Sunday, May 08, 2011

The future

Tell anyone that you are an economist and pretty soon they want to know if you can share what you know about where the economy is going -- ans what to do about it.  Economists have brought this on themselves by often taking on the posture of a forecaster.  Back in the day, undergrad econ majors were taught things like "cobweb models" (micro) and Evsey-Domar models (macro), but I do not think that there was ever the hint that these are useful for making forecasts.  What then?  They were useful for grasping some market fundamentals so that we could think about markets clearly.  Forecasting is an entirely different matter.

In today's NY Times, Greg Mankiw addresses this topic "If You Have Answers, Tell Me."  He discusses three topical questions, all of which begin with the words "How long ...?"  These three questions are unanswerable, but they are inevitably asked and pondered by many people, inside and out of government and business and also in private life.  The story of bad forecasts is very old, but there is an understandable demand for advice about the future and some will then show up to supply it. 

Also in today's NY Times Book Review, there is Francis Fukuyama's review of Ronald Hamoway's collection of Hayek's works in particular his edition of The Constitution of Liberty.  The headline writer notes that (gasp!) "The economist F.A. Hayek believed that no government could know enough to plan for society."

Perhaps he did, but what is the hot topic on campuses, bookshelves and all sorts of journals?  I would nominate "sustainability."  We can make predictions about the future and we can control the future.  Double-gasp!