Economists have been forced finally to acknowledge what everyone from HM the Queen downwards has known for a considerable time: they don’t seem to have a clue about what’s going on.
First they failed to spot the full scale of the financial crash until it was too late. Then they predicted that a vote for Brexit would cause the British economy immediately to implode.
For these sins first of omission and then commission, they are now having to explain what could possibly have gone so badly wrong with folk as brainy as they.
Here are some observations.
First, prediction is a mug’s game. Economists are analysts, not soothsayers. The future is necessarily unpredictable. Stating what will happen, or is likely to happen, is just asking for professional trouble.
Second, prediction is particularly useless when you’re dealing with complexity. An economy is highly complex. There are so many variables to start with, and then there are unforeseen reactions or feed-back loops or other possible developments and reactions to developments, and so on.
That’s one reason why anthropogenic global warming theory is bogus. Climate is one of the most complex systems there is. It is not possible to feed into the computer all possible variables that may occur in the future. The same is true for economics. Computer modelling is just not up to the task it is being given.
The model is only as good as the information with which the computer is programmed. If you put into the computer inadequate data, you get garbage out the other end. And that’s before you factor in the element of possible bias in the programmer’s mind.
Those who purport to know what the future holds have always been venerated as seers – people who can see what lesser mortals cannot. Economists are not oracles. They should learn a little humility and throw away their crystal balls.