
Why being a macroeconomist means never having to say you're sorry - chaostheory
http://www.reason.com/news/show/134059.html
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robryan
The point about how obama can claim a victory no matter what the outcome is
closely paralleled here in Australia where the government has a 42billion
stimulus package including giving nearly the whole population $950.

They have claimed that the handouts have been effective in saving jobs despite
the trend towards higher unemployment still occurring like America. It's
impossible to truly gauge the effects of the handout on the economy.

~~~
earl
Um, no it isn't impossible at all. It's called statistics and all sorts of
government organizations collect a bunch of them. While it is impossible to
finely estimate, it is nothing like impossible to come up with pretty good
estimates.

And for what it's worth, industrial output has fallen at a pace faster than
during the beginning of the Great Depression. That we haven't seen similar
knockon effects (30% unemployment?) is most likely due to government stimulus
ala Keynes. Now it is fair to claim that the economy has more services and
less goods, so the GD isn't a perfect comparison, but it is pretty good.

See, eg, (industrial output)
<http://voxeu.org/files/image/eichengreen_update_fig1.gif>

(world trade -- more important now than then)
<http://voxeu.org/files/image/eichengreen_update_fig3.gif>

(industrial output, 4 big europeans)
<http://voxeu.org/files/image/biigeuro.gif>

Source: <http://voxeu.org/index.php?q=node/3421>

~~~
randallsquared
You can get some important and interesting insights from economic statistical
data, but macroeconomics is a series of just-so stories, at best; it isn't
even really the same thing as microeconomics. Microeconomics deals, in part at
least, with things you can run experiments on, with actual controls. Macro,
not so much; like politics, you can find a macro pundit to give pretty much
any conclusion you'd like, even when they mostly agree on micro.

[Edit: apparently I'm just rephrasing the article summary. I guess I should
have read it before ranting...]

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maarek
Of course these people will still be trotted out whenever someone wants a new
law. Every politician loves having people who can justify any policy they want
to enact without fear of contradiction.

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kailashbadu
I have always been skeptical of what prophetic capabilities of economists.
Their predictions on rise and fall of the greenback, oil prices, share market
performance have mostly fell flat on face.

Remember how the league of global economists were forecasting that oil prices
would shoot beyond $200 in no time. Until the oil price took an u-turn and
plummeted to around $40 within six month.

very good at explaining past events. terrible at predicting the future.

~~~
gasull
_very good at explaining past events._

They aren't that good at that either.

~~~
kailashbadu
Well, I guess, they indeed are good at making things up. especially when they
have the benefit of hindsight.

~~~
absconditus
If you want an example of how they are bad at this, look at the Great
Depression. There is still a great deal of disagreement to this day about its
cause and how it was overcome.

~~~
aswanson
And yet this is a field that has a Nobel set aside for it whereas mathematics
is treated like a stepchild.

~~~
jswinghammer
I believe that Nobel's family is quite opposed to this-they believe that the
prize's relationship to the Nobel prize is an attempt to elevate economics up
to the level of physics or chemistry.

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billswift
Peer review only helps when the peers have a clue. By the articles own
admissions, no one has any real idea of how to do macroeconomics that predicts
the real world. Without the discipline of reality, peer review becomes group-
think. In macro they develop all sorts of claims and mathematics that have no
connection to what actually happens. But with so many different approaches and
claims some actually seem to predict what happens, just as some stock pickers
seem to predict stock prices, though it is mostly random.

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johnnybgoode
Not a bad article, but it doesn't go far enough. Most macroeconomists use
false assumptions and bad models to make terrible predictions. It's hard to
accept that a field like this can be dominated by people making the most basic
of errors, so many observers can't bring themselves to reject these methods
wholesale.

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steve_mobs
that's the reason why macrofund managers, like george soros are called
speculators.

