The Nobel savage
It is not often that a dispute between rival economists starts attracting significant public attention - Sunday morning talk show segments, outraged blog posts, enthusiastic heckling from the newspaper sidelines - but in this case the stakes are high and the contenders are heavyweights.
The blue in question pits the Nobel prize-winning economist and New York Times columnist Paul Krugman against his former MIT classmates, Carmen Reinhart and Kenneth Rogoff, a former chief economist for the International Monetary Fund.
Hurtful things have been said. Nasty reviews have been written. Sides have been taken. Reinhart and Rogoff have accused Krugman of incivility. Krugman has gone a tad further, accusing Reinhart and Rogoff of helping to prolong the worst economic downturn since the Depression, contributing to the misery of millions around the world and of doing so by stuffing up an entry on a spreadsheet.
At issue is a paper Reinhart and Rogoff co-wrote in 2010 called Growth in a Time of Debt. In it, they wrote that they had found evidence that once a nation's debt reached 90 per cent of GDP, a tipping point was reached and its economy risked dropping off a cliff. Normally this sort of academic argument might not have a significant real-world consequence. In this case, Krugman argues, the result was catastrophic.
He believes the paper gave valuable ammunition to policy-makers both in European governments and the US Republican Party, who never accepted the Keynesian orthodoxy that governments should boost spending during downturns. It gave them cover to advocate austerity, despite the agony of high unemployment.
"Indeed, Reinhart-Rogoff may have had more immediate influence on public debate than any previous paper in the history of economics," writes Krugman in the New York Review of Books. "The 90 per cent claim was cited as the decisive argument for austerity by figures ranging from Paul Ryan, the former vice-presidential candidate who chairs the House budget committee, to Olli Rehn, the top economic official at the European Commission, to the editorial board of The Washington Post."
A confluence of historical factors compounded the problem, Krugman argues. At the time, a new Greek government discovered that the nation's debt and deficit was far worse than had been admitted by the former incumbent. "Put Greece and Reinhart-Rogoff together and there seemed to be a compelling case for a sharp, immediate turn towards austerity," Krugman writes.
He says that the stabilisation and recovery promoted by stimulus on both sides of the Atlantic ended when the austerity argument promoted by Reinhart and Rogoff, among others, became the new orthodoxy.
But his critique gets tougher. He says that even as austerity was demonstrably failing, his two former classmates neglected to make the data on which they had based their thesis widely available, and those economists who sought to replicate it were flummoxed.
When a graduate student from the University of Massachusetts, Thomas Herndon, got access to the data this year, he discovered not only the coding error in the spreadsheet but the absence of available data that might have conflicted with the paper's central thesis.
"The threshold 90 per cent vanished," writes Krugman. "At this point, then, austerity economics is in a very bad way. Its predictions have proved utterly wrong; its founding academic documents haven't just lost their canonised status, they've become the objects of much ridicule."
To be fair, much of that ridicule comes from Krugman himself. Not only is he equipped with his Nobel tin, Krugman wields a pen as sharp and clear as any opinion writer in the business, and in The New York Times has a soapbox as big as they come.
At the end of May, Reinhart and Rogoff made public a letter they had written to him.
"We admire your past scholarly work, which influences us to this day," they wrote, "so it has been with deep disappointment that we have experienced your spectacularly uncivil behaviour the past few weeks. "You have attacked us in very personal terms, virtually non-stop, in your New York Times column and blog posts.
"Now you have doubled down in the New York Review of Books, adding the accusation we didn't share our data. Your characterisation of our work and of our policy impact is selective and shallow."
Last Sunday Krugman appeared on Fareed Zakaria's masthead CNN International program, where he was asked if he worried about how personal the disagreement had become.
For a moment Krugman was conciliatory, noting that Rogoff was a "magnificent economist".
Then this: "Who cares, right? I mean who cares about my feelings or Carmen Reinhart's feelings or Ken Rogoff's feelings? We're having a global economic crisis, which is not over, which we have handled abysmally. We have massive long-term unemployment in the United States. We have massive youth unemployment in southern Europe.
"I don't think the question of how civil a bunch of comfortable academic economists who went to MIT in the mid-1970s ... matters at all compared with the question of the substantive issues and are we doing this wrong - which I think we are."