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An amazing mea culpa from the IMF’s chief economist on austerity
Now that is absolutely fascinating. The practitioners of the dark art would have us believe otherwise, but yet again we are "surprised" to find that economics is about as much of a science as astrology.
The aspect to economic modeling and forecasting which is most infuriating is not that economic forecasts and models are inaccurate, undependable and many times flat-out wrong. Given the complexity of the interactions of large-scale international financial issues, that inaccuracy and undependability is understandable and forgivable.
Weather forecasting is a good comparison: the degree of complexity in weather modeling is also of a very high order. It is only fairly recently, with an ongoing huge investment in satellite observation and computer technology, that weather forecasting has become reasonably dependable. And even at this stage, surprises still occur.
The point that I would like to emphasize is that, unlike the extreme hubris of the economic "professionals", the professional weather folks will flat out tell you that they still don't have all of the answers, by any means. Try finding a concession of that nature from any of the major economic schools... no, they have ALL of the answers, and they will be the first to tell you so. Champions of von Mises and the Austrian "school" are particularly egregious in this arrogance... God has spoken to them, and the questioning of assumptions is unthinkable.
At least the Keynesians allow for variables such as "animal spirits", which is a sort of back-handed acknowledgement that there just may be factors in a complex economic equation which are in fact somewhat uncertain.
Computer technology is advancing to the state that it's application to economic models may allow future modeling to approach the accuracy of weather forecasting, but we're still a long way from that point. The only aspect of economics that we can forecast with complete confidence at this time is that an economist will never admit that he might be wrong... well, hardly ever, anyway... Investor says "amazing", and he's right.
It is not the first time IMF prescribed wrong medicine.
As for "Amazing" qualification, I just copied the title of the article from Washington Post but it is still amazing that they acknowledged the mistake.
Ah, quite your bitch'in........tis some of your country's money doing the good deed. I have read more than I care to about this "club" of elities over many years. Perhaps this was just a mis-direction play to begin.
Reply to @catch22: Actually, IMF is dominated by Europeans while World Bank is dominated by USA. I am not saying one is better than the other but the prescriptions issued by these organizations reflect that dominating bias.
Comments
The aspect to economic modeling and forecasting which is most infuriating is not that economic forecasts and models are inaccurate, undependable and many times flat-out wrong. Given the complexity of the interactions of large-scale international financial issues, that inaccuracy and undependability is understandable and forgivable.
Weather forecasting is a good comparison: the degree of complexity in weather modeling is also of a very high order. It is only fairly recently, with an ongoing huge investment in satellite observation and computer technology, that weather forecasting has become reasonably dependable. And even at this stage, surprises still occur.
The point that I would like to emphasize is that, unlike the extreme hubris of the economic "professionals", the professional weather folks will flat out tell you that they still don't have all of the answers, by any means. Try finding a concession of that nature from any of the major economic schools... no, they have ALL of the answers, and they will be the first to tell you so. Champions of von Mises and the Austrian "school" are particularly egregious in this arrogance... God has spoken to them, and the questioning of assumptions is unthinkable.
At least the Keynesians allow for variables such as "animal spirits", which is a sort of back-handed acknowledgement that there just may be factors in a complex economic equation which are in fact somewhat uncertain.
Computer technology is advancing to the state that it's application to economic models may allow future modeling to approach the accuracy of weather forecasting, but we're still a long way from that point. The only aspect of economics that we can forecast with complete confidence at this time is that an economist will never admit that he might be wrong... well, hardly ever, anyway... Investor says "amazing", and he's right.
As for "Amazing" qualification, I just copied the title of the article from Washington Post but it is still amazing that they acknowledged the mistake.
I have read more than I care to about this "club" of elities over many years.
Perhaps this was just a mis-direction play to begin.