The research discrediting the Reinhart-Rogoff study is upending the economic policy discussion everywhere. Everywhere, apparently, except for HBO’s new series “Vice,” which recently featured Kenneth Rogoff as an expert on austerity.
Episode 4 of “Vice” on HBO, “Love and Rockets,” included a segment on austerity in Europe and the protest movements it has sparked. Most of the segment was “Vice” at its best: highly accessible narration, on-the-ground reporting of events as they take place and interviews with citizen-stakeholders that other shows might shy away from.
But one major flaw undermined the entire segment: “Vice” featured discredited Harvard economist Kenneth Rogoff as an expert commentator. “Vice” correspondent and founder Shane Smith introduced Rogoff as the former “chief economist of the International Monetary Fund…who’s now a Harvard Professor.” Nowhere does the show inform viewers that Rogoff is the author of a discredited study that is more responsible than any other academic paper for the austerity policies being protested in the segment. It does not even mention that his views are controversial.
For those who don’t know why this is so outrageous — why featuring Rogoff as an expert on the consequences of austerity is like presenting Thomas Friedman as an expert on the negative fallout from the Iraq War — let me explain. In 2010, Kenneth Rogoff and Carmen Reinhart authored, “Growth in a Time of Debt,” arguing, based on an examination of dozens of countries over decades, that debt becomes a drag on growth when it reaches 90 percent of GDP. The study itself did not assert that high debt necessarily caused economic stagnation, but Rogoff and Reinhart claimed as much in subsequent statements.
Rogoff and Reinhart now say that the study did not intend to prescribe certain policies. Instead, they say, politicians, especially in Europe, have mistakenly used the study to justify drastic austerity.
But time and again, the duo encouraged political leaders to interpret the study as an admonition to reduce debt. Both Rogoff and Reinhart testified about the urgency of addressing the national debt in Congress and the press on multiple occasions–and touted citations of their study by members of Congress on their site. When Senator Johnny Isakson (R-GA) asked Rogoff if reducing spending should begin that year, Rogoff said: “Absolutely. Not acting moves the risk closer. You have very few levers at this point.” A wide array of figures and institutions from Representative Paul Ryan (R-WI) to the Washington Post editorial board cited Reinhart-Rogoff to argue that austerity was a necessity, not an option.
There have been serious doubts about the meaning of Rogoff and Reinhart’s findings since they came out. For instance, Josh Bivens and John Irons of the Economic Policy Institute argued that high debt was the effect of economic stagnation, not a cause, as Rogoff and Reinhart claimed.
Then, in mid-April 2013, a new paper eviscerated the Reinhart-Rogoff study’s actual results. Thomas Herndon, Michael Ash and Robert Pollin of the University of Massachusetts-Amherst finally replicated Reinhart-Rogoff and identified three major mistakes in the paper, including a now-infamous Excel spreadsheet error. Had the study been performed properly, Herndon-Ash-Pollin concludes that the average real GDP growth rate in countries with public debt-to-GDP ratios of 90 percent over the period measured would be 2.2 percent rather than the -0.1 percent Reinhart-Rogoff estimated. In other words, there is not even a correlation between 90% debt-to-GDP and slow economic growth.
In light of this revelation, featuring Rogoff as an expert on austerity shows poor judgment. It bolsters Rogoff’s authority on a topic where his intellectual standards and judgment are in serious doubt.
You may be wondering: Rogoff’s background notwithstanding, did he actually say anything inaccurate or misleading in the “Vice” segment?
The answer is no. Rogoff did not say anything wrong per se. But his criticism of the European governments for being too tight-fisted was hypocritical. Take this gem:
They’re treading this very cautious path that involves a lot of belt-tightening. This idea: If we just wait, in a decade it may be better. I think they have been overly cautious, thinking they can just throw the weight of the adjustment on the unemployed, particularly on young people year after year after year, but it certainly provides the seeds of these more extreme views, these more extreme parties.
The same guy who told Congress that the longer the US waits to enact austerity, the worse off we’ll be, is lecturing the Europeans for engaging in “belt-tightening” too soon, and delaying stimulus too long? It is possible in theory to believe in long-term belt-tightening and short-term stimulus, but in practice, emphasis is everything. Rogoff leveraged his prestige and media presence to push for austerity and give intellectual cover for right-wing politicians. Now that both on-the-ground austerity policies and the intellectual foundations of Rogoff’s paper have blown up, he is rushing to disown his old deficit zeal and switch to the winning team. But having played such a significant role in the global push to cut spending, Rogoff’s born-again Keynesianism is just not credible.
Even if “Vice” was intent on featuring Rogoff, they should not have allowed the show to become an accessory in his plan to rehabilitate his reputation. At the very least, viewers watching the episode deserved to know that they were hearing from someone whose discredited paper was indirectly responsible for the austerity policies inspiring so much anger on screen. Although the segment was undoubtedly filmed and produced before Herndon-Ash-Pollin tore Reinhart-Rogoff to shreds, they could have added a disclaimer to the show before it aired–or provided one retroactively. In any event, Rogoff’s work was controversial enough before Herndon-Ash-Pollin that his background was worth noting then too.
Upon watching the episode, I tweeted “Vice” founder Shane Smith challenging the decision to feature Rogoff as an expert. Two weeks later, after receiving no response on Twitter, I e-mailed Vice.com’s editorial office with the same message. That was Tuesday. I still haven’t heard from them.
Although there is no evidence to suggest that HBO’s corporate brass influences “Vice”‘s editorial and production decisions, HBO executives’ professional and ideological ties to Kenneth Rogoff are worth noting, however remote they are. Richard Plepler, Co-President of HBO, serves on the advisory board of the Peter G. Peterson Foundation, the foundation of private equity billionaire Pete Peterson. Through organs like the Peter G. Peterson Foundation, Peterson has spent over $500 million promoting deficit reduction that is centered on cutting Social Security and Medicare and regressive tax reform. Plepler is apparently good friends with Peterson, and shares Peterson’s obsession with a looming debt crisis. A 2011 New York Times profile of Peterson includes this quote:
“Pete was right about the debt before it was popular,” Mr. Plepler said. “Now, he’s right when it is popular.”
Plepler may have little influence on “Vice”. But the inclusion of Rogoff, whose work has complemented Peterson’s cause, does raise the question as to how far Plepler’s–and in turn, Peterson’s–influence reaches.
“There’s this feeling that something happened and no one was punished,” Rogoff says in “Vice”, Episode 4, “Love and Rockets.” Rogoff is describing popular anger toward the big banks for their role in the financial crisis. But his words could just as easily apply to economists like himself, who provided the intellectual justification for austerity, and now pretend they were on our side all along.
If influential academics like Rogoff are not held accountable for the failure of the policies they have promoted, then they will produce shoddy, ideology-driven “studies” that cause suffering again and again with impunity. The lack of accountability for prominent intellectuals whose findings influence policy decisions is a major reason why our political system continues to fail ordinary people. Consider the ongoing credibility enjoyed by many of the same people who led us into the Iraq War based on claims that Iraq had WMDs, or economists who insisted that deregulating the financial sector would never endanger our financial system.
If “Vice” considers itself a responsible news outfit, it should not let itself become a platform for discredited economists to restore their reputations. “Vice” should correct its mistake. “Vice” must inform viewers that it omitted key information about Rogoff’s background and share the information that it left out the first time. That would be a lot more like the “Vice” I know and respect.
I explained the flaws in the Reinhart-Rogoff paper in greater detail on “Take Action News with David Shuster” a few weeks ago.