Adonis Diaries

Archive for December 10th, 2016

Are you aware of your biases?

Someone who looks like me walks past you in the street. Do you think they’re a mother, a refugee or a victim of oppression?

Or do you think they’re a cardiologist, a barrister or maybe your local politician?

Do you look me up and down, wondering how hot I must get or if my husband has forced me to wear this outfit? What if I wore my scarf like this?

0:42 I can walk down the street in the exact same outfit and what the world expects of me and the way I’m treated depends on the arrangement of this piece of cloth.

But this isn’t going to be another monologue about the hijab because Lord knows, Muslim women are so much more than the piece of cloth they choose, or not, to wrap their head in. This is about looking beyond your bias.

What if I walked past you and later on you’d found out that actually I was a race car engineer, and that I designed my own race car and I ran my university’s race team, because it’s true.

What if I told you that I was actually trained as a boxer for 5 years, because that’s true, too. Would it surprise you? Why?

Ladies and gentlemen, ultimately, that surprise and the behaviors associated with it are the product of something called unconscious bias, or implicit prejudice. And that results in the ridiculously detrimental lack of diversity in our workforce, particularly in areas of influence. Hello, Australian Federal Cabinet. (Applause)

Let me just set something out from the outset: Unconscious bias is not the same as conscious discrimination. I’m not saying that in all of you, there’s a secret sexist or racist or ageist lurking within, waiting to get out. That’s not what I’m saying.

We all have our biases. They’re the filters through which we see the world around us. I’m not accusing anyone, bias is not an accusation.

Rather, it’s something that has to be identified, acknowledged and mitigated against.

Bias can be about race, it can be about gender. It can also be about class, education, disability. The fact is, we all have biases against what’s different, what’s different to our social norms.

The thing is, if we want to live in a world where the circumstances of your birth do not dictate your future and where equal opportunity is ubiquitous, then each and every one of us has a role to play in making sure unconscious bias does not determine our lives.

There’s this really famous experiment in the space of unconscious bias and that’s in the space of gender in the 1970s and 1980s.

So orchestras, back in the day, were made up mostly of dudes, up to only 5% were female.

And apparently, that was because men played it differently, presumably better, presumably.

But in 1952, The Boston Symphony Orchestra started an experiment. They started blind auditions. So rather than face-to-face auditions, you would have to play behind a screen. Now funnily enough, no immediate change was registered until they asked the audition-ers to take their shoes off before they entered the room. because the clickity-clack of the heels against the hardwood floors was enough to give the ladies away.

Now get this, there results of the audition showed that there was a 50 percent increased chance a woman would progress past the preliminary stage. And it almost tripled their chances of getting in.

What does that tell us? Well, unfortunately for the guys, men actually didn’t play differently, but there was the perception that they did. And it was that bias that was determining their outcome.

what we’re doing here is identifying and acknowledging that a bias exists.

And look, we all do it. Let me give you an example. A son and his father are in a horrible car accident. The father dies on impact and the son, who’s severely injured, is rushed to hospital. The surgeon looks at the son when they arrive and is like, “I can’t operate.” Why? “The boy is my son.” How can that be? Ladies and gentlemen, the surgeon is his mother. Now hands up — and it’s okay — but hands up if you initially assumed the surgeon was a guy?

There’s evidence that that unconscious bias exists, but we all just have to acknowledge that it’s there and then look at ways that we can move past it so that we can look at solutions.

one of the interesting things around the space of unconscious bias is the topic of quotas.

And this something that’s often brought up. And of of the criticisms is this idea of merit.

Look, I don’t want to be picked because I’m a chick, I want to be picked because I have merit, because I’m the best person for the job. It’s a sentiment that’s pretty common among female engineers that I work with and that I know. And yeah, I get it, I’ve been there.

But, if the merit idea was true, why would identical resumes, in an experiment done in 2012 by Yale, identical resumes sent out for a lab technician, why would Jennifers be deemed less competent, be less likely to be offered the job, and be paid less than Johns. The unconscious bias is there, but we just have to look at how we can move past it.

it’s interesting, there’s some research that talks about why this is the case and it’s called the merit paradox.

And in organizations — and this is kind of ironic — in organizations that talk about merit being their primary value-driver in terms of who they hire, they were more likely to hire dudes and more likely to pay the guys more because apparently merit is a masculine quality. But, hey.

you guys think you’ve got a good read on me, you kinda think you know what’s up.

Can you imagine me running one of these? Can you imagine me walking in and being like, “Hey boys, this is what’s up. This is how it’s done.” Well, I’m glad you can. (Applause) Because ladies and gentlemen, that’s my day job. And the cool thing about it is that it’s pretty entertaining. Actually, in places like Malaysia, Muslim women on rigs isn’t even comment-worthy. There are that many of them. But, it is entertaining.

I remember, I was telling one of the guys, “Hey, mate, look, I really want to learn how to surf.” And he’s like, “Yassmin, I don’t know how you can surf with all that gear you’ve got on, and I don’t know any women-only beaches.”

And then, the guy came up with a brilliant idea, he was like, “I know, you run that organization Youth Without Borders, right? Why don’t you start a clothing line for Muslim chicks in beaches. You can call it Youth Without Boardshorts.” (Laughter) And I was like, “Thanks, guys.” And I remember another bloke telling me that I should eat all the yogurt I could because that was the only culture I was going to get around there.

the problem is, it’s kind of true because there’s an intense lack of diversity in our workforce, particularly in places of influence.

 in 2010, The Australian National University did an experiment where they sent out 4,000 identical applications to entry level jobs, essentially. To get the same number of interviews as someone with an Anglo-Saxon name, if you were Chinese, you had to send out 68 percent more applications.

If you were Middle Eastern — Abdel-Magied — you had to send out 64 percent, and if you’re Italian, you’re pretty lucky, you only have to send out 12 percent more.

In places like Silicon Valley, it’s not that much better. In Google, they put out some diversity results and 61 percent white, 30 percent Asian and nine, a bunch of blacks, Hispanics, all that kind of thing. And the rest of the tech world is not that much better and they’ve acknowledged it, but I’m not really sure what they’re doing about it.

The thing is, it doesn’t trickle up. In a study done by Green Park, who are a British senior exec supplier, they said that over half of the FTSE 100 companies don’t have a nonwhite leader at their board level, executive or non-executive. And two out of every three don’t have an executive who’s from a minority. And most of the minorities that are at that sort of level are non-executive board directors. So their influence isn’t that great.

I’ve told you a bunch of terrible things. You’re like, “Oh my god, how bad is that? What can I do about it?” Well, fortunately, we’ve identified that there’s a problem.

There’s a lack of opportunity, and that’s due to unconscious bias.

But you might be sitting there thinking, “I ain’t brown. What’s that got to do with me?” Let me offer you a solution. And as I’ve said before, we live in a world where we’re looking for an ideal. And if we want to create a world where the circumstances of your birth don’t matter, we all have to be part of the solution.

And interestingly, the author of the lab resume experiment offered some sort of a solution. She said the one thing that brought the successful women together, the one thing that they had in common, was the fact that they had good mentors.

So mentoring, we’ve all kind of heard that before, it’s in the vernacular. Here’s another challenge for you. I challenge each and every one of you to mentor someone different. Think about it.

Everyone wants to mentor someone who kind of is familiar, who looks like us, we have shared experiences. If I see a Muslim chick who’s got a bit of attitude, I’m like, “What’s up? We can hang out.”

You walk into a room and there’s someone who went to the same school, you play the same sports, there’s a high chance that you’re going to want to help that person out.

But for the person in the room who has no shared experiences with you it becomes extremely difficult to find that connection.

The idea of finding someone different to mentor, someone who doesn’t come from the same background as you, whatever that background is, is about opening doors for people who couldn’t even get to the damn hallway.

Because ladies and gentlemen, the world is not just. People are not born with equal opportunity. I was born in one of the poorest cities in the world, Khartoum. (Sudan)

I was born brown, I was born female, and I was born Muslim in a world that is pretty suspicious of us for reasons I can’t control. However, I also acknowledge the fact that I was born with privilege.

I was born with amazing parents, I was given an education and had the blessing of migrating to Australia. But also, I’ve been blessed with amazing mentors who’ve opened doors for me that I didn’t even know were there. A mentor who said to me, “Hey, your story’s interesting. Let’s write something about it so that I can share it with people.”

A mentor who said, “I know you’re all those things that don’t belong on an Australian rig, but come on anyway.” And here I am, talking to you.

11:24 And I’m not the only one. There’s all sorts of people in my communities that I see have been helped out by mentors. A young Muslim man in Sydney who ended up using his mentor’s help to start up a poetry slam in Bankstown and now it’s a huge thing.

And he’s able to change the lives of so many other young people. Or a lady here in Brisbane, an Afghan lady who’s a refugee, who could barely speak English when she came to Australia, her mentors helped her become a doctor and she took our Young Queenslander of the Year Award in 2008. She’s an inspiration. This is so not smooth.

12:05 This is me. But I’m also the woman in the rig clothes, and I’m also the woman who was in the abaya at the beginning. Would you have chosen to mentor me if you had seen me in one of those other versions of who I am? Because I’m that same person.

We have to look past our unconscious bias, find someone to mentor who’s at the opposite end of your spectrum because structural change takes time, and I don’t have that level of patience. So if we’re going to create a change, if we’re going to create a world where we all have those kinds of opportunities, then choose to open doors for people. Because you might think that diversity has nothing to do with you, but we are all part of this system and we can all be part of that solution.

12:51 And if you don’t know where to find someone different, go to the places you wouldn’t usually go. If you enroll in private high school tutoring, go to your local state school or maybe just drop into your local refugee tutoring center. Or perhaps you work at an office.

Take out that new grad who looks totally out of place — ’cause that was me — and open doors for them, not in a tokenistic way, because we’re not victims, but show them the opportunities because opening up your world will make you realize that you have access to doors that they didn’t even know existed and you didn’t even know they didn’t have.

13:24 Ladies and gentlemen, there is a problem in our community with lack of opportunity, especially due to unconscious bias. But each and every one one of you has the potential to change that. I know you’ve been given a lot of challenges today, but if you can take this one piece and think about it a little differently, because diversity is magic. And I encourage you to look past your initial perceptions because I bet you, they’re probably wrong.

Patsy Z shared this link

“Bias is not an accusation. It’s something that has to be identified, acknowledged and mitigated against.”

A powerful talk on the biases we don’t even know we have.
t.ted.com|By Yassmin Abdel-Magied
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Anger Over Garbage in Lebanon: Plausible that it will Blossom into Demands for Reform of militia system

BEIRUT—Weeks of protests over mounds of uncollected trash in Lebanon’s capital have grown into a broader antigovernment campaign, echoing those that have transformed the political landscape elsewhere in the Middle East.

Demands by the “You Stink” movement and its supporters for a change of Lebanon’s leadership—heard in chants for the “downfall of the regime”—face a challenge: The country has no coherent government to overthrow and no opposition to take its place.

Hezbollah, the Shiite Muslim militia and political party, has declared its support for the grass-roots rallies, which are scheduled to resume in central Beirut on Saturday and could be this year’s largest.

Past calls for political overhauls in Lebanon also collided with the country’s sectarian-militia based political system.

But those arrangements, a legacy of both the country’s drive for independence in the 1940s and its ruinous 1975-1990 civil war, have proved remarkably durable despite widespread dissatisfaction.

The system’s resilience has led even some veteran activists to dismiss the latest talk of revolution in this country of 4.5 million people.

“The slogan, ‘Down with the regime’,” isn’t realistic,” said Joanna Nassar, 32, who for years has campaigned on issues that include the Arab-Israeli conflict and civil marriage.

“If there is hope in Lebanon, it’s more of a reform thing than a change of regime. If change is possible, it’s through institutions and laws,” Ms. Nassar said.

Many “You Stink” protest organizers say they don’t wish to see the kind of Arab Spring demonstrations that ended in civil war or a return to authoritarian rule. Instead, they hope to galvanize support around ridding the government of its constitutionally mandated sectarianism and building ties across Lebanon’s often deep religious and political divides.

Still, most of the country’s veteran activists hold out little hope that Lebanon’s latest political ferment will lead to political change.

“I’m very happy for what’s happened, but I’m also very cautious. Maybe it’s experience,” said Haitham Chammas, an activist unaffiliated with any political party who has helped organize demonstrations and participated in advocacy groups in Lebanon since the early 1990s.

Last Sunday’s demonstrations turned violent, as police fired tear gas and hoses at thousands of protesters gathered in front of the office of Prime Minister Tammam Salam.

More than 400 demonstrators and members of the security forces were wounded in the melee, according to the International Committee of the Red Cross. “You Stink” organizers decided to delay planned daily protests after 32 demonstrators were arrested, Lebanon’s state news agency reported. (The Minister of Interior admitted over 100 were detained)

Lebanon’s state prosecutor appointed a military prosecutor this week to investigate accusations of police abuse, and Mr. Salam said protesters “have the right to stand up to what happened and even hold officials accountable.”

Even Lebanese who didn’t participate in the street demonstrations say the protests over government ineffectiveness and ineptitude are justified. Power shortages have become chronic, and the economically stretched country now has more than one million Syrian refugees in its territory.

The latest crisis began in July after residents near a large landfill south of Beirut, worried about possible environmental hazards, blocked garbage trucks from unloading trash. Unable to locate an alternate dump site, authorities allowed trash to accumulate on Beirut’s streets.

On Tuesday, Mr. Salam held an emergency meeting of his cabinet to address the garbage problem but adjourned without agreeing on a solution.

Even on the best of days, Lebanon’s government, made up of seven main political parties grouped in two opposing blocs, barely operates.

  1. The country hasn’t had a president for more than a year.

2. Legislative elections haven’t been held since 2009. Parliament is rarely able to achieve a quorum to conduct business, yet has renewed its mandate until 2017 on what many Lebanese say are dubious legal grounds.

The current government paralysis is partly the result of a political system constructed by quota. Each cabinet position and parliamentary seat is distributed among Lebanon’s 19 officially recognized religious sects, including Sunni Islam, Shiite Islam, Maronite Christians, Greek Orthodox Christians and followers of the ancient Druse faith.

“You have 18 different dictators, represented by the sectarian community,” Ms. Nassar said. “It’s by nature dysfunctional.”

But even as Lebanese complain about their sectarian system, the country’s political establishment hews to it, said Firas Maksad, a Lebanese political analyst and founder of the Washington-based consultancy Global Policy Associates.

Even widely popular secular movements such as the “You Stink” campaign are unlikely to persuade voters to support candidates outside their own sect, Mr. Maksad said.

“I actually think that Lebanon’s archaic sectarian system is deep in patronage and corrupt, but it’s also an accurate reflection of Lebanese society,” he said. “I think the Lebanese with the garbage crisis are being forced to face their own rotten reality.”

Veteran activist Gilbert Doumit said he still plans to attend “You Stink” protests, though he said he is heartbroken by decades of failed overhaul efforts.

“I don’t have high hopes anymore for such movements,” he said. “I literally failed in every movement that I’ve been involved in. One of the symptoms of the political environment we’re living in now is my failure, and the failure of the people of my generation.”

Note: Since the Syrian troops vacated Lebanon in 2005, the main Lebanese former militia leaders ruled Lebanon.  The control of Syria over their greed dwindled and they grabbed the public funds and every donation and loan that the government received.

This ruling triumviri of Nabih Berry, Walid Jumblat and the political representative of the Hariri clan Fouad Seniora refused to invest in any infrastructure so that the citizens paid twice for every facility that the State was supposed to shoulder. 

Patsy Z shared this post of Gilbert Doumit

I said “I don’t have high hopes anymore for such movements”, but I continued and it is not mentioned in the article “unless those movements transform into a political platform with a clear agenda, leadership and organization, and therefore becomes a serious opponent capable of either changing the political will or the political elite itself.”

Calls for political reform, however, collide with country’s entrenched, sectarian-based political system.
wsj.com|By Matt Bradley and Dana Ballout

Is  Violent warfare Not about to wane? Why mankind is such a violent species?

A spate of recent and not so recent books have suggested that “everything is getting better,” that the world is getting more peaceful, more civilized, and less violent. Some of these claims stand up.

In his book The Better Angels of Our Nature, psychologist Steven Pinker made the case that everything from slavery and torture to violent personal crime and cruelty to animals has decreased in modern times.

He presented masses of evidence. Such trends, it would certainly seem, are highly unlikely to be reversed. (In which nations these data were collected?)

Pinker also suggested — as have others, including historian Niall Ferguson — that something big has changed about violent warfare since 1945 as well. (Including the warfare in Syria, Iraq, Yemen, Libya, Somalia?)

Here too, the world seems to have become much more peaceful, as if war is becoming a thing of the past. As he wrote,

… wars between great powers and developed nations have fallen to historically unprecedented levels. This empirical fact has been repeatedly noted with astonishment by many military historians and international relations scholars…

John Peter shared this link of Nassim Nicholas

A summary of our paper on violence by Mark Buchanan, a physicist and writer.
https://medium.com/…/violent-warfare-is-on-the-wane-right-9…

(Sure. Since wars are deployed through third parties to the developing States)

Pinker admits that this might be a statistical illusion; perhaps we’ve just experienced a recent lull, and war will resume with its full historical fury sometime soon. But he thinks this is unlikely, for a variety of reasons. These include…

the fact that the drop in the frequency of wars among great powers and developed states has been so sudden and massive (essentially, to zero) as to suggest a qualitative change; that territorial conquest has similarly all but vanished in the planning and outcomes of wars; that the period without major war has also seen sharp reductions in conscription, length of military service, and per-GDP military expenditures; that it has seen declines in every exogenous variable that are statistically predictive of militarized disputes; and that war rhetoric and war planning have disappeared as live options in the political deliberations of developed states in their dealings with one another. None of these observations were post-hoc, offered at the end of a fortuitously long run that was spuriously deemed improbable in retrospect; many were made more than three decades ago, and their prospective assessments have been strengthened by the passage of time.

Again, Pinker has gone to lengths to emphasize that none of this proves anything abut future wars. But it is strongly suggestive, he believes, that this is significant evidence for such a belief.

Nassim Taleb criticized Pinker’s arguments a few years ago, arguing that Pinker didn’t take proper account of the statistical nature of war as a historical phenomenon, specifically as a time series of events characterized by fat tails.

Such processes naturally have long periods of quiescence, which get ripped apart by tumultuous upheavals, and they lure the mind into mistaken interpretations.

Pinker responded, clarifying his view, and the quotes above come from that response . Pinker acknowledged the logical possibility of Taleb’s view, but suggested that Taleb had “no evidence that is true, or even plausible.”

That has now changed.

Just today, Taleb, writing with another mathematician, Pasquale Cirillo, has released a detailed analysis of the statistics of violent warfare going back some 2000 years, with an emphasis on the properties of the tails of the distribution — the likelihood of the most extreme events. I’ve written a short Bloomberg piece on the new paper, and wanted to offer a few more technical details here.

The analysis, I think, goes a long way to making clear why we are so ill-prepared to think clearly about processes governed by fat tails, and so prone to falling into interpretive error.

 it strongly suggests that hopes of a future with significantly less war are NOT supported by anything in the recent trend of conflict infrequency. The optimists are fooling themselves.

Anyone can read the paper, so I’ll limit myself to simply summarizing a few of the main points:

  1. Following many historians, Cirillo and Taleb use the number of casualties as a measure of the size of a conflict. Obviously, since the human population has grown with time, larger wars have become possible. So, they sensibly treat the data in a fractional sense — looking at the number of deaths as a fraction of the human population.
  2. For nearly more than 50 years, going back to Lewis Fry Richardson, it’s been known that the cumulative distribution of wars by size follows a rough power law, the number of events larger than size S being proportional to 1/S raised to an exponent α.
  3. This is also an approximation, of course, because there is an absolute maximum possible size for a conflict — it can’t be more than the entire population. Hence, the power law form can only hold over a certain range. To take this into account, Cirillo and Taleb also rescale the data to take into account the finite size of the human population.
  4. Having done this, they find using various statistical methods that α falls within the range 0.4 to 0.7. For maximum sensitivity in the statistical tests, they derive this by focusing mostly on the largest wars over the 2000 years, those equivalent (in today’s numbers) to at least 50,000 casualties.
  5. Note on the value of α — this is smaller than the exponent known to hold for either earthquakes or financial market fluctuations. This implies that statistics of wars is even more prone to large fluctuations than these other processes, which are of course highly erratic themselves.
  6. It also implies that the sample mean over any period is NOT a very useful statistic for estimating the TRUE mean of the underlying statistical process. For example, it turns out that, for a process following this statistical pattern, one should expect fully 96% of all observations to fall below the true mean of the process.
  7. This brings home just how non-Gaussian and non-normal this process is. We’re used to thinking that, if we observe instances from some random process, we ought to (very crudely) see events about half above and half below the mean. Instead, in this process, one should expect that almost all observations will be below, and even far below, the actual mean. We almost always see fewer wars than we, in a sense, should. The process is set up almost perfectly to make an observer complacent about the possibility of large events.
  8. Related to the above, it also turns out to be >90% certain that the true mean of the process is higher than the observed mean. What we have seen in the record of wars over the past 70 years, for example, almost certainly offers an underestimate of the true likelihood of wars.
  9. The statistical process makes rare but large events so likely that looking forward on the basis of recent past observations is a recipe for unwarranted optimism. In actual numbers, Cirillo and Taleb find that the true expected mean — say, the number of deaths we should expect over the next half century — is actually about three times higher than what we’ve seen in the past.
  10. There are quite few other gems in the analysis, but these seem to me to be the most important.

One final thing, and maybe this is most important.

Cirillo and Taleb make a strong argument that the quantity that one should study and try to estimate from the statistics is the tail exponent α (see point 5 above). This is certainly not easy to estimate, and it takes a lot of data to get even a crude estimate, but working with α is a much better way of getting at the true mean of the process than working with the sample mean over various periods.

Looking at past events, and estimating the average number over any period, is simply a bad way to go about thinking about any process of this kind. The sample mean is NOT a mathematically sound estimate of the true mean of the process. For more on this, see Taleb’s comments at the top of the 3rd page of his earlier criticism of Pinker’s argument.

And that, I think, is pretty good reason to believe that all talk of the dwindling likelihood of wars based on recent past experience is mostly based on illusion and people telling themselves convincing but probably unfounded stories.

Sure it looks as if things are getting more peaceful. But, looking at the mathematics, that’s exactly what we should expect to see, even if we’re most likely due for a much more violent future.

104
10
Many optimists think so.
But a close look at the statistics suggests that the idea just doesn’t add up
medium.com|By Mark Buchanan

 

The case for cuts was a lie. Why does Britain still believe it?

In May 2010, as Britain headed into its last general election, elites all across the western world were gripped by austerity fever, a strange malady that combined extravagant fear with blithe optimism.

Every country running significant budget deficits – as nearly all were in the aftermath of the financial crisis – was deemed at imminent risk of becoming another Greece unless it immediately began cutting spending and raising taxes.

Concerns that imposing such austerity in already depressed economies would deepen their depression and delay recovery were airily dismissed; fiscal probity, we were assured, would inspire business-boosting confidence, and all would be well.

PAUL KRUGMAN this April 29,2015

Illustrations by Mark Long, Design by Sam Morris and Chris Clarke

People holding these beliefs came to be widely known in economic circles as“austerians” – a term coined by the economist Rob Parenteau – and for a while the austerian ideology swept all before it.

But that was five years ago, and the fever has long since broken.

Greece is now seen as it should have been seen from the beginning – as a unique case, with few lessons for the rest of us.

It is impossible for countries such as the US and the UK, which borrow in their own currencies, to experience Greek-style crises, because they cannot run out of money – they can always print more.

Even within the eurozone, borrowing costs plunged once the European Central Bank began to do its job and protect its clients against self-fulfilling panics by standing ready to buy government bonds if necessary.

As I write this, Italy and Spain have no trouble raising cash – they can borrow at the lowest rates in their history, indeed considerably below those in Britain – and even Portugal’s interest rates are within a whisker of those paid by HM Treasury.

All of the economic research that allegedly supported the austerity push has been discredited

On the other side of the ledger, the benefits of improved confidence failed to make their promised appearance.

Since the global turn to austerity in 2010, every country that introduced significant austerity has seen its economy suffer, with the depth of the suffering closely related to the harshness of the austerity.

In late 2012, the IMF’s chief economist, Olivier Blanchard, went so far as to issue what amounted to a mea culpa: although his organisation never bought into the notion that austerity would actually boost economic growth, the IMF now believes that it massively understated the damage that spending cuts inflict on a weak economy.

Widely touted statistical results were, it turned out, based on highly dubious assumptions and procedures – plus a few outright mistakes – and evaporated under closer scrutiny.

It is rare, in the history of economic thought, for debates to get resolved this decisively.

The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it.

Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media.

I don’t know how many Britons realise the extent to which their economic debate has diverged from the rest of the western world – the extent to which the UK seems stuck on obsessions that have been mainly laughed out of the discourse elsewhere.

George Osborne and David Cameron boast that their policies saved Britain from a Greek-style crisis of soaring interest rates, apparently oblivious to the fact that interest rates are at historic lows all across the western world.

The press seizes on Ed Miliband’s failure to mention the budget deficit in a speech as a huge gaffe, a supposed revelation of irresponsibility; meanwhile, Hillary Clinton is talking, seriously, not about budget deficits but about the “fun deficit” facing America’s children.

Is there some good reason why deficit obsession should still rule in Britain, even as it fades away everywhere else? No. This country is not different. The economics of austerity are the same – and the intellectual case as bankrupt – in Britain as everywhere else.

When economic crisis struck the advanced economies in 2008, almost every government – even Germany – introduced some kind of stimulus programme, increasing spending and/or cutting taxes. There was no mystery why: it was all about zero.

Normally, monetary authorities – the Federal Reserve, the Bank of England – can respond to a temporary economic downturn by cutting interest rates; this encourages private spending, especially on housing, and sets the stage for recovery. But there’s a limit to how much they can do in that direction. Until recently, the conventional wisdom was that you couldn’t cut interest rates below zero. We now know that this wasn’t quite right, since many European bonds now pay slightly negative interest.

Still, there can’t be much room for sub-zero rates. And if cutting rates all the way to zero isn’t enough to cure what ails the economy, the usual remedy for recession falls short.

So it was in 2008-2009. By late 2008 it was already clear in every major economy that conventional monetary policy, which involves pushing down the interest rate on short-term government debt, was going to be insufficient to fight the financial downdraft. Now what? The textbook answer was and is fiscal expansion: increase government spending both to create jobs directly and to put money in consumers’ pockets; cut taxes to put more money in those pockets.

But won’t this lead to budget deficits? Yes, and that’s actually a good thing.

An economy that is depressed even with zero interest rates is, in effect, an economy in which the public is trying to save more than businesses are willing to invest. In such an economy the government does everyone a service by running deficits and giving frustrated savers a chance to put their money to work. Nor does this borrowing compete with private investment.

An economy where interest rates cannot go any lower is an economy awash in desired saving with no place to go, and deficit spending that expands the economy is, if anything, likely to lead to higher private investment than would otherwise materialise.

It’s true that you can’t run big budget deficits for ever (although you can do it for a long time), because at some point interest payments start to swallow too large a share of the budget. But it’s foolish and destructive to worry about deficits when borrowing is very cheap and the funds you borrow would otherwise go to waste.

At some point you do want to reverse stimulus. But you don’t want to do it too soon – specifically, you don’t want to remove fiscal support as long as pedal-to-the-metal monetary policy is still insufficient. Instead, you want to wait until there can be a sort of handoff, in which the central bank offsets the effects of declining spending and rising taxes by keeping rates low. As John Maynard Keynes wrote in 1937: “The boom, not the slump, is the right time for austerity at the Treasury.”

All of this is standard macroeconomics. I often encounter people on both the left and the right who imagine that austerity policies were what the textbook said you should do – that those of us who protested against the turn to austerity were staking out some kind of heterodox, radical position. But the truth is that mainstream, textbook economics not only justified the initial round of post-crisis stimulus, but said that this stimulus should continue until economies had recovered.

What we got instead, however, was a hard right turn in elite opinion, away from concerns about unemployment and toward a focus on slashing deficits, mainly with spending cuts. Why?

Conservatives like to use the alleged dangers of debt and deficits as clubs with which to beat the welfare state and justify cuts in benefits

Part of the answer is that politicians were catering to a public that doesn’t understand the rationale for deficit spending, that tends to think of the government budget via analogies with family finances. When John Boehner, the Republican leader, opposed US stimulus plans on the grounds that “American families are tightening their belt, but they don’t see government tightening its belt,” economists cringed at the stupidity.

But within a few months the very same line was showing up in Barack Obama’s speeches, because his speechwriters found that it resonated with audiences. Similarly, the Labour party felt it necessary to dedicate the very first page of its 2015 general election manifesto to a “Budget Responsibility Lock”, promising to “cut the deficit every year”.

Let us not, however, be too harsh on the public. Many elite opinion-makers, including people who imagine themselves sophisticated on matters economic, demonstrated at best a higher level of incomprehension, not getting at all the logic of deficit spending in the face of excess desired saving.

For example, in the spring of 2009 the Harvard historian and economic commentator Niall Ferguson, talking about the United States, was quite sure what would happen: “There is going to be, I predict, in the weeks and months ahead, a very painful tug-of-war between our monetary policy and our fiscal policy as the markets realise just what a vast quantity of bonds are going to have to be absorbed by the financial system this year. That will tend to drive the price of the bonds down, and drive up interest rates.” The weeks and months turned into years – six years, at this point – and interest rates remain at historic lows.

Beyond these economic misconceptions, there were political reasons why many influential players opposed fiscal stimulus even in the face of a deeply depressed economy. Conservatives like to use the alleged dangers of debt and deficits as clubs with which to beat the welfare state and justify cuts in benefits; suggestions that higher spending might actually be beneficial are definitely not welcome.

Meanwhile, centrist politicians and pundits often try to demonstrate how serious and statesmanlike they are by calling for hard choices and sacrifice (by other people). Even Barack Obama’s first inaugural address, given in the face of a plunging economy, largely consisted of hard-choices boilerplate. As a result, centrists were almost as uncomfortable with the notion of fiscal stimulus as the hard right.

In a way, the remarkable thing about economic policy in 2008-2009 was the fact that the case for fiscal stimulus made any headway at all against the forces of incomprehension and vested interests demanding harsher and harsher austerity. The best explanation of this temporary and limited success I’ve seen comes from the political scientist Henry Farrell, writing with the economist John Quiggin.Farrell and Quiggin note that Keynesian economists were intellectually prepared for the possibility of crisis, in a way that free-market fundamentalists weren’t, and that they were also relatively media-savvy.

So they got their take on the appropriate policy response out much more quickly than the other side, creating “the appearance of a new apparent consensus among expert economists” in favour of fiscal stimulus.

If this is right, there was inevitably going to be a growing backlash – a turn against stimulus and toward austerity – once the shock of the crisis wore off. Indeed, there were signs of such a backlash by the early fall of 2009. But the real turning point came at the end of that year, when Greece hit the wall. As a result, the year of Britain’s last general election was also the year of austerity.

rom the beginning, there were plenty of people strongly inclined to oppose fiscal stimulus and demand austerity. But they had a problem: their dire warnings about the consequences of deficit spending kept not coming true. Some of them were quite open about their frustration with the refusal of markets to deliver the disasters they expected and wanted.

Alan Greenspan, the former chairman of the Federal Reserve, in 2010: “Inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.”

But he had an answer: “Growing analogies to Greece set the stage for a serious response.”

Greece was the disaster austerians were looking for. In September 2009 Greece’s long-term borrowing costs were only 1.3 percentage points higher than Germany’s; by September 2010 that gap had increased sevenfold. Suddenly, austerians had a concrete demonstration of the dangers they had been warning about. A hard turn away from Keynesian policies could now be justified as an urgent defensive measure, lest your country abruptly turn into another Greece.

Still, what about the depressed state of western economies? The post-crisis recession bottomed out in the middle of 2009, and in most countries a recovery was under way, but output and employment were still far below normal. Wouldn’t a turn to austerity threaten the still-fragile upturn?

Not according to many policymakers, who engaged in one of history’s most remarkable displays of collective wishful thinking. Standard macroeconomics said that cutting spending in a depressed economy, with no room to offset these cuts by reducing interest rates that were already near zero, would indeed deepen the slump. But policymakers at the European Commission, the European Central Bank, and in the British government that took power in May 2010 eagerly seized on economic research that claimed to show the opposite.

The doctrine of “expansionary austerity” is largely associated with work by Alberto Alesina, an economist at Harvard. Alesina used statistical techniques that supposedly identified all large fiscal policy changes in advanced countries between 1970 and 2007, and claimed to find evidence that spending cuts, in particular, were often “associated with economic expansions rather than recessions”. The reason, he and those who seized on his work suggested, was that spending cuts create confidence, and that the positive effects of this increase in confidence trump the direct negative effects of reduced spending.

Greece was the disaster austerians were looking for

This may sound too good to be true – and it was. But policymakers knew what they wanted to hear, so it was, as Business Week put it, “Alesina’s hour”. The doctrine of expansionary austerity quickly became orthodoxy in much of Europe. “The idea that austerity measures could trigger stagnation is incorrect,” declared Jean-Claude Trichet, then the president of the European Central Bank, because “confidence-inspiring policies will foster and not hamper economic recovery”.

Besides, everybody knew that terrible things would happen if debt went above 90% of GDP.

Growth in a Time of Debt, the now-infamous 2010 paper by Carmen Reinhart and Kenneth Rogoff of Harvard University that claimed that 90% debt is a critical threshold, arguably played much less of a direct role in the turn to austerity than Alesina’s work. After all, austerians didn’t need Reinhart and Rogoff to provide dire scenarios about what could happen if deficits weren’t reined in – they had the Greek crisis for that.

At most, the Reinhart and Rogoff paper provided a backup bogeyman, an answer to those who kept pointing out that nothing like the Greek story seemed to be happening to countries that borrowed in their own currencies: even if interest rates were low, austerians could point to Reinhart and Rogoff and declare that high debt is very, very bad.

What Reinhart and Rogoff did bring to the austerity camp was academic cachet. Their 2009 book This Time is Different, which brought a vast array of historical data to bear on the subject of economic crises, was widely celebrated by both policymakers and economists – myself included – for its prescient warnings that we were at risk of a major crisis and that recovery from that crisis was likely to be slow. So they brought a lot of prestige to the austerity push when they were perceived as weighing in on that side of the policy debate. (They now claim that they did no such thing, but they did nothing to correct that impression at the time.)

When the coalition government came to power, then, all the pieces were in place for policymakers who were already inclined to push for austerity. Fiscal retrenchment could be presented as urgently needed to avert a Greek-style strike by bond buyers. “Greece stands as a warning of what happens to countries that lose their credibility, or whose governments pretend that difficult decisions can somehow be avoided,” declared David Cameron soon after taking office. It could also be presented as urgently needed to stop debt, already almost 80% of GDP, from crossing the 90% red line.

In a 2010 speech laying out his plan to eliminate the deficit, Osborne cited Reinhart and Rogoff by name, while declaring that “soaring government debt … is very likely to trigger the next crisis.” Concerns about delaying recovery could be waved away with an appeal to positive effects on confidence. Economists who objected to any or all of these lines of argument were simply ignored.

But that was, as I said, five years ago.

To understand what happened to austerianism, it helps to start with two charts.

The first chart shows interest rates on the bonds of a selection of advanced countries as of mid-April 2015. What you can see right away is that Greece remains unique, more than five years after it was heralded as an object lesson for all nations. Everyone else is paying very low interest rates by historical standards.

This includes the United States, where the co-chairs of a debt commission created by President Obama confidently warned that crisis loomed within two years unless their recommendations were adopted; that was four years ago. It includes Spain and Italy, which faced a financial panic in 2011-2012, but saw that panic subside – despite debt that continued to rise – once the European Central Bank began doing its job as lender of last resort.

It includes France, which many commentators singled out as the next domino to fall, yet can now borrow long-term for less than 0.5%.

And it includes Japan, which has debt more than twice its gross domestic product yet pays even less.

The Greek exception

10-year interest rates as of 14 April 2015

Chart 1Source: Bloomberg

Back in 2010 some economists argued that fears of a Greek-style funding crisis were vastly overblown – I referred to the myth of the “invisible bond vigilantes”. Well, those bond vigilantes have stayed invisible. For countries such as the UK, the US, and Japan that borrow in their own currencies, it’s hard to even see how the predicted crises could happen. Such countries cannot, after all, run out of money, and if worries about solvency weakened their currencies, this would actually help their economies in a time of weak growth and low inflation.

Chart 2 takes a bit more explaining. A couple of years after the great turn towards austerity, a number of economists realised that the austerians were performing what amounted to a great natural experiment. Historically, large cuts in government spending have usually occurred either in overheated economies suffering from inflation or in the aftermath of wars, as nations demobilise.

Neither kind of episode offers much guidance on what to expect from the kind of spending cuts – imposed on already depressed economies – that the austerians were advocating. But after 2009, in a generalised economic depression, some countries chose (or were forced) to impose severe austerity, while others did not. So what happened?

Austerity and growth 2009-13

More austere countries have a lower rate of GDP growth

Chart 2Source: IMF

In Chart 2, each dot represents the experience of an advanced economy from 2009 to 2013, the last year of major spending cuts. The horizontal axis shows a widely used measure of austerity – the average annual change in the cyclically adjusted primary surplus, an estimate of what the difference between taxes and non-interest spending would be if the economy were at full employment. As you move further right on the graph, in other words, austerity becomes more severe. You can quibble with the details of this measure, but the basic result – harsh austerity in Ireland, Spain, and Portugal, incredibly harsh austerity in Greece – is surely right.

Meanwhile, the vertical axis shows the annual rate of economic growth over the same period. The negative correlation is, of course, strong and obvious – and not at all what the austerians had asserted would happen.

Again, some economists argued from the beginning that all the talk of expansionary austerity was foolish – back in 2010 I dubbed it belief in the “confidence fairy”, a term that seems to have stuck. But why did the alleged statistical evidence – from Alesina, among others – that spending cuts were often good for growth prove so misleading?

The answer, it turned out, was that it wasn’t very good statistical work. A review by the IMF found that the methods Alesina used in an attempt to identify examples of sharp austerity produced many misidentifications.

For example, in 2000 Finland’s budget deficit dropped sharply thanks to a stock market boom, which caused a surge in government revenue – but Alesina mistakenly identified this as a major austerity programme. When the IMF laboriously put together a new database of austerity measures derived from actual changes in spending and tax rates, it found that austerity has a consistently negative effect on growth.

Yet even the IMF’s analysis fell short – as the institution itself eventually acknowledged. I’ve already explained why: most historical episodes of austerity took place under conditions very different from those confronting western economies in 2010.

For example, when Canada began a major fiscal retrenchment in the mid-1990s, interest rates were high, so the Bank of Canada could offset fiscal austerity with sharp rate cuts – not a useful model of the likely results of austerity in economies where interest rates were already very low. In 2010 and 2011, IMF projections of the effects of austerity programmes assumed that those effects would be similar to the historical average. But a 2013 paper co-authored by the organisation’s chief economist concluded that under post-crisis conditions the true effect had turned out to be nearly three times as large as expected.

So much, then, for invisible bond vigilantes and faith in the confidence fairy. What about the backup bogeyman, the Reinhart-Rogoff claim that there was a red line for debt at 90% of GDP?

Well, in early 2013 researchers at the University of Massachusetts examined the data behind the Reinhart-Rogoff work. They found that the results were partly driven by a spreadsheet error. More important, the results weren’t at all robust: using standard statistical procedures rather than the rather odd approach Reinhart and Rogoff used, or adding a few more years of data, caused the 90% cliff to vanish.

What was left was a modest negative correlation between debt and growth, and there was good reason to believe that in general slow growth causes high debt, not the other way around.

By about two years ago, then, the entire edifice of austerian economics had crumbled. Events had utterly failed to play out as the austerians predicted, while the academic research that allegedly supported the doctrine had withered under scrutiny. Hardly anyone has admitted being wrong – hardly anyone ever does, on any subject – but quite a few prominent austerians now deny having said what they did, in fact, say. The doctrine that ruled the world in 2010 has more or less vanished from the scene.

In the US, you no longer hear much from the deficit scolds who loomed so large in the national debate circa 2011. Some commentators and media organisations still try to make budget red ink an issue, but there’s a pleading, even whining, tone to their exhortations. The day of the austerians has come and gone.

Yet Britain zigged just as the rest of us were zagging.

By 2013, austerian doctrine was in ignominious retreat in most of the world – yet at that very moment much of the UK press was declaring that doctrine vindicated. “Osborne wins the battle on austerity,” the Financial Times announced in September 2013, and the sentiment was widely echoed.

What was going on? You might think that British debate took a different turn because the British experience was out of line with developments elsewhere – in particular, that Britain’s return to economic growth in 2013 was somehow at odds with the predictions of standard economics. But you would be wrong.

Austerity in the UK

Cyclically adjusted primary balance, percent of GDP

Chart 3Source: IMF, OECD, and OBR

The key point to understand about fiscal policy under Cameron and Osborne is that British austerity, while very real and quite severe, was mostly imposed during the coalition’s first two years in power. Chart 3 shows estimates of our old friend the cyclically adjusted primary balance since 2009. I’ve included three sources – the IMF, the OECD, and Britain’s own Office of Budget Responsibility – just in case someone wants to argue that any one of these sources is biased. In fact, every one tells the same story: big spending cuts and a large tax rise between 2009 and 2011, not much change thereafter.

Given the fact that the coalition essentially stopped imposing new austerity measures after its first two years, there’s nothing at all surprising about seeing a revival of economic growth in 2013.

Look back at Chart 2, and specifically at what happened to countries that did little if any fiscal tightening. For the most part, their economies grew at between 2 and 4%. Well, Britain did almost no fiscal tightening in 2014, and grew 2.9%. In other words, it performed pretty much exactly as you should have expected. And the growth of recent years does nothing to change the fact that Britain paid a high price for the austerity of 2010-2012.

British economists have no doubt about the economic damage wrought by austerity. The Centre for Macroeconomics in London regularly surveys a panel of leading UK economists on a variety of questions. When it asked whether the coalition’s policies had promoted growth and employment, those disagreeing outnumbered those agreeing four to one. This isn’t quite the level of unanimity on fiscal policy one finds in the US, where a similar survey of economists found only 2% disagreed with the proposition that the Obama stimulus led to higher output and employment than would have prevailed otherwise, but it’s still an overwhelming consensus.

By this point, some readers will nonetheless be shaking their heads and declaring, “But the economy is booming, and you said that couldn’t happen under austerity.” But Keynesian logic says that a one-time tightening of fiscal policy will produce a one-time hit to the economy, not a permanent reduction in the growth rate. A return to growth after austerity has been put on hold is not at all surprising. As I pointed out recently: “If this counts as a policy success, why not try repeatedly hitting yourself in the face for a few minutes? After all, it will feel great when you stop.”

In that case, however, what’s with sophisticated media outlets such as the FT seeming to endorse this crude fallacy? Well, if you actually read that 2013 leader and many similar pieces, you discover that they are very carefully worded. The FT never said outright that the economic case for austerity had been vindicated.

It only declared that Osborne had won the political battle, because the general public doesn’t understand all this business about front-loaded policies, or for that matter the difference between levels and growth rates. One might have expected the press to seek to remedy such confusions, rather than amplify them. But apparently not.

Which brings me, finally, to the role of interests in distorting economic debate.

As Oxford’s Simon Wren-Lewis noted, on the very same day that the Centre for Macroeconomics revealed that the great majority of British economists disagree with the proposition that austerity is good for growth, the Telegraph published on its front page a letter from 100 business leaders declaring the opposite. Why does big business love austerity and hate Keynesian economics? After all, you might expect corporate leaders to want policies that produce strong sales and hence strong profits.

I’ve already suggested one answer: scare talk about debt and deficits is often used as a cover for a very different agenda, namely an attempt to reduce the overall size of government and especially spending on social insurance. This has been transparently obvious in the United States, where many supposed deficit-reduction plans just happen to include sharp cuts in tax rates on corporations and the wealthy even as they take away healthcare and nutritional aid for the poor. But it’s also a fairly obvious motivation in the UK, if not so crudely expressed.

The “primary purpose” of austerity, the Telegraph admitted in 2013, “is to shrink the size of government spending” – or, as Cameron put it in a speech later that year, to make the state “leaner … not just now, but permanently”.

Beyond that lies a point made most strongly in the US by Mike Konczal of the Roosevelt Institute: business interests dislike Keynesian economics because it threatens their political bargaining power. Business leaders love the idea that the health of the economy depends on confidence, which in turn – or so they argue – requires making them happy.

In the US there were, until the recent takeoff in job growth, many speeches and opinion pieces arguing that President Obama’s anti-business rhetoric – which only existed in the right’s imagination, but never mind – was holding back recovery. The message was clear: don’t criticise big business, or the economy will suffer.

If the political opposition won’t challenge the coalition’s bad economics, who will?

But this kind of argument loses its force if one acknowledges that job creation can be achieved through deliberate policy, that deficit spending, not buttering up business leaders, is the way to revive a depressed economy. So business interests are strongly inclined to reject standard macroeconomics and insist that boosting confidence – which is to say, keeping them happy – is the only way to go.

Still, all these motivations are the same in the United States as they are in Britain. Why are the US’s austerians on the run, while Britain’s still rule the debate?

It has been astonishing, from a US perspective, to witness the limpness of Labour’s response to the austerity push. Britain’s opposition has been amazingly willing to accept claims that budget deficits are the biggest economic issue facing the nation, and has made hardly any effort to challenge the extremely dubious proposition that fiscal policy under Blair and Brown was deeply irresponsible – or even the nonsensical proposition that this supposed fiscal irresponsibility caused the crisis of 2008-2009.

Why this weakness? In part it may reflect the fact that the crisis occurred on Labour’s watch; American liberals should count themselves fortunate that Lehman Brothers didn’t fall a year later, with Democrats holding the White House. More broadly, the whole European centre-left seems stuck in a kind of reflexive cringe, unable to stand up for its own ideas. In this respect Britain seems much closer to Europe than it is to America.

The closest parallel I can give from my side of the Atlantic is the erstwhile weakness of Democrats on foreign policy – their apparent inability back in 2003 or so to take a stand against obviously terrible ideas like the invasion of Iraq. If the political opposition won’t challenge the coalition’s bad economics, who will?

You might be tempted to say that this is all water under the bridge, given that the coalition, whatever it may claim, effectively called a halt to fiscal tightening midway through its term. But this story isn’t over. Cameron is campaigning largely on a spurious claim to have “rescued” the British economy – and promising, if he stays in power, to continue making substantial cuts in the years ahead.

Labour, sad to say, are echoing that position. So both major parties are in effect promising a new round of austerity that might well hold back a recovery that has, so far, come nowhere near to making up the ground lost during the recession and the initial phase of austerity.

For whatever the politics, the economics of austerity are no different in Britain from what they are in the rest of the advanced world. Harsh austerity in depressed economies isn’t necessary, and does major damage when it is imposed. That was true of Britain five years ago – and it’s still true today.

Follow the Long Read on Twitter: @gdnlongread

Andrew Bossone shared this link. 1 hr ·

“Since the global turn to austerity in 2010, every country that introduced significant austerity has seen its economy suffer, with the depth of the suffering closely related to the harshness of the austerity….It is rare, in the history of economic thought, for debates to get resolved this decisively. The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it. Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media.”

The long read: The case for cuts was a lie. Why does Britain still believe it?
THEGUARDIAN.COM|BY PAUL KRUGMAN

Chapter three Decline and fall of the austerity cult


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