Economists, not the economy, are the only ones taking a battering from Brexit

Thrugelmir

A light read for the end of week.

There are queues outside the money exchanges as we desperately try and swap our worthless pounds for euros. The Red Cross are flying in food parcels. The IMF is arranging an emergency aid package, whilst house prices are in freefall and interest rates are soaring. If you cast your mind back only a few weeks, that was meant to be an accurate description of the British economy by now if we were crazy enough to vote to leave the European Union. That, however, is not how it has worked out. In fact, the economy is fine. It is the economists who are taking a beating.

This week, we have had the first hard data after the referendum. And it has all been surprisingly good. On Tuesday, we learned that inflation had nudged up a tiny bit, but was still way below the Bank of England’s target. Yesterday, we found out the economy was still creating jobs in record numbers. Today, we hear that retail sales are up as well, with an increase well ahead of City forecasts.

So why were most mainstream economists predicting a recession? As Krugman points out, it is hard to escape the conclusion that they were so committed to the EU, and so disappointed by the result, that they ended up insisting it would be disaster, despite the fact that the textbooks suggested it wouldn’t be.

But that really isn’t good enough. Economics is meant to be a science, not a form of propaganda. In fact, the profession has already taken a beating from its failure to foresee the 2008 crash, to peddling quack remedies such as quantitative easing, and now negative interest rates and abolishing cash. The hysterical, and it now seems wildly inaccurate, predictions of a post-Brexit recession may finish its credibility forever – and deservedly so.

Full article.

http://blogs.spectator.co.uk/2016/08/post-brexit-economy-just-fine-economists-not-much/

westernpromise

It's not a true science, it's a social science. Cambridge economics graduates receive a Bachelor of Arts degree and the university classifies it as an Arts subject.

Eric_the_half_a_bee

westernpromise wrote: »

It's not a true science, it's a social science.

It's even less of a true science than many social sciences.

In true science, theories only gain credibility if they predict previously unobserved outcomes which are later confirmed by experiment. That really does not happen in (macro) economics, whatever the academic economists may like to think, because there are too many confounding variables to adjust for, so it's impossible to ever have a proper controlled experiment. In contrast, it's quite possible to conduct large scale randomised trials in fields like psychology.

The other reason it is not a true science is that despite these limitations, economists are very often convinced that they are right. True scientists rarely have this level of confidence in areas where experimental evidence is vague.

CLAPTON

Well I am regretting digging that blast proof shelter in my garden.
Mind you, the tinned food should see me OK for a few years

HAMISH_MCTAVISH

Brexit hasn't happened yet....

The only people looking daft are those claiming the effects of Brexit not happening before Brexit has happened mean they won't ever happen should we Brexit.

AFF8879

We haven't left the EU yet. I think most businesses and households are carrying on as normal because they have no other choice - politicians are clueless as to what the post Brexit landscape will look like, so what choice do we have other than to carry on until we know?

That's not to say any damage will necessarily be permanent or long term. If we leave the EU / single market and it's a total disaster, then we would simply elect a new government and rejoin. It's not as though EU wouldn't take us back out of spite, given they would be wanting to act in their own interests first.

Then again...the scariest thing about this...is that it is all being decided by politicians, rather than experts or businesses....and they do not always act rationally :-)

posh*spice

HAMISH_MCTAVISH wrote: »

Brexit hasn't happened yet....

The only people looking daft are those claiming the effects of Brexit not happening before Brexit has happened mean they won't ever happen should we Brexit.

Spoken like a true Remoaner

CLAPTON

HAMISH_MCTAVISH wrote: »

Brexit hasn't happened yet....

The only people looking daft are those claiming the effects of Brexit not happening before Brexit has happened mean they won't ever happen should we Brexit.

how true, it is ridicuous to have a view for at least a couple of years, which is why I have admired the way you have been continually been reminding the more more stupid remainers (and all of the brexiters too): well done.

kinger101

Eric_the_half_a_bee wrote: »

In true science, theories only gain credibility if they predict previously unobserved outcomes which are later confirmed by experiment. .

That's not completely true. Science can either be experimental or observational.

ruperts

Is the pound being at its weakest for decades not enough of a bad thing? We've basically devalued our currency and that brings some benefits, might even prevent a domestic recession, but we're still a lot poorer as a country and as individuals from an international perspective.

CLAPTON

ruperts wrote: »

Is the pound being at its weakest for decades not enough of a bad thing? We've basically devalued our currency and that brings some benefits, might even prevent a domestic recession, but we're still a lot poorer as a country and as individuals from an international perspective.

utter garbage , the pound was massively 'stronger' in 1945 but we were all massively poorer
you need to consider what you can buy from an hours labour