Turns out that Robert “Bob” Pollin is one of those economists in academia who are far, far brighter and cleaner analysts than most of the better known economists in the public eye in Washington or on the book and talk show circuit. He is the man, in fact, who, tipped off by a graduate student that something was amiss in a Harvard paper that conservative deficit hawks had been waving as their proof that their fears that when government debt exceeded 90 of national GDP (Gross Domestic Product) it would so cripple growth that GDP would decline rather than grow through the year. Pollin analysed the paper and found that the two Harvard economists had done a shoddy piece of work that had left out major countries in their totals and that in fact not only was their finding quite wrong, and a deficit above 90% would not send the economy into a decline, but in fact it would have no effect at all. Growth in a typical national economy would still be an average of 2.9 per cent annually for deficit levels between 60% and 90% of GDP but would remain at 2.9% all the way to a deficit of 120% of GDP. In other words, there was no danger of impacting growth even though the deficit rose from 60% all the way to 120% of GDP.

The two Harvard economists went back to check their method and results and had to agree with Pollin that their conclusion – which had become well known because it had been loudly trumpeted by deficit hawks in Washington and the conservative media – that anything over 90 per cent would turn growth negative was quite wrong. But when he showed by reworking their data that any deficit growth over 60% to 120% would make no difference to output at all they turned nasty and starting lobbying insults and smears at this “left wing socialist” and similar and wouldn’t admit they had got their results completely wrong and published the reverse of the truth. A similar response came when the Daily Beast published his analysis and for some reason a budding journalist at the Columbia Journalism review critiqued it as hogwash or words to that effect. When challenged by Pollin to show where he had gone wrong, the critic went into hiding and was never heard from again on the topic.

Having shown up the Harvard couple as incompetent to an embarrassing extent and thus that worry about the deficit expansion after the 2008 credit collapse was groundless, Pollin, who points out the little reported fact that the deficit has almost disappeared at this point, also shows that the austerity policy pushed by conservatives and Tea Party in this country and which has taken over Britain and the EU has never been appropriate for ending recession anywhere, and that federal and state cutbacks are the big reason why four and a half years after the Crash of 2008 recover is sputtering and half hearted. It is as if politicians have learned nothing from history, Keynes and the Great Depression and all the other recessions here and around the world since.

His talk then moved to its second half – how the Federal government should expand spending again. (More TK)

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The Post-Austerity Agenda:

Towards Full Employment, Financial Stabilization & Environmental Sustainability

6:00pm, Wednesday, February 12, 2014
The New School, Wolff Conference Room

6 East 16th Street, Room 1103, New York

RSVP

The failure of austerity policies in both the United States and Europe is clear. But it’s time to move beyond documenting failure.

On February 12, Economist Robert Pollin will propose a post-austerity policy agenda that lays out a clear path to job creation and lowering the public debt – while advancing greater equality.

Robert Pollin is a distinguished professor of economics at the University of Massachusetts-Amherst and co-director of the Political Economy Research Institute (PERI). He is co-author of a recent study that debunks the notion that austerity policies can promote economic growth by starving social spending.

This event will be streamed live online on The New School’s Livestream channel.

The event will celebrate the fall issue of The New School’s
Social Research journal, “Austerity: Failed Economics but Persistent Policy.” It is cosponsored by the Center for Public Scholarship andSocial Research: An International Quarterly.

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The Schwartz Center for Economic Policy Analysis (SCEPA) is a leader in alternatives to mainstream economics. An economic policy think tank within The New School’s Department of Economics, our projects empower policy makers to create positive change. With a focus on collaboration and outreach, we provide scholars, non-profits, and government officials with original, standards-based research on key policy issues.