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Liveblogging World War II: August 20, 1942

Mark Thoma Sends Us to Ezra Klein on the Embarrassingly Bad Niall Ferguson

This has sprawled out. It's time to sharpen this back down:

Dylan Byers:

Ferguson decides to edit the CBO report to satisfy his own conclusions.


It is unclear whether such a reduction can be achieved through greater efficiencies in the delivery of healthcare or will instead reduce access to care or the quality of care (relative to the situation under prior law.)


Here’s the CBO....

It is unclear whether such a reduction can be achieved…

Indeed, it is, which is why I wrote what I wrote.


[C]ontrary to what Ferguson leads readers to believe, the CBO report does not state that the reduction is "unclear." What is "unclear" is whether the reduction will come through greater efficiencies in healthcare delivery or reduced access to care. So, one more time: The Oxford-trained, Harvard-employed, Newsweek contributor Niall Ferguson just edited the CBO report to change its meaning. With all due lack of respect: What are you thinking?

Ezra Klein: The worst case against the Obama administration: Well, this is unusual.

On Sunday, Paul Krugman noticed Niall Ferguson writing something apparently false about the Affordable Care Act. Today, Ferguson responded to Krugman’s critique by saying, in effect, that he wasn’t wrong so much as he was very carefully trying to mislead his readers.

The sentence in question is straightforward enough. Ferguson wrote:

The president pledged that health-care reform would not add a cent to the deficit. But the CBO and the Joint Committee on Taxation now estimate that the insurance-coverage provisions of the ACA will have a net cost of close to $1.2 trillion over the 2012–22 period.

The intended meaning is pretty clear. Ferguson is saying Obama “pledged” that the Affordable Care Act would reduce the deficit, “but” the Congressional Budget Office and Joint Tax Committee now say otherwise. The problem, as Krugman pointed out, is that the CBO and the JCT do not now say otherwise. Ferguson is simply wrong….

Ferguson says he wasn’t confused. Rather, he phrased his original comments very carefully in order to deceive his readers. You see, Ferguson specified that he was only talking about the “insurance-coverage provisions”…. [T]he first sentence and the second sentence had nothing to do with each other. Of course, most people… just got tricked. In the pages of Newsweek. Bummer for them.

That’s not the only time that Ferguson’s argument veers factually astray. He says that only “half of us [are] paying the taxes.”… He says that “The Patient Protection and Affordable Care Act (ACA) of 2010 did nothing to address the core defects of the system."… He says, “The total number of private-sector jobs is still 4.3 million below the January 2008 peak.” You might remember that Obama didn’t become president until January 2009…. Matt O’Brien has already done the spadework. I actually can’t recall running into a piece in which the argument is so carefully written as to mislead the reader without, in most cases, being entirely untrue….

Ferguson… might be cheating to strengthen his argument. But that doesn’t mean his argument is wrong. Rather, the main reason to mistrust Ferguson is that, for years now, his argument has been wrong….

Ferguson has pushed a very specific theory with a very specific prediction: The bond markets, he has said, are going to revolt against American debt. And if that doesn’t happen, inflation is going to run amok…. Ferguson argued the markets were turning on our debt and Krugman argued that they were not. So who was right? Well, the interest rate on 10-year Treasuries was 3.73 percent when Ferguson wrote that column. Today, they’re 1.81 percent. Point, Krugman.

Having been rebuffed by the bond market, Ferguson then predicted that we were entering a period that would come to be known as “the great inflation of the 2010s”. We were not. On Sunday, Bloomberg News published an article that began with the sentence, “So much for the inflation warnings.”

These predictions — and others, like when Ferguson warned that ”the Chinese clearly feel they have enough U.S. government bonds” — were the testable hypotheses generated by Ferguson’s worldview. That worldview, in essence, was that the United States was under imminent threat from its debt, and that the result would either be a crisis as the U.S. proved unable to pay its creditors or runaway inflation as the Fed printed money in excess of what the economy could handle.

These predictions were wrong. But Ferguson hasn’t updated the theory to account for their failure. Instead, he has simply applied that same theory to argue that Paul Ryan, who he first met at “a dinner in Washington where the U.S. fiscal crisis was going to be the topic of discussion,” should be vice president, because his deficit-reduction plan could “end four years of economic underperformance [and] stop the terrifying accumulation of debt.”…

There is a strain of thinking that argued, from the beginning, that Obama’s policies would fail because the required borrowing would send interest rates soaring. Ferguson was a member of this club, but so was the Wall Street Journal editorial board, which warned, back in May 2009, that the bond vigilantes “appear to be returning with a vengeance now that Congress and the Federal Reserve have flooded the world with dollars to beat the recession.”

It is no surprise that most of the folks who bought into this theory were early and enthusiastic backers of Paul Ryan. After all, he bought into this theory, too…. [N]either he nor his backers appear to have rethought any element of their critique or of their program.

This doesn’t say anything one way or another about the success of Obama’s policies. You might think they failed, for instance, because they didn’t do enough to address housing debt. That would lead you to a verdict on Obama that’s no less harsh than Ferguson’s, but that actually has some empirical evidence behind it. Or you might think they failed because the stimulus was too small, and because Obama renominated Ben Bernanke to lead the Federal Reserve. Or you might think they did about as well as could be expected, and that the key measure isn’t that things aren’t as good as we wish they were, but that they could have been much, much worse.

Whatever you believe about Obama’s policies, the Ferguson/WSJ/Ryan theory has clearly failed in its main predictions, and it’s worrying to see that this hasn’t led to a more serious effort to rethink its premises. After all, Romney and Ryan might well win this election, and it would be nice if the people they were listening to were pushing them to fix what’s actually gone wrong rather than what they wish had gone wrong.