Low growth leads to high debt, not the other way round

Charts of the day.

Two big holes have been left by the revelation of serious flaws in the Reinhart-Rogoff paper on austerity. The first is that the concept of a criticality at high levels of debt has been demolished. The original paper showed a massive drop in growth rates for countries with debt to GDP ratios over 90 per cent; that simply does not hold anymore. Insofar as the paper shows any negative association, it is linear – the step from 60 to 70 per cent is no more dangerous than the step from 85 to 95 per cent.

But there's also now an absence of notable economists claiming that high debt ratios cause low growth. In Reinhart and Rogoff's initial response to Herndon, Ash, and Pollin's paper, the authors point out that "we are very careful in all our papers to speak of 'association' and not 'causality'". That's true, but they have also not been shy about endorsing suggestions that there is an element of causality involved – and their paper has been widely misinterpreted as showing as such.

However, Arindrajit Dube presents pretty compelling evidence that the causality lies in the direction everyone but the austerians expected it to: slow growth causes high debt to GDP ratios, not the other way round. It's as simple as two charts:


The first image shows the correlation between the debt to GDP ratio in any given year, and the growth in the three years after it. Really low debt comes before high growth rates – but for nearly every other level of debt, the average growth in the next three years is 3 per cent.

Looking backwards, though presents a very different picture. There's strong linear relationship between low growth in the past and high debt-to-GDP ratios now.

And that's not surprising! As Dube writes:

One reason is just algebraic. The ratio has a numerator (debt) and denominator (GDP): any fall in GDP will mechanically boost the ratio. Even if GDP growth doesn’t become negative, continuous growth in debt coupled with a GDP growth slowdown will also lead to a rise in the debt-to-GDP ratio.

Besides, there is also a less mechanical story. A recession leads to increased spending through automatic stabilizers such as unemployment insurance. And governments usually finance these using greater borrowing, as undergraduate macro-economics textbooks tell us governments should do. This is what happened in the U.S. during the past recession.

The easiest way to cut the debt – in the only measure which matters, which is it in relation to the size of the economy – is to increase growth, at least back to the long-term trend. Going at it from the opposite direction, and cutting the debt in the hope it will bring growth back, is a recipe for disaster.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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On World Aids Day, let’s end the stigma around HIV for good

Advances in treatment mean that being HIV positive is no longer a death sentence, but attitudes still lag behind.

Stigma is a dangerous human construct, principally based on unfounded prejudices. None more so than the stigma surrounding HIV. The condition has been a recognised health issue in the UK for more than 30 years, and the advances in treatment have been staggering. Unfortunately attitudes seem to have remained in the 1980s.

A recent Terrence Higgins Trust poll asked people who are living with HIV for words that they have heard to describe their health condition. “AIDS”, “riddled”, “dirty”, “disgusting”, “promiscuous”, “dirty”, “deserved”, “unclean”, “diseased” – were the most cited.

Imagine turning to someone, who lets say has a long term health condition like high blood pressure, and branding them “lazy”, “fat”, “deserving”. Or someone who has just been diagnosed with diabetes being dismissed as “greed”. Of course, I’m not saying that these health conditions are without their own stigma. Rather I doubt that Charlie Sheen would have been subjected to such a vitriolic witch hunt, had it transpired he had either of those.

Once the nausea of that coverage subsided, it was telling to note the absent voices from most of the media debate around HIV and stigma. The thing that struck most was the total lack of understanding of the condition, the treatment, and the lack of representation of those who are living with HIV.

There was little written about the stigma women living with HIV face. That which those within the black African community, or the trans community, or the over 50s – the first generation of people living into old age with HIV – are subjected to.

Such is the stigma and the shame of HIV in black African communities that it can divide families. HIV positive people can be asked to leave home, resulting in separation from their family and isolation from their community. We know of a woman from the black African community who felt so stigmatised for not breastfeeding her baby – due to her HIV treatment – that she stopped her drug regime. She died unnecessarily of an Aids-related illness. After her death, her medication was found in the attic.

While living with HIV can be stressful for all ages, ageing with HIV can introduce challenges to mental health and quality of life. When compared to their peers, older people living with HIV are disadvantaged in a wide range of ways – from poorer health, to social care and financial security. We’ve found that older people fear that social care services will be prejudiced about their HIV diagnosis. One man shared that he feared hugely going into a home – the attitudes towards HIV that he might find, and ignorance from the staff. This fear is rooted in many people’s historic and continued experience of HIV-related discrimination.  

Often considered to be a lower risk group than gay men, women are sometimes forgotten in HIV discourse and yet women are stigmatised as much as any other with HIV. Women living with the condition face a unique stigma. Some are mothers and have been accused of being “irresponsible” and “putting children at risk”.

For the record, taking antiretroviral medication (ART) lowers the amount of virus in your blood to “undetectable” levels. When the level of HIV in your blood is so low that it can’t be picked-up in tests it is undetectable. This means there is an extremely low risk of passing on HIV.

Because of ART, undetectable women have a very low risk of passing on HIV to their babies. New-borns are given their own short course of ART to further reduce their risk of developing HIV, and undergo a series of tests during the first 18 months of life.

Many transgender people are on a difficult gender journey, which includes lots of access to GPs for onward referrals to specialists, and still they worry about HIV stigma. Some deny their HIV status in settings where possible, as they look at it as a barrier to achieving their goal. Gender specialist clinics are embedded in mental health departments, and some positive trans people worry that the stigma of diagnosis might be seen as an indicator of promiscuity, which they feel might work against their cases.

And what of stigma in the gay community? The poll mentioned earlier found that of 410 gay men living with HIV, 77 per cent experience stigma – with more than two thirds experiencing this most from within the gay community.

Those gay men who take the plunge and live openly with their status are often heckled, and sent abuse on dating apps like Grindr, even receiving messages that they shouldn’t be using it because “they’ll infect others”. It’s all too easy in the digital age for stigma to persist, and ignorance to remain faceless.

Stigma is best countered with fact. But there’s a clear lack of education amongst many – both positive and negative. Growing up with sex and relationship education lessons that only teach the reproduction cycle is not enough. Young people should be given clear and detailed information about the risks of HIV, but also how living with HIV in the UK has changed, and it is now an entirely manageable health condition.

Officially, stigma is defined as a mark of disgrace associated with a particular circumstance, quality, or person. Let’s turn that around today, and use the red ribbon to stop stigma. Let’s use it a mark of solidarity, compassion and understanding.

Let’s start a conversation about how we speak and write about HIV. Let’s stand together, today of all days against HIV stigma. Start now – join the solidarity on social media by taking a selfie with your red ribbon and #StopStigma.