Study Debunking Austerity Research Sparks Wide Reaction

The Real News Network has a follow-up, Study Debunking Austerity Research Sparks Wide Reaction, to the previous post, Who Benefits from Austerity?

POLLIN: Yeah, I mean, it’s not like policymakers are calling me up and saying, I’ve changed my position. So I’m just following it in the press like anybody can.

There’s been some interesting stories. One is Erskine Bowles, who was the cochair of the deficit reduction commission appointed by President Obama, who was reported in the press as saying, yes, he heard about our study, he knows the results, he understands that this pillar of his approach with Reinhart and Rogoff has been refuted. But that doesn’t change his thinking at all, because he knows intuitively that when you have a lot of debt, it’s bad. So that was his reaction.

One of the amusing ones was a report in a British paper that said the British chancellor, George Osborne, who is the architect of austerity policies in Great Britain, was seen crying at Margaret Thatcher’s funeral. But the article said, well, we know the real reason why George Osborne is crying: because his sainted Reinhart and Rogoff paper has now been refuted, and so the main pillar of his austerity policies has now melted away.

And then the third example, in a blog that was written over the weekend by Professor John Taylor of Stanford, who is a leading austerity hawk, I would say equal to Reinhart and Rogoff—and we’ve talked about John Taylor before in our discussions. And he said in this thing he wrote over the weekend that our results have already led to changes in policy at the IMF–World Bank meetings last week and at the G20 meetings and in the U.S. that the case for austerity is now getting attacked and is weaker. So that’s from three pretty reliable sources.

If I hadn’t read the book How We Decide by Jonah Lehrer, I might be surprised at how resistant our preconceived notions are to the facts. The book explains how we first conclude how we feel about an issue, and then we look for facts to support our conclusion (and ignore facts that do not support the conclusion).

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