS, BEFORE THE

COMMERCIAL BREAK, I TOLD YOU HOW

AN ACADEMIC PAPER BY HARVARD

ECONOMIST ROGOFF AND REINHART

WHICH CONSERVATIVES WORLDWIDE

ARE USING TO ARGUE FOR AUSTERITY

WAS RECENTLY REFUTED BY A U-MASS

GRAD STUDENT JUST BECAUSE IT HAD

A FEW SIMPLE SPREADSHEET ERRORS

AND A COUPLE OF LITTLE

STAGGERING OMISSIONS THAT MADE

IT SLIGHTLY FUNDAMENTALLY WRONG.

EVEN WORSE NONE OF THEIR PIE

CHARTS CONTAINED REAL PIE.

HERE TO DEFEND HIS ATTACK THE

GRAD STUDENT WHO HAS FISCAL

CONSERVATIVES' PANTIES IN AN

ECONOMIC BUNCH.

PLEASE WELCOME THOMAS HERNDON.

MR. HERNDON, THANKS SO MUCH FOR

BEING HERE.

ALL RIGHT.

FIRST OF ALL, WHY DID YOU DO

THIS?

WHO WAS BEHIND YOU?

GEORGE SOROS, NANCY PELOSI.

WHO?

WHO ASSIGNED YOU TO DO THIS?

>> ACTUALLY IT WAS MY PROFESSORS

IN MY CLASS.

IT WAS THE TERM PAPER FOR OUR

PROJECT.

WE HAD TO REPLICATE SOMEONE

ELSE'S PAPER AND LEARN ALL THE

TECHNIQUES IN IT.

>> Stephen: YOU WENT TO

REPLICATE THESE FINDINGS AND

THEN WHAT HAPPENED?

>> WELL, YOU KNOW, I TRIED TO

BUILD THE DATA MYSELF FROM ALL

THE PUBLICLY AVAILABLE SOURCES

BUT I JUST COULDN'T REPLICATE

THEIR NEGATIVE AVERAGE.

>> Stephen: DID YOU START

RECALCULATING?

>> I DID.

IT TOOK A COUPLE OF EMAILS.

THEY WERE POLITE ENOUGH TO GIVE

ME THEIR SPREADSHEET.

ONCE I GOT THE SPREADSHEET, YOU

KNOW, I WAS ABLE TO IDENTIFY THE

ERROR PRETTY QUICKLY.

>> Stephen: YES, YES.

WELL, IT WAS FINE WITH THEM FOR

YOU TO HAVE THE SPREADSHEET.

>> THEY TOLD ME THAT FEEL FREE

TO LIKE PUBLISH WHATEVER RESULTS

I HAD.

>> Stephen: THEN YOU HAD THE

BALLS TO ACTUALLY PUBLISH

WHATEVER RESULTS YOU HAD.

>> YEAH, YOU KNOW, I THOUGHT IT

WAS A REALLY IMPORTANT MESSAGE

AND REALLY UPON STORY SO I

WANTED THE PROFESSION TO HEAR

ABOUT IT.

>> Stephen: WHEN YOU FIRST SAW

THESE, YOU MUST HAVE THOUGHT

I'VE GOT TO BE WRONG.

>> THAT'S EXACTLY WHAT I

THOUGHT.

I COULDN'T REALLY BELIEVE MY

EYES.

SO I ASKED MY GIRLFRIEND WHO IS

ALSO A RESEARCHER IN SOCIOLOGY

TO LOOK AT THE SPREADSHEET WITH

ME.

>> Stephen: WHY ASK HER?

HE'S HAD A LOT OF FISCAL

TRAINING AS WELL.

SHE'S REALLY SHARP AND PAYS A

LOT OF ATTENTION TO DETAIL.

>> Stephen: DID SHE LEARN EXCEL

SPREADSHEET?

>> THAT'S PRETTY STANDARD.

Stephen: SEEMS LIKE THAT

WOULD HELP.

OKAY.

SO YOU HAVE YOUR GIRLFRIEND TO

PEER-REVIEW YOUR WORK.

AND THEN TAKE IT TO PROFESSORS.

THEY SAID, YEAH, YEAH, WE'LL

PUBLISH THIS.

HERE'S MY WORRY ABOUT YOU, YOUNG

MAN.

YOU REALIZE THAT YOU HAVE UPSET

SOME PEOPLE IN THE AUSTERITY

CROWD.

OKAY.

YOU KNOW THAT, RIGHT HAD.

>> IT'S TRUE.

Stephen: OKAY.

THESE ARE VERY IMPORTANT AND

SOMETIMES VERY POWERFUL PEOPLE

WHO ARE USING THE ARGUMENT OF

JEKYLL AND HYDE OVER THERE TO,

YOU KNOW, MAKE AUSTERITY

MEASURES ALL OVER THE WORLD.

DO YOU HAVE SOMEONE STARTING

YOUR CAR FOR YOU RIGHT NOW?

>> I'M REALLY LUCKY THAT THE

UNIVERSITY HAS HELPED ME TAKE

CARE OF ME AND SPOAR ME THROUGH

THE WHOLE MEDIA PROCESS.

THEY TAKE CARE OF ME REALLY

WELL.

>> Stephen: DO YOU THINK THAT

AUSTERITY IS THE RIGHT THING TO

DO?

>> NO.

I THINK AUSTERITY AT THIS TIME

IS LARGELY COUNTERPRODUCTIVE.

>> Stephen: BUT THEY'RE ALREADY

USING IT ALL OVER EUROPE.

THEY LOVE IT SO MUCH THAT THEY

HAVE CELEBRATIONS IN THE

STREETS.

SOMETIMES WITH FIRE AND

EVERYTHING.

>> IT'S TRUE.

ONE OF THE THINGS IS, AS I'VE

BEEN TALKING TO A LOT OF THE

MEDIA ACROSS THE WORLD THEY'VE

GIVEN ME PRETTY HEART BREAKING

STORIES ABOUT WHAT IS GOING ON

IN EUROPE.

I'VE ALSO SEEN THE EFFECTS OF IT

IN THIS COUNTRY AS WELL.

>> Stephen: RIGHT.

WE HAVE TO KEEP CUTTING THE

GOVERNMENT BUDGET AND LAYING OFF

PEOPLE UNTIL THOSE PEOPLE GET

JOBS.

>> THAT SEEM TO BE THE ARGUMENT.

Stephen: IT IS THE ARGUMENT.

IT DOESN'T SEEM PLAUSIBLE TO

ME.

I TEND TO THINK THAT IF WE LAY

OFF A LOT OF PEOPLE THEN IT'S

NOT REALLY GOOD FOR THE ECONOMY.

THEN THOSE PEOPLE CAN'T GO OUT

AND PARTICIPATE AND BUY THINGS.

THAT'S REALLY BAD FOR BUSINESSES

AS WELL.

>> Stephen: IF YOU'RE JUST GOING

TO USE COMPLICATED ECONOMIC

JARGON I CAN'T UNDERSTAND,

MR. HERNDON, THANK YOU SO MUCH

FOR JOINING ME.

HERE'S THE PAPER.

WE'LL BE RIGHT BACK.

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