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The grandstanding against economists is disappointing. Let's say you were driving at night with someone in the country, and because they either knew the road o

The grandstanding against economists is disappointing. Let's say you were driving at night with someone in the country, and because they either knew the road or could see farther ahead they said, "There's a boulder in a road ahead, we're likely going to hit it if you don't slow down and turn to avoid it." And you do slow down and it allows you to turn to avoid a crash. How do you respond? Mock them for always being wrong about predicting a crash? People mistake warnings about possible recessions, which have a probability attached, with forecasting an inevitable doomsday recession. There's no credit given to economists for the recessions or depressions avoided. Often the warnings are about the risk of a recession with no intervention, and in an overwhelming majority of cases there is some action taken in fiscal and monetary policy to soften the blow or avoid the worst outcomes.

sfblah 6y ago
This is a very reasonable comment. Social sciences are frustratingly imprecise. But, understanding the history of various scenarios is useful. And, it can result in useful policy changes which avoid the worst, as you mentioned.
- TheCowboy 6y ago
  I think it helps to have a little charity when it comes to other fields, even if you're not completely on board, because you can end up accidentally limiting your understanding of the world. I'm also sure a lot of people here can identify with feeling frustrated at hot takes about tech that lump all tech workers together as predators eager to violate your privacy.
- save_ferris 6y ago
  The problem I have with economics after reading Debt: The 5000 years by David Graeber[0] (solid read, btw) is that the field was founded on some fundamentally flawed assumptions about its own history. The biggest one being that there's no evidence that a barter economy preceded a cash economy. We've all been taught that this was the case when there's no evidence it was true and there are a lot of unexplained problems with the idea of barter economies (i.e. how were people able to trade items of equitable value regularly, mutual goods exchange mismatch, etc.) In our lifetimes, economists largely balked at the idea that the housing market could collapse, and then boom, 2008 happens. I don't necessarily think that the entire field of study is bunk, but our capitalist society tends to prop them up like oracles without much scrutiny because they're the experts, and it's hard to provide a counterweight against that expertise, especially when their philosophy is used to create the vast wealth inequality we see today. 0: https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
  - eloff 6y ago
    > In our lifetimes, economists largely balked at the idea that the housing market could collapse, and then boom, 2008 happens. I don't buy that without citations. Everyone knows housing markets are like most other markets and go both up and down in cycles. Like most other markets, the bigger the boom, the bigger the bust that follows. To say that a majority of economists believed otherwise seems like pure hyperbole to me.
    - save_ferris 6y ago
      From an analysis by the Wharton school[0]: “It’s not just that they missed it, they positively denied that it would happen,” says Wharton finance professor Franklin Allen, arguing that many economists used mathematical models that failed to account for the critical roles that banks and other financial institutions play in the economy. “Even a lot of the central banks in the world use these models,” Allen said. “That’s a large part of the issue. They simply didn’t believe the banks were important.” They were fundamentally unprepared and many were unwilling to even entertain the idea that the housing market could collapse. That’s what made stories like The Big Short so surreal, they had all these experts telling them that they were wrong, and economists played a major role in that episode. 0: https://knowledge.wharton.upenn.edu/article/why-economists-failed-to-predict-the-financial-crisis/ https://knowledge.wharton.upenn.edu/article/why-economists-f...
      - 37r7eyyeey 6y ago
        > But it was the financial institutions that fomented the current crisis, by creating risky products, encouraging excessive borrowing among consumers and engaging in high-risk behavior themselves, like amassing huge positions in mortgage-backed securities, Allen says. < Which is probably a big reason why many economists weren't watching harder. If the banks are reporting things are fine while incentivizing bad loans on the down low then it's not especially surprising that a data driven field was caught offguard by tainted information.
      - AngrySkillzz 6y ago
        Obviously no one knew what form it would take, but people were pointing out inflated housing prices[1] and other shady tactics in the mortgage market for YEARS. There's always cranks on TV saying This Time Is Different (2000, anyone?), but its just incorrect to say that serious economists were "unwilling to entertain the idea that the housing market could collapse." [1] https://www.npr.org/templates/story/story.php?storyId=4679264 https://www.npr.org/templates/story/story.php?storyId=467926...
twblalock 6y ago
> There's no credit given to economists for the recessions or depressions avoided. I don't think we have avoided any recessions, ever, based on the advice of economists. They just aren't that good at forecasting. They don't even agree on the policy that is appropriate to fight recessions when we know there is one. The "grandstanding" against economists in this thread is entirely justified.
- mywittyname 6y ago
  Also, economies aren't easy to control: We can't even get people to wear masks even though the economic impact of not doing so is obvious and relatively straight-forward to calculate. An economist could come from the year 2100 with 500TB of economic data and news for the past 100 years, and there's a 0% chance that the public would ever heed their warnings.
  - chrisco255 6y ago
    Not at all. Sweden never wore masks and never shut down schools and yet they achieved comparable results to draconian lockdowns. They already have herd immunity. It's likely we would get 2 economists from the year 2100 both giving opposite reasons for the next 80 years of events.
    - luckydata 6y ago
      They don’t have yet herd immunity and their results are worse with respect to all comparable countries that had a lockdown. What you say is categorically false.
      - heavenlyblue 6y ago
        It’s not much worse as you would expect it to be, though.
      - twblalock 6y ago
        There are definitely countries in Europe that locked down and yet have a higher per-capita death rate than Sweden.
leftyted 6y ago
All economists can do is project current trends into the future. Economists do not have -- to use your analogy -- a good theory for predicting when there will be a rock in the road. When economists act like they have such a theory is when people start rolling their eyes.
- TheCowboy 6y ago
  Economics isn't about making some projection like "GDP number going down so will go down more!" Current behavior contradicts this outright. Economists are broadly warning against being too optimistic about interpreting the current upward trend as meaning that a speedy and full recovery, without any economic damage, is inevitable. There are many ideas and models about economic shocks and recessions that had important predictive value in demonstrating how this recession unfolded. It's not like this is something beyond understanding when you can compare the actions other countries took compared to the US.
marcosdumay 6y ago
Well, they really don't have much onus of evidence this time, but... How often do governments follow economists predictions? Govs mostly react to things after they happen, much more so in monetary matters. When they do follow predictions, it's some stupid, politically based one, not an economics consensus. Besides, we trust that guy on your scenario because he has a verifiable model of how accidents happen. For some reason, the people that make macroeconomics theories really dislike verifiable stuff, with very few exceptions.
- TheCowboy 6y ago
  > How often do governments follow economists predictions? Central banking and monetary policy lowering interest rates? The relief package earlier this year? Seriously? > the people that make macroeconomics theories really dislike verifiable stuff, with very few exceptions What are you even talking about?
  - quintushoratius 6y ago
    > Central banking and monetary policy lowering interest rates? The relief package earlier this year? Those are examples of politicians reacting to events that were already occurring or had occurred. Counter-point, most respectable economists said that the 2017 Trump tax cut was a bad idea, it was too expensive and helping the wrong people. Fast forward to this year, and now the deficit is ballooning due to said tax cut, leaving the government very little wriggle-room.
127 6y ago
Economists are a priest class that enables the ruling class to make stupid and short sighted decisions.
- TheCowboy 6y ago
  Many weren't on board with the tax cut bill that passed under the current administration. http://www.igmchicago.org/surveys/tax-reform-2/ http://www.igmchicago.org/surveys/tax-reform-2/
  - nradov 6y ago
    Yes for any given tax policy proposal you can always find one economist who supports it and another who opposes it. Does that tell us anything useful?
pantsforbirds 6y ago
As a counter argument it seems to me that if you are an expert in a field you can generally predict disasters and be wrong and people tend to not care so much, but if you predict a more positive outcome and you are wrong people will never forget. I think this kind of societal reaction pushes experts to being more willing to give severely negative predictions.
- TheCowboy 6y ago
  Another factor that might cause economists to sound doom and gloom is that once you do hit a certain point it's much more difficult to get out of it using conventional policy tools. You run an increased risk for an actual prolonged depression and start doing greater amounts of long-term economic damage.
ttul 6y ago
This is why it's referred to as "the dismal science".
juniper_strong 6y ago
I don't think your analogy is a correct one. Here's something from 538: "A 2018 study conducted by Loungani and others looked at 153 recessions in 63 countries between 1992 and 2014 and found that the vast majority were missed by economists in both the public and private sector. This was painfully true in the case of the global financial crisis in 2008, which wasn’t officially declared a recession until it had been going for almost a year." Economists apparently can't predict the future. And they don't seem to be able to "predict" the present, or the recent past. So I guess in your analogy, it would be something like, "We were driving at night with an economist in the country, and they said, 'There are no boulders ahead that I can see'", and then you hit a boulder, car was totalled, you were severely injured, spent months in recovery, and then 9 months later the economist gets back to you with, "Recent data confirms that we did, indeed, hit a boulder." I think your argument is an argument from authority. If you can't "predict" the past, you are not an authority.
TwoNineFive 6y ago
The "economists" you see on TV have been calling boulders in the road for the last decade and we are in the middle of Kansas. They have no credibility.

sfblah 6y ago

This is a very reasonable comment. Social sciences are frustratingly imprecise. But, understanding the history of various scenarios is useful. And, it can result in useful policy changes which avoid the worst, as you mentioned.

TheCowboy 6y ago
I think it helps to have a little charity when it comes to other fields, even if you're not completely on board, because you can end up accidentally limiting your understanding of the world. I'm also sure a lot of people here can identify with feeling frustrated at hot takes about tech that lump all tech workers together as predators eager to violate your privacy.
save_ferris 6y ago
The problem I have with economics after reading Debt: The 5000 years by David Graeber[0] (solid read, btw) is that the field was founded on some fundamentally flawed assumptions about its own history. The biggest one being that there's no evidence that a barter economy preceded a cash economy. We've all been taught that this was the case when there's no evidence it was true and there are a lot of unexplained problems with the idea of barter economies (i.e. how were people able to trade items of equitable value regularly, mutual goods exchange mismatch, etc.) In our lifetimes, economists largely balked at the idea that the housing market could collapse, and then boom, 2008 happens. I don't necessarily think that the entire field of study is bunk, but our capitalist society tends to prop them up like oracles without much scrutiny because they're the experts, and it's hard to provide a counterweight against that expertise, especially when their philosophy is used to create the vast wealth inequality we see today. 0: https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
- eloff 6y ago
  > In our lifetimes, economists largely balked at the idea that the housing market could collapse, and then boom, 2008 happens. I don't buy that without citations. Everyone knows housing markets are like most other markets and go both up and down in cycles. Like most other markets, the bigger the boom, the bigger the bust that follows. To say that a majority of economists believed otherwise seems like pure hyperbole to me.
  - save_ferris 6y ago
    From an analysis by the Wharton school[0]: “It’s not just that they missed it, they positively denied that it would happen,” says Wharton finance professor Franklin Allen, arguing that many economists used mathematical models that failed to account for the critical roles that banks and other financial institutions play in the economy. “Even a lot of the central banks in the world use these models,” Allen said. “That’s a large part of the issue. They simply didn’t believe the banks were important.” They were fundamentally unprepared and many were unwilling to even entertain the idea that the housing market could collapse. That’s what made stories like The Big Short so surreal, they had all these experts telling them that they were wrong, and economists played a major role in that episode. 0: https://knowledge.wharton.upenn.edu/article/why-economists-failed-to-predict-the-financial-crisis/ https://knowledge.wharton.upenn.edu/article/why-economists-f...
    - 37r7eyyeey 6y ago
      > But it was the financial institutions that fomented the current crisis, by creating risky products, encouraging excessive borrowing among consumers and engaging in high-risk behavior themselves, like amassing huge positions in mortgage-backed securities, Allen says. < Which is probably a big reason why many economists weren't watching harder. If the banks are reporting things are fine while incentivizing bad loans on the down low then it's not especially surprising that a data driven field was caught offguard by tainted information.
    - AngrySkillzz 6y ago
      Obviously no one knew what form it would take, but people were pointing out inflated housing prices[1] and other shady tactics in the mortgage market for YEARS. There's always cranks on TV saying This Time Is Different (2000, anyone?), but its just incorrect to say that serious economists were "unwilling to entertain the idea that the housing market could collapse." [1] https://www.npr.org/templates/story/story.php?storyId=4679264 https://www.npr.org/templates/story/story.php?storyId=467926...

twblalock 6y ago

> There's no credit given to economists for the recessions or depressions avoided. I don't think we have avoided any recessions, ever, based on the advice of economists. They just aren't that good at forecasting. They don't even agree on the policy that is appropriate to fight recessions when we know there is one. The "grandstanding" against economists in this thread is entirely justified.

mywittyname 6y ago
Also, economies aren't easy to control: We can't even get people to wear masks even though the economic impact of not doing so is obvious and relatively straight-forward to calculate. An economist could come from the year 2100 with 500TB of economic data and news for the past 100 years, and there's a 0% chance that the public would ever heed their warnings.
- chrisco255 6y ago
  Not at all. Sweden never wore masks and never shut down schools and yet they achieved comparable results to draconian lockdowns. They already have herd immunity. It's likely we would get 2 economists from the year 2100 both giving opposite reasons for the next 80 years of events.
  - luckydata 6y ago
    They don’t have yet herd immunity and their results are worse with respect to all comparable countries that had a lockdown. What you say is categorically false.
    - heavenlyblue 6y ago
      It’s not much worse as you would expect it to be, though.
    - twblalock 6y ago
      There are definitely countries in Europe that locked down and yet have a higher per-capita death rate than Sweden.

leftyted 6y ago

All economists can do is project current trends into the future. Economists do not have -- to use your analogy -- a good theory for predicting when there will be a rock in the road. When economists act like they have such a theory is when people start rolling their eyes.

TheCowboy 6y ago
Economics isn't about making some projection like "GDP number going down so will go down more!" Current behavior contradicts this outright. Economists are broadly warning against being too optimistic about interpreting the current upward trend as meaning that a speedy and full recovery, without any economic damage, is inevitable. There are many ideas and models about economic shocks and recessions that had important predictive value in demonstrating how this recession unfolded. It's not like this is something beyond understanding when you can compare the actions other countries took compared to the US.

marcosdumay 6y ago

Well, they really don't have much onus of evidence this time, but... How often do governments follow economists predictions? Govs mostly react to things after they happen, much more so in monetary matters. When they do follow predictions, it's some stupid, politically based one, not an economics consensus. Besides, we trust that guy on your scenario because he has a verifiable model of how accidents happen. For some reason, the people that make macroeconomics theories really dislike verifiable stuff, with very few exceptions.

TheCowboy 6y ago
> How often do governments follow economists predictions? Central banking and monetary policy lowering interest rates? The relief package earlier this year? Seriously? > the people that make macroeconomics theories really dislike verifiable stuff, with very few exceptions What are you even talking about?
- quintushoratius 6y ago
  > Central banking and monetary policy lowering interest rates? The relief package earlier this year? Those are examples of politicians reacting to events that were already occurring or had occurred. Counter-point, most respectable economists said that the 2017 Trump tax cut was a bad idea, it was too expensive and helping the wrong people. Fast forward to this year, and now the deficit is ballooning due to said tax cut, leaving the government very little wriggle-room.

127 6y ago

Economists are a priest class that enables the ruling class to make stupid and short sighted decisions.

TheCowboy 6y ago
Many weren't on board with the tax cut bill that passed under the current administration. http://www.igmchicago.org/surveys/tax-reform-2/ http://www.igmchicago.org/surveys/tax-reform-2/
- nradov 6y ago
  Yes for any given tax policy proposal you can always find one economist who supports it and another who opposes it. Does that tell us anything useful?

pantsforbirds 6y ago

As a counter argument it seems to me that if you are an expert in a field you can generally predict disasters and be wrong and people tend to not care so much, but if you predict a more positive outcome and you are wrong people will never forget. I think this kind of societal reaction pushes experts to being more willing to give severely negative predictions.

TheCowboy 6y ago
Another factor that might cause economists to sound doom and gloom is that once you do hit a certain point it's much more difficult to get out of it using conventional policy tools. You run an increased risk for an actual prolonged depression and start doing greater amounts of long-term economic damage.

ttul 6y ago

This is why it's referred to as "the dismal science".

juniper_strong 6y ago

I don't think your analogy is a correct one. Here's something from 538: "A 2018 study conducted by Loungani and others looked at 153 recessions in 63 countries between 1992 and 2014 and found that the vast majority were missed by economists in both the public and private sector. This was painfully true in the case of the global financial crisis in 2008, which wasn’t officially declared a recession until it had been going for almost a year." Economists apparently can't predict the future. And they don't seem to be able to "predict" the present, or the recent past. So I guess in your analogy, it would be something like, "We were driving at night with an economist in the country, and they said, 'There are no boulders ahead that I can see'", and then you hit a boulder, car was totalled, you were severely injured, spent months in recovery, and then 9 months later the economist gets back to you with, "Recent data confirms that we did, indeed, hit a boulder." I think your argument is an argument from authority. If you can't "predict" the past, you are not an authority.

TwoNineFive 6y ago

The "economists" you see on TV have been calling boulders in the road for the last decade and we are in the middle of Kansas. They have no credibility.