When a politician misleads the public with distorted or flat-out fictional data, or uses eight minutes of national TV time to smear the character of the careful scholar who dared to report an inconvenient set of facts, you can always count on Paul Krugman of the New York Times to leap to the defense of truth and honesty — or, alternatively, to jump on the bandwagon if the politician happens to be a Democrat.
Here, you see, is what happened this week: Salim Furth, an economist at the Heritage Foundation (and a graduate of the University of Rochester, where I knew him to be a thoughtful and honest researcher) testified before the Senate budget committee, where he presented data from the Organisation for Economic Cooperation and Development (OECD) showing that most European governments have recently increased their spending. (This isn’t surprising for several reasons, one of which is that governments often spend more in recessionary times.)
Enter Senator Sheldon Whitehouse of Rhode Island, who spent eight excruciating televised minutes lambasting Furth and questioning his honesty, by reading out OECD numbers that differed dramatically from what Furth had reported. Some choice comments:
Dr. Furth, I am very concerned about your testimony….
When I look at the graph, for instance, which you source to the OECD — did you actually look at what the OECD says?….
They’ve actually written what the numbers are. And here’s what the numbers actually are, according to the OECD….
I am concerned that your testimony to this committee has been meretricious…I am contesting whether you have given us fair and accurate information.
And then there’s another eight minutes of reading out numbers that are, Senator Whitehouse keeps reminding us actually from the OECD, as opposed to these other numbers reported by Furth, which Furth claims are from the OECD, but obviously can’t be, because Whitehouse has the actual OECD numbers right here, and look how different they are — all of this interspersed with a barrage of attacks on Furth’s character and integrity. (See the video below, if you have the stomach for it.)
Now here’s the thing: There are a couple of legitimate reasons why Furth’s and Whitehouse’s numbers don’t agree. The first is that they’re for different time periods. Furth’s are for the years 2007-2012, while Senator Whitehouse’s are for the years 2009-2016. That’s right, 2016. Which brings us to the other reason these numbers differ: Furth’s come from the historical record, while Senator Whitehouse’s come from somebody’s ass.
More precisely: The numbers Whitehouse quoted come from an OECD report on what various countries plan to do (or say they plan to do) over the next few years. Because these numbers differ from what these countries have actually done, Whitehouse wants you to believe first that Furth’s accurate account of what’s actually happened is irrelevant, and second that Furth is a liar for reporting the truth.
But surely Whitehouse realizes that he can’t actually get you to believe that, which is, I’d guess, why he didn’t bother to tell you that the numbers he was reading were largely nothing but pie-in-the-sky projections from politicians with extremely poor track records of living up to their promises.
It’s as if I’d announced plans to lose 30 pounds over the next year, and then promptly gained 10 pounds. Furth comes before Congress and says “Landsburg tells me he just gained 10 pounds”. Whitehouse says: “I can’t imagine where you got that number, because I have a number here from Landsburg that refers to a loss of 30 pounds — and that comes directly from Landsburg, who you say is your source. This makes me very concerned about your testimony, very concerned about where you’re getting these numbers…..” followed by eight minutes of innuendo suggesting that only sheer dishonesty can account for a discrepancy like this.
Well, yes, only sheer dishonesty — or perhaps an extraordinary failure of competence — can account for a discrepancy like this. But the dishonesty is not on Furth’s part.
This, then, is where Paul Krugman comes in. You know, the Paul Krugman who’s always complaining about dishonest politicians with no respect for actual data? Here’s what Paul Krugman had to say on the matter:
OK, this is really shocking: a Heritage Foundation economist has been accused of presenting false, deliberately misleading data and analysis to the Senate Budget Committee.
What’s so shocking? Not the false, misleading data and analysis — that’s SOP at Heritage …. What’s shocking is that they got called on it, in real time.
Krugman’s other big schtick lately has been about how one-sided all the dishonesty is nowadays, with 90% of it coming from Repulicans. I guess this is Democrat Krugman’s attempt to restore some balance.
Edited to add: It’s possible, of course, that Krugman simply made a rash mistake and posted before he’d realized what the facts were. That happens to everyone from time to time. But this is the same Paul Krugman who has urged us repeatedly not to give anyone else the benefit of this kind of doubt, so a decent respect for Krugman’s worldview really demands that we dismiss out of hand any temptation to cut him some slack.
What’s so shocking? This is SOP from the Democrats and Krugman.
But… Krugman won the Nobel Prize!
…and we all know that a little Nobel Prize pixie dust changes predictions into reality. PK does look somewhat like a pixie, and he even has the correct stature.
So why even give this guy the exposure that lights his fire and keeps him going?
What Krugman needs is to see a proctologist so he can have his head removed from its current location and put back on his shoulders where it belongs.
The problem with Salim Furth’s testimony was that it lumps in 2007-2009 with 2010-2012. No one denies that Europe had stimulus at the beginning of the recession. The problem is that they pulled back too soon. Larry Summers does a different analysis based on 2010-2013 and finds a different result in that same hearing. You’re right though that Krugman missed this on his first read through and should correct it and apologize to for the error.
Exactly why would he use a base line that begins in 2007 before the recession?
Daniel:
The problem with Salim Furth’s testimony was that it lumps in 2007-2009 with 2010-2012.
You could reasonably argue that. You could also reasonably argue the opposite. But you can’t reasonably argue that it was deceptive for Furth to submit (in his written testimony) a bunch of graphs with data from 2007-2012, all of which were clearly labeled “2007-2012”. And you certainly can’t reasonably insinutate that Furth must have invented these numbers, because they don’t match the (projected) numbers for 2009-2016.
Nor, I think, can you reasonably argue that those 2009-2016 numbers mean a goddam thing in the first place.
Kudos on setting the record straight on the OECD #’s and Krugman’s column. Here’s another account of Krugman’s contradictions:
http://www.cyniconomics.com/2013/05/28/reinhart-rogoff-and-krugman-square-off-again-but-are-they-arguing-about-the-right-issues/
@Landsburg, agreed, that’s why I think Krugman should apologize in this case. Not trying to defend him on this one.
Hell will freeze over before Krugman even acknowledges the mistake.
This is tangential to your main point, but if you’re making the case that few countries enacted actual austerity wouldn’t be more honest to report volume or growth in final government consumption of goods and services? If you include government budget as a percentage of GDP then you run the risk of making contractionary fiscal policy look expansionary if GDP contracts enough relative to the government budget.
Those numbers are easily accessible on OECD, and it seems Dr. Furth is making the mistake in his report of equating budget surplus = austerity. It appears austerity has occurred in Spain, UK, Greece, Ireland, etc. that have been labeled ‘austere.’
Nvm, Dr. Furth uses potential GDP and cyclically adjusted balances. Still, however, as Daniel stated, Furth lumps 2007-2009 before actual austerity policies take place.
See here: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/06/05/yes-europe-really-is-in-the-throes-of-austerity/
“Which brings us to the other reason these numbers differ: Furth’s come from the historical record, while Senator Whitehouse’s come from somebody’s ass.”
I love it!!!
2009, 2010, 2011, and 2012 are in the past. . . No projection there
hmmm: Yes, 2009, 2010, 2011 and 2012 are in the past. But nothing that happened in those years affects the total change from 2009 to 2016, which depends entirely on your 2016 projection.
Note that the WaPo’s Dylan Matthews apologized for inaccurately characterizing Furth’s testimony — while at the same time counting “2016” numbers as though they’re real.
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/06/05/yes-europe-really-is-in-the-throes-of-austerity/
Did Further have a response to the congressman?
Sorry. Autocorrect. Furth.
Imagine a senator and a Nobel prize winner on a frictionless track, slowly leaking credibility …
I’m afraid I can’t imagine the Krugman would move initially left and then rightwards forever.
@db
Actually my question was, if they drift off forever would you want to stop them?
They should be looking at more data in any case instead of just the past few years. Data from the OECD, IMF, and the US shows that typically the faster government spending grows, the slower the private economy grows (and vice versa). This article goes through the issue showing easily an easily reproduced pattern:
http://www.politicsdebunked.com/article-list/spendingpattern
It doesn’t attempt to isolate cause and effect, but it is a start, and it notes some of the difficulties in doing so (and why some flawed research on “stimulus” does too simplistic a job of attempting to do so). It makes sense to assume worst case until proven otherwise (with better studies than exist) that greater government spending is bad for the economy.
“Imagine a senator and a Nobel prize winner on a frictionless track, slowly leaking credibility …”
That’s funny! (See Ken B, I DO have sense of humor).
Unfortunately, just like the boxcar, the leaking senator and Nobel laureate will not move from their positions!
The biggest problem is that the damage is already done no matter the facts. Krugman’s extremely large NYT audience believes that they’ve just had another great gotcha moment. Krugman has a huge mic, and his reckless, irresponsible commentary damages public discourse in this country. He needs to apologize, and start doing a bit more fact-checking before blindly repeating the party line.
Politics Debunked,
The argument pushed by Keynesians isn’t that there isn’t a crowding out effect but rather that the special case of a liquidity trap negates this effect. Since liquidity traps are rare, a much more nuanced approach than the one pushed in the article you linked is warranted. Lets see what happens to Japan in the next couple of years.
Looking at the video, I’d say that Whitehouse made a simple mistake and then let outrage overwhelm civility. He can recover with a sincere apology.
Krugman, however, is beyond the pale – he brings the Nobel Prize into disrepute.
@bushwalker 27:
I don’t want to be rude but do you know the word “meretricious”? When I watch this I see demands for an explanation in writing, I hear “pretense”, a denial of “honesty”, I hear “maneuvered these numbers” and “not legitimate”. Whitehouse said they deserve and did not get “honest data”. I heard in short not a question, not a doubt, but an accusation.
As Dylan’s update properly notes – “The issue is that Furth lumps together the 2007-2010 stimulus with the 2010-13 austerity measures. It remains the case that Europe is engaged in massive austerity but the issue is one of dating, not of denominators.” This has been my understanding – that while European governments may have been engaged in some fiscal stimulus through 2009 (the US was doing the same) they have been practicing austerity since 2010. I thought this was well known. Remind me when Furth testified – wasn’t it recently? So tell me again how he was being honest before this Senate committee?
progrolib:
“The issue is that Furth lumps together the 2007-2010 stimulus with the 2010-13 austerity measures”
Oh is THAT the issue? Because I thought the issue was that he was accused of making up the numbers, not disagreeing with you about what their significance is.
But since you bring up reminders … remind me why being open, explcit, and accurate in what you are arguing is dishonest? Because it looks to me like you are trying to portray a disagreement as proof of turpitude.
Krugman’s problem is that he long ago decided to monetize his Nobel Prize. Every Nobel Prize winner in Economics has lots of opportunities to do so. Most decline. Krugman decided to convert his Nobel into the currency of political power, exercised through his platform at the Times. That meant discarding all the attributes that got him the Nobel in the first place: careful research, a scrupulous regard for details, honesty in responding to opposing arguments, and so on. That’s why there is so little respect for Krugman-the-pundit (versus the old academic Krugman) among economists these days.
@Ken B. (#30)
Since progrolib has not provided you the requested reminder, I thought I might step in and do it.
The reason Furth is being accused of dishonesty despite his accurate labeling of his data is obvious– data can be easily put together in a mischievous way that is designed to mislead but still be labeled accurately.
Furth is making the argument that austerity hasn’t really been tried and presents data from 2007-2012, which includes a period (2007-2009) that has been asserted to be one *before austerity* when *stimulus* was being applied.
Counter to this, his presentation of the data beginning at 2007 has the direct and clear implication that that’s where the austerity policies began. If it did not, then why begin the data there? Why not 2009? 2005? 2000? Those contending there was stimulus in 2007-2009 question whether any of his analysis or conclusions would hold up if he began the data in 2009. Either way, few will take the time to go into the actual raw data to see if 2007-2009 was not a time of austerity and thus should be excluded from Furth’s data. And why would they? Furth’s presentation (and labeling) gives no indication that those years are in dispute.
So if Furth’s implication about the relevance of the year 2007 in regard to austerity is false, then that results in the audience drawing an improper conclusion. Using false implications that mislead an audience to make improper conclusions that are in favor of the author is generally called “lying with statistics.” Even if everything is labeled accurately.
Note that in Huff’s classic book on the topic, he does not include “making up numbers” or inaccurate labeling in his methods for lying with statistics. That would be obvious and would not require a book to be written. In the types of lies Huff describes, numbers are not required to be made up or labeled inaccurately to qualify as a lie. For example, if one creates a “gee-whiz graph” the truncated axes will likely be labeled accurately, but it will still be considered to be purposely misleading and thus becomes an example of lying with statistics.
These are well-known principles of data presentation, but you asked for a reminder, so there it is.
Stated simply, it’s not unreasonable to conclude that:
1) If austerity policies were in place in Europe in 2007-09, then Furth did not lie.
2) If stimulus policies were in place in Europe in 2007-09, then Furth did lie. Regardless of how his data were labeled.
Note that I do not know for certain what the policies in Europe were in 2007-2009, so I’m taking no position.
The OECD report described fiscal austerity that happened from 2010 on. Quibble with the report if you will, but denying the premise that austerity actually happened in OECD countries starting in 2010 or so is ridiculous. Austerity was one of the biggest political issues of the decade, debated by economists all over the world, and was the focus of the attention of politicians in dozens of countries. The cuts in spending and tax increases are right there in the economic accounts and in legislation. It’s not something on which reasonable people disagree!
And yet here Furth comes along trying to pretend that the OECD itself, in a report that states at the outset that austerity is happening, shows that austerity is not happening. Of course it’s going to make people mad!
And how does Furth pretend that austerity isn’t happening? By using jumps in spending as a percent of GDP during the period 2007-2012, which is irrelevant! Furth is counting on the fact that gullible journalists will look at the chart and not notice that the time period covered is wrong.
The ENTIRE issue is around the fact that around 2009-2010 a bunch of governments in the OECD reduced government contributions to aggregate demand, aggravating the already depressed economic conditions. “Economists” who try to deny this by pointing to misleading data points should be excoriated.
The ENTIRE issue of the original blog post is whether Furth made up false numbers. The best choice of numbers to represent austerity or lack thereof is a different issue and open to debate. If you think the post should have been about something else then just say so.
Will the people who talk about “lumping” point out where he actually did so?
In his testimony (http://www.budget.senate.gov/democratic/index.cfm/files/serve?File_id=9ddbf627-3827-490d-a02a-d0ce25e025d2
), he seems to be using 2007 as a contrast, not to average over.
This is particularly laughable: “Counter to this, his presentation of the data beginning at 2007 has the direct and clear implication that that’s where the austerity policies began. If it did not, then why begin the data there?”
He would begin the data there because it is before the alleged austerity. If you are going to show how an event changed something, you need to look at the data before and after that event. Not after and after that event.