Austerity shown to be a sham
"An engineer, a chemist, and an economist are stranded on a deserted island.
They are starving, when miraculously they find a box filled with canned food.
What to do? They consider the problem, bringing their collective lifetimes of
study and discipline to the task.
Being the practical, straightforward sort, the engineer suggests that they
simply find a rock and hit the cans until they break open.
“No, no!” cry the chemist and economist, “we would spill too much food and the
birds would get it!”
After a bit of thought, the chemist recommends that they start a fire and heat
the cans. The pressure in the cans will force them open and the food
will conveniently already be heated. But the engineer and economist object,
pointing out correctly that the cans would likely explode and splatter
the food all over the beach.
The economist, after carefully studying the cans and reading the labels, starts
scrawling a series of equations in the sand, which eventually cover the entire
After much pondering, he excitedly announces, “I’ve got it! I’ve got it!” as he
points to the final equation. They ask him to explain, with their visions of
a meal causing them to regard the economist with a new sense of respect.
The economist clears his throat and begins, “First, assume a can opener …”
And that reflects the work of Professor Carmen Reinhart and the former chief economist of the International Monetary Fund, Ken Rogoff as reported here
"Herndon and his professors found other issues with Growth in a Time of Debt, which had an even bigger impact on the famous result. The first was the fact that for some countries, some data was missing altogether.
Reinhart and Rogoff say that they were assembling the data series bit by bit, and at the time they presented the paper for the American Economic Association conference, good quality data on post-war Canada, Australia and New Zealand simply weren't available. Nevertheless, the omission made a substantial difference.
Thomas and his supervisors also didn't like the way that Reinhart and Rogoff averaged their data. They say one bad year for a small country like New Zealand, was blown out of proportion because it was given the same weight as, for example, the UK's nearly 20 years with high public debt. "
AND the real shame is ""I don't think jobs were destroyed because of this but it provides an intellectual rationalisation for things that affect how people think about the world," says Daniel Hamermesh, professor of economics at Royal Holloway, University of London.
"And how people think about the world, ESPECIALLY POLITICIANS, eventually affects how the world works."