A European Affair

Imagine; you are locked in a room with twelve other individuals, it’s a stifling summer’s day and you have to decide whether a teenaged Puerto Rican will be sent to the electric chair (because this is the 1950s). His crime? Killing his father with a switchblade. You cannot leave the room until you and your fellow jurors have made a unanimous decision. You are also frustrated, because although there is clear evidence that the boy is guilty, one of your fellow jurors is refusing to cooperate. You don’t know his name but he has been labelled “Juror #8” for anonymity’s sake. He seems to think that the jury should collectively and methodologically go through the evidence one more time. You are not sure why, but it’s very frustrating because this room is very hot.

“If there’s a reasonable doubt in your minds as to the guilt of the accused, a reasonable doubt, then you must bring me a verdict of not guilty. If however, there is no reasonable doubt, then you must in good conscience find the accused guilty. However you decide, your verdict must be unanimous. In the event that you find the accused guilty, the bench will not entertain a recommendation for mercy. The death sentence is mandatory in this case. You are faced with a grave responsibility. Thank you, gentlemen.”

– The Judge.

This is roughly the scene presented in Reginald Rose’s play Twelve Angry Men (1954) and later in Sidney Lumet’s feature film adaptation (1956). The play is exhausting, dominated by angry dialogue and violent disagreement. Slowly, Juror #8 convinces his peers to return to the evidence; they begin to see a strong case for “reasonable doubt”, and finally, Juror #3, the last remaining advocate of guilt, gives way.

There is a good message here; things may not always be what they seem and “evidence” should never be removed from scrutiny. The jury will never categorically know whether the teenager was innocent or not. Rather, it is their attitude of balanced evaluation that is exemplary and as a model prevents needless loss of life.

Until last week, the work of Carmen Reinhart and Ken Rogoff (RR) on public sector debt ratios had largely been taken as fact in economic policy circles. Their statistical analysis, based on a 200-year database and covering dozens of countries, suggested that public debt rations above 90% were associated with much lower rates of GDP growth than debt rations under 90%. As European public debt expanded in the wake of the 2007/8 financial crises, policy advisors and economists alike advocated a healthy dose of “austerity measures”. Yet a new paper by Thomas Herdon, Michael Ash and Robert Pollin (HAP) now argues that the RR “fact” was based on certain statistical errors.

In reality, the “truth” is much more complex; the original RR paper never convincingly demonstrated that GDP would dramatically decline once the 90% public debt threshold had been crossed, largely because the authors chose to focus on certain calculations rather than others (skewed evidence). On the other hand, even the HAP paper acknowledges that as a general trend, higher public debt does lead to slower growth. However, as Paul Krugman has argued many times, a negative correlation between debt and growth does not establish the direction of causation; slow growth may itself actually be the cause of higher debt, as governments borrow money to make up for lower tax receipts.

The economic debate has further entrenched divisions between northern and southern countries. Deciding on whether Europe should continue with austerity policies or not, Europe’s politicians could be characterised as 23 Angry Men and 4 Angry Women, (at the recent European Council Summit in March, female heads of state represented Slovenia, Germany, Denmark and Lithuania). These would do well to exercise the caution demonstrated by Juror #8. In Portugal, where unemployment rates hit a 17.5% high in February, application of the rule of law by the Constitutional Court found that proposed austerity budget cuts were untenable. Specifically, judges stated that cutting the 14th month of pay for public-sector workers and pensioners constituted unfair discrimination. Brussels could barely hide its disgust at the ruling and then, with that wonderful twist of fate that has dictated so much of history, RR’s public debt thesis was publically humiliated. It pays to have institutions that offer equitable, fair and balanced examinations of “facts”.

On the subject of Constitutional Courts, the EU should also bend its thoughts towards Hungary, where President János Áder recently signed a decree for new constitutional reforms that removed the right of the Hungarian Constitutional Court from giving its opinion on the content of past and present law.

An equitable institution is powerful force and will always threaten those who wish to manipulate evidence.

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  1. Really good post, a little late I found it but read whole post and I can say it’s amazing.

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