Editorial

By Brad Lowell
 A University of Massachusetts, Amherst, graduate student, recently exposed major flaws in research done by two economists which has had a significant influence on Rep. Paul Ryan and the majority of his pro-austerity colleagues in Congress.
 Ryan, chairman of the House budget committee, in his current budget proposal cites research by Carmen Reinhart and Ken Rogoff, economists at the University of Maryland and Harvard, respectively, which claims that economic growth slows dramatically anytime public debt crosses the threshold of 90 percent of gross domestic product.
 Gross Domestic Product is the market value of all goods and services produced in a country during a given amount of time. The GDP of the U.S during 2012 was $15.7 trillion with public debt standing at 82 percent of GDP.
 Painfully, for the deficit scolds, as Princeton economist Paul Krugman calls them, Thomas Herndon, the Amherst graduate student, was joined by economists Michael Ash and Robert Polin of the University of Massachusetts to critique Reinhart and Rogoff's 2010 paper.   The online critique exposed a significant number of errors in their computations.
An additional error was the simple failure of using an Excel spreadsheet correctly, according to economist Mike Konczal at the Roosevelt Institute 's Next Time New Deal blog.
 Herndon, while doing a class assignment, couldn't replicate the results reached by Reinhart and Rogoff.
 He found that correcting the errors changes the findings dramatically and increases the average GDP growth for high-debt countries from a negative 0.1 percent to 2.2 percent.
 According to a Huffington Post article‚ "The most important error found by Herndon appears to be a failure to include years of data that showed Australia, Canada and New Zealand enjoying high economic growth and high debt at the same time. Including all of the years of data boosts New Zealand's growth rate under high debt to 2.58 percent from a negative 7.6 percent, the UMass economists claim.
 Now what in the world does this have to do for anyone living in Concordia, Kansas, you might ask?
 Dean Baker of the Center for Economic and Policy Research helps explain why we should all be concerned when he wrote, "This is a mistake that has had enormous consequences. If facts mattered in economic policy debates, this should be the cause for a major reassessment of the deficit reduction policies being pursued in the United States and elsewhere.
 Krugman wrote in the New York Times Monday that, "the overriding fear driving economic policy today has been debt hysteria, fear that unless we slash spending we'll turn into Greece any day now." He points out that the  famous red line on debt in the Reinhart-Rogoff research was an artifact of dubious statistics reinforced by bad arithmetic.
Economics is a complex subject. Few people want to spend the time trying to understand it.
 It's much easier to accept the explanation that we need to manage the public money as we would the family budget and not spend more than we take in. Good advice, except during times of high unemployment when government spending is needed to help stabilize the economy and provide a safety net for the less fortunate.
 The time for us to begin worrying is when the cost of borrowing goes up. Krugman states that after years of warnings from the deficit hawks that a fiscal crisis is just around the corner, the U.S. government can still borrow at incredibly low interest rates.



OPINIONS

Letter to the Editor 4-11-14

Dear Editor, Subject: Blowing out the candle  Abortion blows out the candle of the future. Everyone with a mind and a conscience knows this.     President Lincoln's words on the slavery issue apply. “I couldn't deny to someone else what I myself desire,... [More]

More Opinions

NEWS

Commission approves tire bids

 Andy Asch, highway administrator, reported at Monday's Cloud County Commission meeting that he had reviewed the tire bids that were opened last week.  Commissioners accepted the lowest bid for each type of tire. Low bids were Becker Tire, $2,215.73; Kansasland, $27,689.22;... [More]

USD 333 board hears funding report

 A bill passed by the Kansas Legislature to increase funding for the poorer school districts in the state does offer some good news for Unified School District 333.  USD 333 superintendent of schools Bev Mortimer outlined the plan for the board of education during its... [More]

For the record 4-14-14

Police Dept. Report Arrest—At 4:55 a.m., April 11, officers responded to a disturbance call in the 700 block of West 5th and upon investigation arrested Simone Longsine, 25, Concordia, on three Cloud County Warrants for Failure to Comply. She was transferred to the Law... [More]

More News

SPORTS

Wrestlers compete for Team Kansas

The Concordia Kids Wrestling Club had six wrestlers compete for Team Kansas this past weekend. At the USA Heartland Elementary Duals in Council Bluffs, Iowa, Hunter Schroeder, 95 pounds, competed for Kansas Team 2.  He was 3-4 and placed third in his pool on Saturday, and... [More]

CCCC’s Van Zyl sets javelin record

WICHITA — Cloud County Community College freshman Reinhard Van Zyl established a new school record on his way to winning the javelin at the KT Woodman Classic this weekend. Van Zyl uncorked a winning toss of 234-11 to break the Cloud County record. It is the best throw... [More]

More Sports

Buy Photos