Yet another pillar of the austerity edifice has crumbled.
As many readers will have seen, fresh research has refuted the famous Reinhart-Rogoff paper showing a cliff-edge fall in growth to minus 0.1pc once public debt reaches 90pc of GDP.
This was the paper seized upon by Tea Party Republicans, scorched-earth Schaublerians and Rehnites in Europe, our own dear Chancellor George Osborne, and Austro-liquidationists the world over, to back calls for draconian, pro-cyclical, fiscal tightening.
A team of economists from the University of Massachusetts has gone for the jugular.
Part of the Reinhart-Rogoff error is due to a surreal Excel slip. A handful of countries were accidentally left out. Far too much weight was given to an almost irrelevant episode in New Zealand in 1951.
In fact the average growth rate for the 20 developed countries in the study is plus 2.2pc. Big difference.
The greater conceptual error was to conflate correlation and cause, or at least to construct the argument in such a way that politicians with an axe to grind and little grasp of history could misuse the data.
Is it high debt that slows growth? Or is slow growth that causes high debt? Or both?
I know Carmen Reinhart and Kenneth Rogoff. They are both outstanding IMF/Harvard economists. Their integrity is beyond question. So the saga saddens me. Yet I never really believed in such a mechanical linkage in the first place.
Britain’s public debt was 260pc of GDP in 1816 at the end of near perma-wars: Seven Years War, American War of Independence, and the Napoleonic Wars. This was whittled down to 24pc over the next century by the magical compound effects of economic growth.
The debt reached 220pc in 1945, the price for defeating fascism. This was certainly a drag on the post-War recovery, but it did not stop debt falling to 36pc by the mid-1990s.

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