Peak Oil is You
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Page added on January 30, 2013
Why Economists Get Things Wrong
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Following today’s 3-sigma miss in GDP by the greatest and goodest economists of the world, we thought David McWilliams brief ‘Punk Economics’ clip on “why economists get things wrong” was particularly appropriate. With Mark Zandi’s “this didn’t really happen” comment this morning on GDP, McWilliams starts by warning of the most dangerous of economic soothsayers – the overconfident and over-optimistic forecaster. Perhaps, he notes, the Queen was on to something when she asked (about the crisis), “why didn’t you see this coming? …and why should I listen to you now?” The key fact driving economists’ inability to predict the future is a lack of understanding of the present thanks to the “complete and utter nonsense” that economists see the world as rational – which, he shows, we certainly are not. There is no economics for emotions, exuberances, impulses, or frenzies (as is all too clear currently). We simply don’t learn from our mistakes and always believe this time will be different. Indeed…
One Comment on "Why Economists Get Things Wrong"
BillT on Thu, 31st Jan 2013 12:49 am
This is a world of 7,000,000,000 individuals, all having an effect of different measure on the direction we are going. A billionaire has much more power than an African struggling to survive, but both do have an effect.
The fact is that economists and deniers have the same problem. They want BAU because anything else hurts. They will be in uncharted territory if anything changes significantly. Both are living in the distant past. Both will be proven wrong, eventually.