Matt Bruenig

Matt Bruenig is a blogger at PolicyShop. Follow him on Twitter

Recent Articles

Reinhart and Rogoff's Theory of Government Debt is Dead

Carmen Reinhart and Kenneth Rogoff wrote a wildly influential book four years ago called This Time Is Different .* The thesis of the book is that when a government has a debt-to-GDP ratio above 90 percent, it is terrible for economic growth. The authors also followed up with a couple of papers arguing the same thing. Pro-austerity forces here and elsewhere in the world have seized upon the book to push their favored policies. From the beginning, the paper was met with extreme skepticism among the left. The theory could have gotten the causation backwards: perhaps low growth drives high debt, not the other way around. The theory also seemed hard to understand within any macroeconomic frame. It would follow from it that a government that holds assets instead of selling them to reduce debt somehow caused growth to decline, which is just a very confusing idea. The conceptual problems could iterate on and on. Beyond those problems, other researchers also had a hard time replicating their...

Cash Benefit Programs Are Not Really Government Spending

Wikimedia/Social Security Administration
For accounting purposes, it makes sense to count programs like Social Security, disability insurance, and Temporary Assistance for Needy Families as government spending. But these kinds of programs are not really government spending because the government does not actually direct how the money is spent. Unlike building a road, for instance, where the government decides that a road should be built and then pays to make it happen, cash benefit programs involve the government distributing money to people and allowing them to decide where to spend it. This is an important distinction because many of the problems people often raise about government spending simply do not apply to cash benefit programs. For example, one common criticism of government spending is that the government is incapable of figuring out what people actually want, and therefore wastes a bunch of money on projects and services that do not deliver much value. Another common criticism is that directly spending money...

The Horrible Youth Labor Market

One of my pet peeves about the coverage surrounding the plight of young people in America is that it focuses heavily, and at times exclusively, on how well recent college graduates are doing. Why people focus on this is a mystery to me. I suspect it is because the chattering classes are almost all college graduates, as are their friends. To them, being a recent college graduate is simply what it means to be a young person in the labor market. The focus on college graduates is pernicious for a couple of reasons. First, most young people are not college graduates. So on a purely descriptive level, focusing on graduates fails to capture what the reality of being a young person looking for work actually looks like. Second, college graduates are considerably better off than their non-degreed peers. As bad as being a recent college graduate might be, being in the same position without a degree is so much worse. The primary focus on young college graduates skews our understanding of the...