Debunking « Quotulatiousness

April 5, 2012

Why government stimulus is usually a bad idea

Filed under: Cancon, Economics, Government — Tags: Debt, Debunking, Stimulus — Nicholas @ 09:12

Mike Milke of the Fraser Institute:

Frum’s praise for Ottawa’s go-slow approach on balanced books is premised on the perception that if Ottawa actually cut spending (as opposed to slowing the rate of growth) such actions would endanger our prosperity: “If you reduce spending too fast, you crimp your economy,” wrote Frum.

But that’s a mistaken notion.

To use just one example from a large body of research, in 2009, leading fiscal policy expert and Harvard University professor Alberto Alesina and his colleague Silvia Ardagna reviewed stimulus initiatives in Canada and 20 other industrialized countries from 1970 to 2007. In the 91 instances where governments tried to stimulate the economy, it turned out the unsuccessful attempts generally were the ones based on increased government spending. Alesina noted that “a one percentage point higher increase in the current [government] spending-to-GDP ratio is associated with a 0.75 percentage point lower growth.”

In other words, stimulus spending doesn’t increase economic growth; it harms it.

To see how Ottawa’s own stimulus spending was unnecessary, consider how Canada emerged from the last recession and how government stimulus spending had nothing to do with it. Our recession ended in mid-2009; it was only about then that federal and provincial governments started spending extra (borrowed) stimulus cash.

To credit stimulus spending for the end to Canada’s recession, one must argue that extra (borrowed) dollars mostly spent after June 2009 somehow magically rescued the Canadian economy before June 2009.

All the borrowing did have one effect: It added to the existing large federal debt mountain, forecast to hit $614-billion in 2015, up from $457-billion in 2008.

The government’s stimulus spending was demanded by the opposition, but evidence since then indicates that the minority Tories would probably have passed a stimulus budget even if the opposition didn’t give them political cover.

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March 3, 2012

Three persistent myths about the Great Depression, the New Deal, and World War 2

Filed under: Economics, Government, History, USA — Tags: Debunking, GreatDepression, Regulation, WW2 — Nicholas @ 00:08

Historian Stephen Davies names three persistent myths about the Great Depression. Myth #1: Herbert Hoover was a laissez-faire president, and it was his lack of action that lead to an economic collapse. Davies argues that in fact, Hoover was a very interventionist president, and it was his intervening in the economy that made matters worse. Myth #2: The New Deal ended the Great Depression. Davies argues that the New Deal actually made matters worse. In other countries, the Great Depression ended much sooner and more quickly than it did in the United States. Myth #3: World War II ended the Great Depression. Davies explains that military production is not real wealth; wars destroy wealth, they do not create wealth. In fact, examination of the historical data reveals that the U.S. economy did not really start to recover until after WWII was over.

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December 2, 2011

“There is no prophecy for 2012. It is a marketing fallacy”

Filed under: Americas, History, Randomness — Tags: 2012, Archaeology, Debunking, Mexico — Nicholas @ 08:14

The BBC attempts to debunk the “2012 is the end of the world” notion that the Mayans are supposed to have predicted.

The date marks the end of one of the periods of roughly 400 years into which the Mayan calendar is divided.

Mexico’s National Institute for Anthropological History has also tried to counter speculation that the Maya predicted a catastrophic event for 2012.

Only two out of 15,000 registered Mayan texts mention the date 2012, according to the Institute, and no Mayan text predicts the end of the world.

“There is no prophecy for 2012. It is a marketing fallacy,” Erik Velasquez, etchings specialist at the National Autonomous University of Mexico, told Reuters.

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July 28, 2011

Penn and Teller talk about their new TV show

Filed under: Media, Science — Tags: Debunking, PennAndTeller, TV — Nicholas @ 12:29

Erik Amaya reports on the duo’s latest show, Penn & Teller Tell a Lie:

“We kind of forced Showtime into doing a show about science and reality,” admitted Penn Jillette, the more outspoken half of the duo. “We did get to have naked people and we did get to say profanity. I am one of the only people who does not own a motorcycle who has said ‘motherfucker’ enough.”

After referring to their new home as “The Disco Channel,” Jillette mentioned that the cable network was “more interested in science.” Unlike Bullshit, the performer hopes Tell a Lie will take a more pointed view of both science and objective reality. He then outlined the format: “We’re doing six packages, most of them [featuring] us. One of those stories will be a fake, a complete lie. [After each episode], the audience can go to discovery.com and vote on which is a lie.”

Teller clarified that segments within each episode will make certain claims. “We will claim that a single head of human hair can lift a Mustang,” he began. “We will claim that a wrecking ball can be stopped by special wallpaper. We’ll claim that you can put a person into a tank of live piranha and they will not kill him.”

“The person will be Teller,” Jillette interjected.

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April 23, 2011

QotD: The debunking problem in media

Filed under: Media, Quotations, Science — Tags: Debunking, Fraud, JunkScience, Newspapers, TV — Nicholas @ 12:23

[. . .] the second issue is how people find out about stuff. We exist in a blizzard of information, and stuff goes missing: as we saw recently, research shows that people don’t even hear about retractions of outright fraudulent work. Publishing a follow-up in the same venue that made an initial claim is one way of addressing this problem (and when the journal Science rejected the replication paper, even they said “your results would be better received and appreciated by the audience of the journal where the Daryl Bem research was published”).

The same can be said for the New York Times, who ran a nice long piece on the original precognition finding, New Scientist who covered it twice, the Guardian who joined in online, the Telegraph who wrote about it three times over, New York Magazine, and so on.

It’s hard to picture many of these outlets giving equal prominence to the new negative findings that are now emerging, in the same way that newspapers so often fail to return to a debunked scare, or a not-guilty verdict after reporting the juicy witness statements.

All the most interesting problems around information today are about structure: how to cope with the overload, and find sense in the data. For some eyecatching precognition research, this stuff probably doesn’t matter. What’s interesting is that the information architectures of medicine, academia and popular culture are all broken in the exact same way.

Ben Goldacre, “I foresee that nobody will do anything about this problem”, Bad Science, 2011-04-23

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March 4, 2011

A model of how government pension schemes work

Filed under: Economics, Government, USA — Tags: Debt, Debunking, Pensions, SocialSecurity — Nicholas @ 12:04

It’s all so immense that it’s hard to understand, so Karl Denninger reduces it to an easy-to-comprehend model:

Let’s start with the model but take it into the real world. We’ll use you and I.

You set up a business. I’m a “trustworthy guy.” You have employee who you wish to provide a pension.

So every week when you pay them, you take out $100 from their paycheck. You have 10 employees (including yourself) and you come to me with your $1,000 every week and give it to me. I take it.

But instead of sticking it in an account somewhere with your name on it (as a trustee would) I instead give you a piece of paper. It says I owe you $1,000. But it’s not a debt security. You cannot negotiate it like a check, nor can you sell it to anyone else — it’s only valid if you bring it back to me. It says so right on the face. I promise that if you bring it back I’ll give you the $1,000.

Here’s the problem — as soon as you leave I call up my 10 stripper friends and the local liquor store and throw a party. Guess what I use for the money? Your $1,000.

Now here’s the rub — I don’t have any other money. At all.

In fact, I’m in hock up to my neck. I earn $100,000 a year but I spend $170,000. And how do I do this? Well, among other things I have people like you giving me money to “save.” I also have a bunch of credit cards, and everyone thinks I’m a great guy — kind of like an uncle (just call me “Sam”) and so they keep raising my credit limit.

It’s a wonderful life, isn’t it?

Well, maybe for a while.

But there is a problem with this model. First, this isn’t a “Trust.” A Trust can hold funds for someone, and can even invest them in something, but the funds cannot be converted to the trustee’s use. They must be held segregated and not inure to the benefit of the trustee. Further, the trustee must act solely in the best interest of the beneficiaries of the trust, not their own interest. That’s black-letter law.

Then there’s the second problem — I didn’t invest the money. I blew it, and all of the rest of my money.

One day you come and ask me to redeem one of your $1,000 IOUs. I don’t have any money, but I have a cash advance available on the credit card — or at least I think I do. So I go to the local bank and pull a $1,000 cash advance, giving you ten crisp $100 bills.

Notice what just happened: As soon as you showed up, your IOU, which in fact had no legal status as debt, had to be turned into actual debt at that point in time. Now there really is $1,000 in debt out there — it’s on the credit card.

This is exactly what happened with Social Security and Medicare since Reagan’s “reform” of the systems in the 1980s. Every single Administration since has taken all the money and immediately blown it. There is no money.

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January 21, 2011

Remaking Red Dawn as a metaphor for US fear of China

Filed under: China, Economics, Media, USA — Tags: Debt, Debunking, Movies, Newspapers, Statistics — Nicholas @ 12:59

David Harsanyi notes the remake of the 1980′s movie Red Dawn with the Chinese taking the place of the original film’s Soviet and Cuban troops:

Doubtlessly, the remake will be entertaining and offer a far more plausible plot line than the original — seeing that the Chinese, well, they have a proper army. Producers will almost certainly capitalize on a growing alarmism regarding China’s growth. Few issues, in fact, can bring right and left together in this polarized world of ours than a shared knowledge that China is bad news.

Now, the American populace can typically be divided into two categories: 1. Those who don’t care one whit about foreign policy. 2. Newspaper editors.

So before Chinese President Hu Jintao was here meeting with the president, Andrew Kohut of the Pew Research Center took to the pages of The Wall Street Journal and explained what we think about the topic.

Apparently, 47 percent of those he surveyed cited China as the world’s top economic power. (Only 31 percent properly identified it as the U.S., which has an economy nearly three times the size.) Another Pew survey from last year found that 47 percent of us consider China’s growth a “bad thing” for the United States. A new CNN poll found that 58 percent of us believe that China’s “wealth and economic power” are a threat to the U.S.

I’m certain our relationship with China is layered with international complexity and fraught with danger. But why would we fear the aspects of China’s ascendancy — its “wealth and economic power” — that pose the least threat to United States? Unlike ideological clashes, economic competition can be mutually beneficial. A country with real economic wealth is typically free and doesn’t look kindly on radical behavior. Suicide bombers rarely drive top-of-the-line BMWs.

I have a long history of doubting the stated size and growth of the Chinese economy and therefore feeling that the “threat” they pose is overstated. Overall, the economic growth in China is a good thing, both for China and for the world economy, but there’s still too much malignancy from the “bad old days” of the command economy that haven’t been properly dealt with. China is big, and getting bigger, but will face severe problems the longer these historical artifacts remain unexamined and unresolved.

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January 20, 2011

In case you weren’t worried enough about the rise of China

Filed under: China, Economics, Government, Media, USA — Tags: Debt, Debunking, Newspapers, TV — Nicholas @ 16:23

The Wall Street Journal rounds up the leading indicators of the current “USA sliding down the ladder” worries:

Of all the differences between dictatorship and democracy, probably none is so overlooked as the ability of the former to project strength, and the penchant of the latter to obsess about its own weakness.

In 1957 the Soviets launched Sputnik and the U.S. went into a paroxysm of nerves about our supposed backwardness in matters ballistic. Throughout the 1980s Americans lived with “Japan as Number One” (the title of a book by Harvard professor Ezra Vogel, though the literature was extensive) and wondered whether Mitsubishi’s purchase of Rockefeller Center qualified as a threat to American sovereignty.

Now there’s China, whose President is visiting the U.S. this week amid a new bout of American hypochondria. In an op-ed last week in these pages, Andrew Kohut of the Pew Research Center noted that a plurality of Americans, 47%, are under the erroneous impression that China is the world’s leading economy. News reports regarding Chinese military strides, or the academic prowess of Shanghai high school students, contribute to Western perceptions of Chinese ascendancy. So does the false notion that Beijing’s holdings of U.S. debt amounts to a sword of Damocles over Washington’s head.

Oh, we nearly forgot: Tough-as-nails Chinese mothers are raising child prodigies (a billion of them!) while their Western counterparts indulge their kids with lessons in finger-painting.

There you go, more than enough to keep you up late tonight worrying about the inevitability of China’s rise to top economic dog in the pack. Of course, most of it is misinterpretation of the facts, but you can worry about it if you want.

H/T to Jon, my former virtual landlord, for the link.

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November 11, 2009

Why would he do this?

Filed under: Politics, USA — Tags: BarackObama, Criticism, Debunking, Paranoia, Secrecy — Nicholas @ 18:05

My best guess is for two reasons: 1) He can. 2) It drives the opposition batshit insane:

The president who campaigned for a more “open government” and “full disclosure” will not unseal his medical records, his school records, his birth records or his passport records. He will not release his Harvard records, his Columbia College records, or his Occidental College records — he will not even release his Columbia College thesis. All his legislative records from the Illinois State Senate are missing and he claims his scheduling records during those State Senate years are lost as well. In addition, no one can find his school records for the elite K-12 college prep school, Punahou School, he attended in Hawaii.

The whacky public image of the “Birthers” continues to do much damage to more rational criticism of Barack Obama’s administration. Whether there is “fire” to go along with all the breathlessly described “smoke”, it’s taking lots of attention away from the actual policies and actions of the current president, and tarring-by-association those who do criticize. That’s enough of a political win that Obama would be very foolish to do anything to calm them down by releasing these documents.