Carmen Reinhart has written yet another defense of the discredited study that she and fellow Harvard economist Kenneth Rogoff wrote. This one takes the form of an open letter to Paul Krugman, one of her harshest critics in academia. She says that it was not their fault if policymakers misread their statements about the impact of debt reaching 90% of GDP and arrived at an alarming conclusion that resulted in them pursuing the debt-reduction austerity programs that have caused such hardship around the world.
What Reinhart and Rogoff are doing is the ‘academic two-step’, writing things in such a way that it seems to imply one thing while at the same time inserting caveats in case things turn out differently. Then as long as things are going your way, you don’t mention the caveats, but if you start to take a beating, shift to the other foot and haul them out as defenses.
Krugman counters with a short piece that essentially says that she is doing the academic two-step.
There is, as everyone in this debate has acknowledged, a negative correlation in the data between debt and growth. As a result, draw a line at any point — 80 percent, 90 percent, whatever — and countries with debt above that level will tend to have slower growth than countries with debt below that level.
There is, however, an enormous difference between the statement “countries with debt over 90 percent of GDP tend to have slower growth than countries with debt below 90 percent of GDP” and the statement “growth drops off sharply when debt exceeds 90 percent of GDP”. The former statement is true; the latter isn’t. Yet R&R have repeatedly blurred that distinction, and have continued to do so in recent writings.
Another economist Brad DeLong looks closely at the correlation between debt and growth rates and shows how there is no cliff at the 90% mark but how Reinhart and Rogoff encouraged policymakers to think there was.
The academic two-step is unfortunately not an uncommon practice. It was on clear display in The Bell Curve and more recently in the Jason Richwine affair when the authors encouraged readers to draw all manner of sweeping conclusions about the relationships between IQ and race and success in life, while burying the caveats as insurance policies in case they were taken to task, as indeed happened.