This week the internet is enamored with Thomas Herndon, the UMass Amherst economics doctoral student who reviewed original data from a paper frequently referenced by economists in support of the global austerity movement. The original paper, published by Carmen Reinhart and Kenneth Rogoff, both of Harvard, analyzes data on public debt and economic growth and argues that high debt levels stifles economic development. After finding an incorrenctly formulated cell in the raw data, Herndon proves their hypothesis false and their argument on its head.
Herndon chose the Reinhart and Rogoff article for his assignment "because it has been one of the most politically influential economic papers of the last decade." Economic theory is inherently political. It conceptually manipulates material goods and resources and considers the possible consequences of those manipulations. But when put into practice by politicians, economic theories seriously affect individuals' livelihoods as well as the power structures controlling the means of production and other hegemonic institutions. The austerity measures taken in the UK and throughout the European Union, not to mention the spending cuts proposed by the American right, have real consequences for the working people of those nations.
I would like to applaud Herndon, though, for keeping the political responsibilities of academics at the forefront of his studies. The ivory tower is no longer a desired method for creating knowledge. Scholarly research should be activist in nature and political in intent. We should also be continuously questioning ourselves, our peers, and the most prestigious in our disciplines. This free exchange of ideas accelerates the pursuit of knowledge exponentially more than a rigid heirarchy of tenured, publishing professors and plebeian research assistants.
Roose's article makes the point that despite the defeat of this specific argument, politics is unlikely to be as affected as academia. Austerity measures will not be rolled back with the publication of this paper. Besides being a convenient ideological buttress, the argument is also good for private business. And besides, when it comes to the actual consequences of Keynesian economic theory, opponents have regularly ignored the facts. By providing government demand during times of low economic activity, the economy is kickstarted into an upwards cycle. Once the economy starts to grow, the government can turn to collecting revenue from the booming private market. This has been proven over and over again, and Herndon's re-analysis of the data also confirms this theory. Instead, neoliberal political tenets stress the individual responsibility of nations to balance budgets and pay back debts, forcing weakened governments to tighten their belts at the exact time their economy needs government stimulus. If only international economic policy were more closely in sync with rigorous intellectual inquiry.
Also, kudos to Thomas. Way to get your name out there and give the rest of us hope that recognition is just around the corner.