Shots in the Dark

While a passionate debate about the Federal Reserve’s alleged spending spree continues below—the longest back and forth on an off-topic point in the history of this blog—the story about Ken Rogoff and Carmen Reinhart’s bad math continues to fascinate—and provoke debate.

In brief: The work of the two economists, including their book This Time Is Different, has become the ideological underpinning of the austerity movement that has dominated European fiscal policy in the Crisis and buttresses the budget-cutting forces here in the US.

Only…it’s apparently fundamentally wrong.

The mistakes are in a paper Rogoff and Reinhart published in 2010 called “Growth in a Time of Debt.”* Here is the summation of the argument against it. And here is a solid NYT overview.

This from the Times:

The new paper, released this week, has set off a storm within the economics profession, with some commentators even arguing that it undermines the austerity policies that have proved so prevalent in the last few years.

“How much unemployment was caused by Reinhart and Rogoff’s arithmetic mistake?” asked Dean Baker of the left-leaning Center for Economic and Policy Research, for instance.

That’s actually not an unreasonable question to consider. I’d argue that the authors erred in good faith and there was plenty of contradictory evidence on the part of competing economists to show that deficits, not austerity, fuel growth during recessions. So…blame the policymakers, especially the conservatives, who argue for budget-cutting for ideological reasons and use economics papers to justify cutting social service programs.

But still…the question’s useful because it gets at how influential the work of economists can be, and, well, how wrong.

Rogoff and Reinhart have circled the wagons, of course—too much reputation and too many speaking/consulting fees at stake.

(In the wake of the documentary Inside Job, some—not very many—Harvard economists began disclosing what compensated work outside of Harvard they performed. So far as I can tell, Rogoff is not one of them.)

But perhaps they shouldn’t be so quick to defend themselves; they really might want to consider how many people lost their jobs because of some bad arithmetic.

* And Paul Krugman reminds me that the book and the paper are very different things.

The book had a sound empirical strategy: it focused only on extreme events, then described what happened around those events. Because of the severity of the shock, it was reasonable to infer that whatever happened around crises was in fact crisis-related, so problems of causation were sidestepped.

The paper didn’t do any of that — it just looked at simple correlations, without making any effort to untangle causation. It wasn’t worthy of the authors.

(The Brooklyn Academic of Music)

My guess: right-wing domestic terrorism. The Boston Marathon just doesn’t seem like something that Al Qaeda or a related group would consider as a devastating target. No—I think it’s a Timothy McVeigh-type, like the person/people who has/have been killing prosecutors in Texas.

Obviously, I base this on no information at all. Just years of growing concern about the crucible of a black president, gun control, gay marriage, immigration reform and a bunch of gun-toting nuts.

My bias, obviously. We’ll see.

“Maybe the admissions standards aren’t what they used to be.”

—One of my college roommates, on Yale’s national championship in hockey.

Don’t get me wrong, we’re perfectly happy to have won. Boola-boola, et al. But still…you have to wonder.

Gawker reports that…

Sex workers in Silicon Valley have begun catering to their tech-savvy, incredibly wealthy clients by accepting payments through “Square” (those little boxes that attach to iPads that your favorite coffee shop uses).…

(Actually, CNN reported the original story, Gawker just aggregated it.)

Summers, you’ll remember, joined the board of Square last summer.

So before anyone gets upset, of course this doesn’t make Larry Summers a pimp. It’s not as if he’s pushing women to sell their bodies. Although he is getting a cut when they do. It’s an interesting question—if your legal business facilitates an illegal one, and you profit from the illegal one, and have taken no discernible steps to curtail it, are you complicit in illegality?

Here is another interesting question for some Harvard classroom: Morally speaking, is this better, worse, or no different than making money by sitting on the board of LendingClub.com, a company which issues online loans to credit-starved consumers and boasts that its interest rate is lower than credit cards’, or working as a consultant for a hedge fund, which he did before and after joining the Obama administration? (That whirring sound you hear is the noise of a door quickly revolving.)

It costs a lot to get rich…

They turn a triple play against the Orioles….

My apologies for that; I do have an excuse. Sarah, Griffin and I made a major life change this week, officially selling our apartment in Brooklyn and moving into a home in Pleasantville, New York, about 40 minutes from Manhattan. We’re in a very particular part of Pleasantville—a community called Usonia, which was created by Frank Lloyd Wright in the 1940s. It’s a fascinating place, 47 homes—three of which were designed by Wright, the rest by Wright devotees—on about 100 acres. The homes are classic Wright: minimalist, tucked into the landscape, facing away from the street. One neighbor two houses down has been here since 1951.

I loved Brooklyn and my time there, and I’ll admit to some trepidation about leaving its energy and culture, as well as its proximity to some good friends. But there are many good reasons to make this change. Since Griffin’s birth in March 2012, we’d really outgrown our apartment at 1 Hanson Place. We have his school situation to think about, and likely wouldn’t be in a position to pay $40, 000 to $50, 000 for K-9 at a Brooklyn private school. And of course the Fort Greene area where we lived is changing rapidly. The addition of the (very) nearby Barclays Center has generally been a positive thing for the neighborhood, but it has upped the level of street traffic and pedestrian congestion considerably. Two huge buildings are under construction or about to be within three blocks of 1 Hanson, and that will add to the concentration of people in the area. I never worried much about safety, but you hear stories: a week or so ago there was some sort of teenage mob at a local park where we often brought Griffin to swing on the swing set. Not great.

So we have now spent two nights in the country; the first, I could not sleep because of the quiet. Last night was better. This is the first weekend. It’s exciting and a little nerve-wracking at the same time. But it is nice to be sitting here at a dining room table—which used to be pressed against a kitchen counter because there was not room to separate it—looking out the 11 (!) windows in our dining room (dining room!) and seeing grass and trees…and hearing nothing. Not a single police car or ambulance or fire truck.

Even when it’s good, change can be a bit sad, though. As I once wrote on this blog, when in the mornings I would take Griffin from his crib, I would walk him to the window and remind him, “It’s a happy morning in Brooklyn.” We would look out at the view—from 23 stories, that remarkable view!—at Brooklyn unfolding beneath us, stretching out towards New York Harbor and Staten Island, Ellis Island, Governor’s Island, the Statue of Liberty. “Look at the cars!” I would say to Griffin. “The people! The buildings! Look at the boats and the planes!” In the weeks before we left, Griffin had learned to climb up onto the chairs in front of our windows, then onto the windowsill and look for himself. When I would move to take him down—for a little boy can’t stand on a narrow windowsill, certainly not one 23 stories high, you worry even when the window isn’t open—he would sometimes start to cry. He loved that view.

My son spent his first year in that apartment; there were a lot of happy mornings in Brooklyn. Even with all the happy mornings that lie ahead of us, I will miss them. But I’m fascinated to be here in this historic place. I don’t yet know what the view is like, but I’m excited to find out, and I’ll keep you posted as I do.

I’d live to give a couple of shout-outs to two friends of mine for works of creativity and courage.

First is my friend Greg Widen, a screenwriter who’s written films such as Highlander, The Prophecy and Backdraft—all smart and fun movies. I saw Highlander in a small town in France back in 1986, long before I knew Greg, and enjoyed it immensely.

Greg has just published his first novel, a thriller called Blood Makes Noise, which tells an improbable (but based on truth) story of mystery and murder and the corpse of Eva Peron. I’ve read it; it’s fantastic, a smart and literary historical page-turner. If there’s any justice in the book world, Blood Makes Noise should sell a million copies. Here’s hoping you buy one of them.

The second person I’d like to give a shout-out to is John McKinney, the Republican minority leader in the Connecticut state assembly. John grew up down the street from me in Fairfield; we went to school together through eight grade, and then also at Yale. John’s father, Stuart McKinney, was our congressman, a Republican moderate like the kind you rarely see any more—economically conservative (and not like the Eric Cantors of the modern world) and socially fair-minded. He died in 1987 in a way that was very sad and deeply unexpected, but which his family handled with remarkable dignity and grace.

Maybe the humanity of that event in his life has served John, whose district includes Newtown, well. But in any case, John has been instrumental in putting together the package of gun control legislation justsigned into law by Connecticut governor Daniel Malloy.

Connecticut’s new gun control measures include background checks for all gun sales, a dangerous offenders registry and a ban on the sale or purchase of magazines holding more than ten rounds of bullets. Connecticut may now have the strongest gun laws in the country, and John had a lot to do with that.

Different kinds of risks and courage for these two friends, of course—creative and political. But in their own fields, they both took some big chances. In both cases, the outcome is terrific.

I will agree with Standing Eagle on one point: As much as I believe it’s important to point out the mendacity of those at the heart of Harvard’s e-spionage, there is a larger theme here that’s worth bearing in mind. It is the ongoing tension between corporate and academic values at American universities, particularly Harvard—and all the evidence that corporate values are inexorably winning that battle.

In this case, the specific principles in conflict are freedom of speech versus the right of a corporation to know about and control what its employees say—particularly when the tools of communication are underwritten by the corporation.

Especially insidious in this case is the fact that the two avatars of corporate interests are people who are supposed to represent academic interests: the dean of Harvard College and the dean of the Faculty of Arts and Sciences. Can you imagine Jeremy Knowles, a passionate defender of his constituency, poking into email like an East German bureaucrat with a letter opener?

When even academia’s designated defenders have internalized corporate values—not just committing e-spionage but then, in all likelihood, lying about it—the faculty must do more than protest. It must realize what the stakes are and work not just to articulate its values, but codify them. Through their overreaching, deans Smith and Hammonds have made the corporate interest vulnerable. The faculty must take advantage of this temporary retreat to get its interests written into policy.

Especially because it can not count on the woman at the top—who is now streaming “news” from the Harvard Gazette on her website—to stand for it…

On her blog, Plan B Nation, lawyer and writer Amy Gutman talks about seeing Sheryl Sandberg at the Coolidge Corner Theater in Brookline last Thursday.

She raises two great points.

First is the mixed messages that Sandberg herself sends—and seems incapable of not sending.

First was The Dress, a form-fitting lit­tle black num­ber, at first glance unre­mark­able in this era of Cor­po­rate Alpha Female 2.0, where sex­u­al­ity is proudly fea­tured rather than downplayed—unremarkable, that is, until she turned her back and dis­closed a gold-toned zip­per run­ning from top to bot­tom. …For me, this took the out­fit from Seen This Before, to WTF. It seemed to be demand­ing some sort of response, though I’ve yet to fig­ure out just what.

I’ve noted this about Sandberg, too—that for someone talking about how women can be more professional and more successful, she sexes it up in a way that, I think, undermines her message. Why? Vanity, I’d guess—looking good matters more to her than consistency. Which is her choice, but it makes me distrust the messenger.

Second, and more important, is the argument that leaning-in is a fatuous concept that ultimately puts the onus of change on the individual, rather than on corporations that resist it, and codifies none of this change into law or policy.

Women with full-time jobs and out­side lives have very lim­ited band­width. Here’s my, admit­tedly pes­simistic, prog­nos­ti­ca­tion: The con­ver­sa­tion about lean­ing in will slowly but surely sup­plant talk about on-site child care, work/life bal­ance, and other “fam­ily friendly” poli­cies….

I can’t help but think that Lean In offers a fem­i­nism tailor-made for our New Economy—one where the pri­mary ben­e­fi­cia­ries are com­pa­nies, not women. Through the magic of Lean In, women’s ini­tia­tive costs – poof! – trans­form into cor­po­rate prof­its.

I think that’s exactly right. Leaning-in is a wonderful thing for companies, which is why so many of them have signed on to Sandberg’s womanifesto. It asks nothing of them except the encouragement of women who want to work harder. It’s as if Lean In was secretly ghostwritten by Frederick WInslow Taylor.

But for Sheryl Sandberg, it doesn’t matter. She’s accomplished her primary goal: Creating a high-profile platform to advance her own career. What a missed opportunity to do something serious.

(Which comes from the New York Times, by the way.)

It’s not that Yankee pitcher Hideki Kuroda is on the verge of getting shellacked/injured by the Boston Red Sox.

It’s that it’s the first or second inning of the Yankees’ second home game (Kuroda was gone before the 3rd) against arch-rival Boston…and there are tons of empty seats behind the third-base dugout.

For us Yankee fans, this is going to be a long season…..