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A mandatory reminder: if the economists could actually predict the future, they'd all be ultra-rich. That is evidently not the case. So take any prognostication

by m0zg 7y ago

A mandatory reminder: if the economists could actually predict the future, they'd all be ultra-rich. That is evidently not the case. So take any prognostications with a boulder sized grain of salt.

Gustomaximus 7y ago
They would need to be able to predict the future plus put a significant portion of their net worth on the line likely many times.
imtringued 7y ago
How would prediction of the future allow an economist to become ultra rich? The maximum profit you can obtain from arbitrage is fixed, it does not grow as you add more market participants. Therefore as you add more and more experienced economists you would expect them to get average returns or worse. You may argue that if only a single person is able to predict the future then that person could have all the arbitrage profit for themselves. Although this is possible in theory the problem is that you are talking about a non restricted group of people called "economists" who all share a similar education background which is the exact opposite of a single person with exclusive advantages.
- m0zg 7y ago
  The flaw in this logic is that you're imputing a uniform level of predictive power to all "economists". In any given group there will be people who are much better at a certain skill than others. Such people would be ultra-rich if the skill is to predict the economic future, largely at the expense of those who are not able to predict quite as well.
  - AstralStorm 7y ago
    Ultimately one man can do only so much. Thus you start to involve middlemen who do not necessarily make optimal decisions - and you have to predict their result at least in the median. Stack many levels of this, each accumulating error and delay. Good luck. There is such a thing as control efficiency gain, which you have to balance against stability and constraints. It's a really tough problem, and since economists only work with slow averages, the gains they can make are relatively small over the general growth if present. And that presumes your optimization condition is ultimately correct and complete, which most of these are not. Even an oracle would have limited efficiency unless it could reproduce itself. Even if you can observe all states that does not mean you can control them.
ksec 7y ago
The thing I learned over the years are economists are actually historian, they explain the past, and judge the future with historical patterns.
- m0zg 7y ago
  Most other people never learn this bit of common sense.

by m0zg 7y ago

A mandatory reminder: if the economists could actually predict the future, they'd all be ultra-rich. That is evidently not the case. So take any prognostications with a boulder sized grain of salt.

Gustomaximus 7y ago

They would need to be able to predict the future plus put a significant portion of their net worth on the line likely many times.

imtringued 7y ago

How would prediction of the future allow an economist to become ultra rich? The maximum profit you can obtain from arbitrage is fixed, it does not grow as you add more market participants. Therefore as you add more and more experienced economists you would expect them to get average returns or worse. You may argue that if only a single person is able to predict the future then that person could have all the arbitrage profit for themselves. Although this is possible in theory the problem is that you are talking about a non restricted group of people called "economists" who all share a similar education background which is the exact opposite of a single person with exclusive advantages.

m0zg 7y ago
The flaw in this logic is that you're imputing a uniform level of predictive power to all "economists". In any given group there will be people who are much better at a certain skill than others. Such people would be ultra-rich if the skill is to predict the economic future, largely at the expense of those who are not able to predict quite as well.
- AstralStorm 7y ago
  Ultimately one man can do only so much. Thus you start to involve middlemen who do not necessarily make optimal decisions - and you have to predict their result at least in the median. Stack many levels of this, each accumulating error and delay. Good luck. There is such a thing as control efficiency gain, which you have to balance against stability and constraints. It's a really tough problem, and since economists only work with slow averages, the gains they can make are relatively small over the general growth if present. And that presumes your optimization condition is ultimately correct and complete, which most of these are not. Even an oracle would have limited efficiency unless it could reproduce itself. Even if you can observe all states that does not mean you can control them.

ksec 7y ago

The thing I learned over the years are economists are actually historian, they explain the past, and judge the future with historical patterns.

m0zg 7y ago
Most other people never learn this bit of common sense.