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Economists don't know what's going on

• pseudolus 2y ago
  https://archive.ph/eZPMQ https://archive.ph/eZPMQ
• bhaney 2y ago
  Business as usual then
  • mberning 2y ago
    There are probably Youtube economists that have a better track record than “professionals”. Same for “man on the street” style YouTubers.
    • layer8 2y ago
      Having an above-average track record should be worth more money than you can make on YouTube.
      • db48x 2y ago
        This is a common misconception. A good understanding of economics might enable you to decide what kind of interventions to use (or to avoid) in an economy as a whole, but will not necessarily give you any insight into how well a particular company will do in the market. They are entirely different skills. As a very simple example, companies often fail for non–economic reasons such as fraud, negligence, incompetence, accidents, etc, etc.
        • spwa4 2y ago
          Since we have allowed economic unions to become so huge that question is trivial to answer: huge unions concentrate wealth to an extreme extent. This is playing out both in the US and EU (slowly, or at least, slowly compared to the same playing out in China) So which companies will do well? The already biggest ones, including the government itself. That's the only metric that matters, and this is indeed what we've seen since WW2. S&P500 -> S&P100 -> FAANG -> MAG7 -> what do you think comes next? One, and only one, of the big 7 will win. The problem is: everyone wants everything. The obvious "natural" fix is simple: go back to more power to smaller political entities. That will destroy large companies, as the smaller entities will change laws to make that happen, to protect themselves. Which means, no apple, no internet, no (significant amounts of) oil, no ... This is also ignoring that large entities will fight to defend themselves.
      • lanfeust6 2y ago
        Well let's first distinguish between macro and micro economists, traders and finance guys, etc.
  • mmwako 2y ago
    haha came here for this.
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  • Angostura 2y ago
    Absolutely not. What is going on with the ONS is unprecedented
    • skippyboxedhero 2y ago
      It isn't. Some of their data has been suspect for a very long time, unfortunately (and ironically) there is also a partisan reason why the Economist doesn't mention the series that is most suspect: population estimates. These numbers are known bad for over two decades now...they have done nothing. The US has had a far more serious approach to economic statistics, the ONS is a complete joke. It has never been easier or cheaper to collect stats but the ONS, for some series, is using collection methods that haven't changed since WW2. This is typical of government in the UK, completely isolated from the rest of society.
  • Mutjake 2y ago
    Complex systems are difficult to predict or reason about, especially in turbulent times, and when only partial information about the world is available, and only part of it is accurate. Nothing new under the sun. If you’d always know what’s going on, you could categorically beat the market or make central planning to work flawlessly.
• golemiprague 2y ago
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• jmclnx 2y ago
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  • selfselfgo 2y ago
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  • readthenotes1 2y ago
    You forgot to use the sarcasm font...
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• xbmcuser 2y ago
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• readthenotes1 2y ago
  "America’s Bureau of Labour Statistics (BLS) has faced a real-terms cut of 20% since 2012. " I would be shocked to learn that data collection, retention, analysis, and distribution costs haven't dropped by 50% or more since 2012. (In the USA, the article does note that a real problem is some of the data is from unverified self-reported surveys and the response rate is low)
  • astrange 2y ago
    It doesn't matter if they're unverified as long as nothing external makes the rate of false responses change over time.
  • dv_dt 2y ago
    Since the US never fixes problems like healthcare or housing costs, I wouldn't be surprised that any tech savings are more than swamped by the costs of keeping up with competitive wages and benefits. Good data analytical process still costs money and involves people
    • astrange 2y ago
      Healthcare costs actually haven't been rising as much as they used to, for unclear reasons.
• mschuster91 2y ago
  > When people deign to respond, partisanship clouds their answers. This is a particular problem in America. Just before the presidential election 42% of Democrats believed that the economy was getting better, whereas just 6% of Republicans did. Today 6% of Democrats and 53% of Republicans respond in the same manner. Surveys find that Americans’ expectations of inflation are rising. The trend is worrying, but how meaningful is it? After all, Democrats’ expectations are soaring well above those of Republicans. That one is a complex thing, partially because realities and expectations are in a mismatch. Republican and far-right allied media have been consistently pushing the narrative of Biden being incompetent and dragging the economy down, and now push that the economy is gonna skyrocket Just Next Day thanks to Trump's tariffs. A second part is that "is the economy good or bad" is a very broad question. Democrats under Biden/Harris pushed for months that "the economy is good" and backed that by unemployment numbers, stock index charts and godknowswhat - all while millions of people faced the awful reality of exploding rents and, in the end, exploding egg prices as well, and the Democrats never cared to address this mismatch of realities: both statements were true, but only from a dedicated point of view. No wonder people were fed up with what they deemed to be outright lies when their reality completely crashed with the reported reality. And it's just the same here in Europe, most importantly in Germany. On paper, our companies are still making billions of dollars in profit... but laying off people by the thousands. On paper, we're one of the richest economies in the entire world... but our housing markets are virtually dead with barely anyone able to afford to move, our infrastructure is literally collapsing (just in the last few months, a bridge in Dresden outright collapsed, and another bridge in Berlin was caught to be on the verge of immediate destruction). And again, the far-right populists are the only ones profiting politically.
  • astrange 2y ago
    > all while millions of people faced the awful reality of exploding rents Because most people are homeowners, and the way rent prices are reported in CPI counts homeowners as renting to themselves, when this goes up it actually means people are making money. This is especially true because everyone bought homes in 2021 right before interest rates went up.
  • kmeisthax 2y ago
• Trekkie101-B 2y ago
  The ONS get some of their data on jobs by surveying a ton of companies each month. However the survey has gone from being a page or two to around 10 pages. I sense the data quality being returned may have fallen off a cliff edge.
  • leereeves 2y ago
    Why would more data imply worse data?
    • eightysixfour 2y ago
      People don’t fill out the 10 pages accurately, they just want it off their to-do list.
    • matt-p 2y ago
      Because it lands on the desk of the head of HR, assistant to the COO, or MDs desk and in all honesty there not going to spend more than half an hour on it - so you've got 30 mins / number of questions.
    • ooklala 2y ago
      I think the implication is that it’s gotten so long that people can’t be bothered to finish filling it out… (Anecdotally I can back this up—the one time I’ve remembered to fill it out in time, it took like 10 minutes…I haven’t bothered to fill it since)
      • leereeves 2y ago
        Oh, I assumed it was mandatory, like tax returns or the census.
    • IshKebab 2y ago
      Because people aren't form-filling robots.
      • ludicrousdispla 2y ago
• Frieren 2y ago
  > Budget cuts meant that America stopped publishing some national-accounts data last year Governments need to invest money to properly work. many countries have been following neoliberal policies, not only the USA. Cut everything that the government does to cut taxes for billionaires and to not fix the mega rich getting loans instead of profits to not be taxed, and countries will fall. A modern country needs investment. Accounting is just one of the many things failing.
  • programmertote 2y ago
    That's true. I currently work for a boutique real estate consulting firm. A senior guy, who has been working with Census-sourced data for two decades or more AND has good sources within the Census bureau--of the firm told me that Census department is considering of stopping some survey data (some sections of American Community Survey or some sort is what I recall as an example he used; but please don't quote me on that) due to lack of sufficient budget. One trivia that I learned: some parts of the Census building permits data is collected in the old fashioned way via mail. The Census bureau has to consolidate these disparate sources of building permits from 3100+ counties and deliver monthly, annual revised monthly, annual summary values. It's kind of labor intensive and error prone (and thus, revised data is released once a year) to collect.
  • s1artibartfast 2y ago
    The US federal government, broadly speaking, does not invest money. It is an insignificant part of the budget. For example, infrastructure is ~2% of the budget, and that includes both maintenance and waste. The vast majority of federal tax funds are spent on non-investment welfare consumption of one form or another.
• Gualdrapo 2y ago
  Maybe I'm incredibly stupid but I still can't understand why everything in our lives have to be entirely devoted to "the economy". We are modern day slaves of "the economy". Many old people were left to die in the COVID-19 because of "the economy". The climate is going worse and the environment is being destroyed because of "the economy". But I can't see what is what "the economy" has given to us in return.
  • DragonStrength 2y ago
    There’s certainly a line of thinking that economics is the profession of telling the capital class what they want to hear such as austerity [1]. We can’t let capital fail because… well, ask that guy! [1]: https://press.uchicago.edu/ucp/books/book/chicago/C/bo181707138.html https://press.uchicago.edu/ucp/books/book/chicago/C/bo181707...
    • lanfeust6 2y ago
      https://www.reddit.com/media?url=https%3A%2F%2Fi.redd.it%2Flym1aovbkjk81.png https://www.reddit.com/media?url=https%3A%2F%2Fi.redd.it%2Fl...
      • DragonStrength 2y ago
        Or more: what ideology says I and my heirs deserve to continue to be wealthy and in control? Funny how we’re in a Social Darwinist moment as wealth inequality rises again. But I’m sure people couldn’t possibly be working backwards to justify their position. Certainly the wealthy, who fund research, wouldn’t twist a science as pure as economics like they did the soft science biology.
        • lanfeust6 2y ago
          Meanwhile extreme poverty levels have been steadily diminishing and quality-of-life broadly improving. But you're concerned with some people having more money. That is to say, equality of outcome. No safety net would ever be enough for communist ideologues, because results and well-being don't matter. Only ideology, and punishment. There's a reason would-be socialist states have back-tracked from central control of economy and allowed competition (Lenin did this so quickly in spite of his zeal it would make your head spin). They kept the authoritarianism though. Once those tendrils get in, they're tough to get out. Only a few countries shed that in the 20th century, one of them being South Korea; places that embraced Liberalism, because they had the good fortune to have leaders with sense. Liberty qua Liberalism is good, and the checks-and-balances are meant to evolve over time. The alternatives are abject failures, and you'll propose nothing that hasn't been one.
• hnburnsy 2y ago
  >Economists don't know what's going on This reminds me of my favorite jokes about economists... >Two economists are walking down the street. One says, "Look, a $20 bill!" The other replies, "That’s impossible. If it were real, someone would have already picked it up." >Did you know economists have predicted nine out of the last five recessions? >There is a story that has been going around about a physicist, a chemist, and an economist who were stranded on a desert island with no implements and a can of food. The physicist and the chemist each devised an ingenious mechanism for getting the can open; the economist merely said, "Assume we have a can opener"! >If trivial pursuit were designed by economists, it would have 100 questions and 3,000 answers - Ronald Reagan
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• belter 2y ago
  The article highlights an important problem in several countries, but I am skeptical economists don't know what is going on. The FED has is own sources and means, and any of the best well funded investment houses do their own due diligence. It's not like retail or supermarket prices are confidential, and somebody with enough hours and three or four interns can't have a clear view of real inflation. Or with the appropriate contacts at the HR departments of the Top 500 corporations can't have a clear idea of current hiring and layoff trends, or buy data feeds on sales and forecasts in core vertical markets.
• benator 2y ago
  This article is interesting to me mostly because it appears totally incoherent. > “Western politicians do not appear to be strong-arming the nerds to produce favourable numbers. At the same time, international statistical bodies worry about the example of Dominik Rozkrut, who at the end of last year was mysteriously dismissed as Poland’s chief statistician.” At the same time as not strong arming these bodies, at least one might be? What is the implication here? > “Economic “surprises” in rich countries, where the reported data point either beats or falls short of analysts’ expectations, soared during the pandemic. Years later, surprises remain 30% bigger than before it. The confusion represents a reversal of a trend. In 1941 Britain’s…” How is less trust/revisions in the data today connected with what Britain was doing 70+ years ago? We seem to just have two things said next to each other as if they were related? Am I just being dumb or is this just ramblings, whether or not you agree with the headline?
  • frereubu 2y ago
    > At the same time as not strong arming these bodies, at least one might be? What is the implication here? Yes, exactly. Most don't but one looks like it might be. > How is less trust/revisions in the data today connected with what Britain was doing 70+ years ago? Because up until the pandemic the data had been getting steadily better with fewer "surprises", now it seems to have stagnated: "Two factors have now brought progress to a halt."
    • benator 2y ago
      On the first point, ok sure - it may be the case that most aren’t but one is. So… what’s the reader supposed to take away from that? What’s the problem we’re looking at here - malpractice or corruption? Just both but maybe one more than the other? Seems like bad writing to me. Second point - ok, great. Let’s actually structure the article around that. “We think that cuts in statistical departments, coupled with lower and more complicated survey engagement, have made it harder to rely on the data those departments produce”. Great, nice, coherent argument. I’m totally not trying to get at you, I just think TFA did a pretty bad job of explaining the problem it’s trying to highlight.
  • 2y ago
• grakasja 2y ago
  I don't think they ever did.
• kmckiern 2y ago
  Data is useful! But it seems like (I am not an economist) the incentive structures around these offices are failing. Maybe the benefits need to be more immediate / obvious / visceral.
• AndyKelley 2y ago
  It's quite simply growing wealth inequality, and economists don't know what's going on because they use mathematical models that don't account for this. Recommend this video if you are curious to learn more: https://www.youtube.com/watch?v=CivlU8hJVwc&list=PLXuOBKrmFYbKytq9mkcd62sJPb6w12vpU&index=3 https://www.youtube.com/watch?v=CivlU8hJVwc&list=PLXuOBKrmFY...
  • intended 2y ago
    Not entirely true regarding the criticisms of economists. I am not dinging Gary, and I think he’s done a solid job of putting this topic front and center. There are very specifically people who raised the issue of wealth concentration in economics, (Piketty) and theres been a Nobel as well (Bannerjee and Duflo).
  • PaulKeeble 2y ago
    A lot of the riches income depends on the volume of the working class, they destroy the value of that work at their own peril and would be wise to restore sharing some of the benefits of growth or they might find things sharply snap against them.
  • tootie 2y ago
    That's not what the article is about at all and also not true.
• qqqult 2y ago
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• fidotron 2y ago
  > The episode hints at a wider trend: global economic data have become alarmingly poor. Isn't the cause of this obvious? There is so much political interference in the metrics. Inflation, unemployment, whether it is officially a recession or not - all of these have been manipulated out of all relationship with reality. The article goes on to wonder about the decline in citizens participating in surveys. If the obvious is going to be ignored then why bother helping them fabricate the lie? There has been a culture of way too much interventionism that has crept in to too many parts of the structures for economic governance. Now it's a miracle that what remains of the free market pricing mechanism works at all given how many fingers are trying to tip the scales all over the place.
  • PaulKeeble 2y ago
    It suggests that the politicians aren't interfering with the statisticians but I have seen such manipulation occur multiple times in the past few years on important topics. We have been talking about the increasing bad definitions of "in work" in the UK for over a decade and the situation continues to get worse. The politicians are clearly "strong arming the nerds" and there has been plenty of evidence of it.
• im3w1l 2y ago
  > The second issue is people’s relationship with the state. The average response rate to a crucial population survey produced by the BLS has fallen from 88% to 69% in the past decade. Canadians are 15% less likely to respond to a labour-force survey than pre-covid. Over the past decade the response rate to Britain’s labour-force survey has gone from 48% to 20%. I think this is under-discussed in this thread. I do think people like their states less and it's an important trend.
• cyberax 2y ago
  I'll keep pushing my idea that it's all explained by over-urbanisation and the ongoing density-misery spiral. Why? Because it heavily distorts the perception. And perception ultimately _becomes_ the economy. For example, the US and Canada are doing AWESOME with housing. The number of units per household is near the historical highs, and it dwarfs the numbers seen in the 80-s and 90-s: https://fred.stlouisfed.org/graph/?g=15tRv https://fred.stlouisfed.org/graph/?g=15tRv But ask anybody in the urbanist community, and they'll keep harping about how there's a "housing crisis". Probably due to NIMBYs, evil governments, and "corporations". Reptiloids from Mars are also a distinct possibility. People are now forced to move into larger cities, and they don't make any new land. So rents in the desirable places are growing, while smaller towns fall into decay. This in turn affects the overall economy. E.g. young people understand that they can't just hope to work as a car mechanic and live a comfortable life. They now have to get a university degree (number of enrolled college students is almost 2x than that in 1970-s) to qualify for an office job in a large city. So now they face college loan repayments. This all keeps adding more and more factors that are simply ignored by the models. If your perception is that you'll be living in a shoebox, giving 50% of your salary for rent and college loans, you're far less likely to spend money on a new car. Or conversely, you might take a huge loan and buy a car that you can't really afford just to feel good about _something_. And the old models are just failing to capture this kind of complexity. But I think that over time, the economists will recalibrate them, and they'll be more representative again.
  • ludicrousdispla 2y ago
    Small towns have an opportunity to up their game by offering remote work hubs for the 'big city employers'. I'd return to office if I could just walk a few blocks instead of putting my life on the line commuting ten times a week.
    • cyberax 2y ago
      Absolutely. But smaller cities can't really do that much to attract people. They typically already have very low regulatory burdens for new construction, and very cheap land. What is needed is pressure on _companies_ to force them to consider offices in small cities. And this can be done only via economic forces. For example, with a tax on dense office space and/or tax breaks for remote employment.
• 28304283409234 2y ago
  "Economics is not a science. It is an uncontrollable force of nature." -My mom, ca 1992
• Havoc 2y ago
  You’d think it improves over time with more digitization.
• -__---____-ZXyw 2y ago
  I can't help but suspect that the McNamara fallacy is the far more pressing issue than the quality of the data available. Wouldn't it be lovely though for tech-types and mainstream-economics-types to imagine that all we need is "better data", or "more data". In the words of Roger Hallam, the problem, in reality, is that "it's all f*ked". Our realities are warped. We're trapped in economic and social systems invented 400 years ago when we thought resources were infinite. We're "educated" (belittled and cajoled and propagandised) into believing that it'd be madness to try anything too different, as what we have is "less bad" than the alternatives. We collectively refuse to take the risks involved in seriously and creatively experimenting with other ways of organising human societies, and instead pass the time indulging ourselves with the fantasy that our tech overlords will save us. We need to update our economic theories to match reality, urgently, as a first step. Rags like the economist are the opposite of helpful when it comes to this.