Engineers build bridges, machines, computers, even software. Physicians diagnose diseases and try to cure them using facts. Biologists can determine genetic defects and try to remedy them.
What can economists do? That was the question which initiated this blog going on 14 years ago. In the rather proto Marxist web site, in my opinion and in my experience, the Project Syndicate, they note:
Forecasting inflation is a staple of macroeconomic modeling, yet virtually all economists’ predictions for the United States in 2021 were way off the mark. This dismal performance reflected a collective failure to take economic models seriously enough, as well as other analytical shortcomings. In 2008, as the global financial crisis was ravaging economies everywhere, Queen Elizabeth II, visiting the London School of Economics, famously asked, “Why did nobody see it coming?” The high inflation of 2021 – especially in the United States, where the year-on-year increase in consumer prices reached a four-decade high of 7% in December – should prompt the same question. Inflation is not nearly as bad as a financial crisis, particularly when price increases coincide with a rapid improvement in the economy. And whereas financial crises may be inherently unpredictable, forecasting inflation is a staple of macroeconomic modeling.
There are all sorts of equations for predicting but as I tried them over the decades none work. Why inflation? Two reasons. First too much Government spending, period. Second, total lack of confidence in the Government. I lived through Carter in DC and saw that mess up close. At least he was one of the most decent Presidents, a bit clueless, but well intentioned. Currently we have lived through one after the other of rather bumbling characters. On both sides of the fence.
It took Carter 4 years to get to the mess he was in. We have another three under the current regime. The economists should be relegated to other soothsayers. Not to be listened to.
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