What are these people drinking?

As reported in Green Daily of London, Bank of England Chief Economist Andrew Haldane said:

his profession must adapt to regain the trust of the public, claiming narrow models ignored ‘irrational behaviour’

Haldane also:

admitted his profession is in crisis having failed to foresee the 2008 financial crash and having misjudged the impact of the Brexit vote.

Impressive eh.

I assume when he is referring to “his profession” he means economists rather than professional fortune tellers.

I for one don’t think the problem is in the economics “profession” but rather with certain people who call themselves economists who would be better suited working at a carnival reading palms, tea leaves and tarot cards.  Perhaps they should also go visit a phrenologist the next time they are ill.

I don’t know what is worse?  That the CHIEF ECONOMIST OF THE BANK OF ENGLAND thinks he can predict the future using historical data and mathematics or that he is surprised that he can’t.

It gets better though:

He (Haldane) blamed the profession’s reliance on models that were built for an age when consumers and businesses, and especially banks, “behaved rationally”. Since 2008, consumers have maintained their spending when the classic economic models would have expected them to be more circumspect.

Really.  Classic models would have predicted consumers would spend less post 2008?  Did Haldane check the posture of UK monetary policy since 2008 which has lowered official rates from 5% to 0.5%?  Did he check the UK government which, much like the Australian Government, kept on spending in the face of declining revenues thus ratcheting up debt?  Did he read the statements of his political masters who constantly talked up (retail) spending?

But without doubt, this is the best:

He (Haldane) blamed decades of education policies – that had left numeracy levels in England only just above Albania – for holding back improvements in productivity. He said the lack of numeracy skills was stark in comparison with other countries, which placed more emphasis on workers having more than a basic level of maths.

So basically, were it not for the stupid consumers who can’t count and don’t behave as his models thought they would, his economic forecasts would be right.  Talk about dog eating my homework.

This entry was posted in Uncategorized. Bookmark the permalink.

23 Responses to What are these people drinking?

  1. Paul

    regain the trust
    Try sacking the lot of them, and put in people who know what they are talking about.

  2. miltonf

    Their models are more important to them than the real world. How dare the real world not act as their models predict.

  3. Sparkx

    They could get a few tips from the climate change modelers miltonf. The real world didn’t behave the way their models predicted but that didn’t stop ’em.

  4. Bruce of Newcastle

    I wonder how his recent symposium on “Central Banking, Climate Change and Environmental Sustainability” went?

    I do suspect some wrong assumptions have crept into his models somehow.

  5. cuckoo

    “Dog eating my homework”. No-one says that anymore. Now it’s “The Russians hacked my homework”.

  6. Art Vandelay

    I for one don’t think the problem is in the economics “profession” but rather with certain people who call themselves economists who would be better suited working at a carnival reading palms, tea leaves and tarot cards.

    Spot on. The Keynesian macroeconomists besmirch the profession by making stupid predictions. The rest of us know better.

  7. struth

    He (Haldane) blamed the profession’s reliance on models that were built for an age when consumers and businesses, and especially banks, “behaved rationally”.

    Translation from elitish to English.
    I wouldn’t have been caught out being the aloof dumb bastard I am , now having to justify my existence, if it wasn’t for uneducated dumb bastards.

  8. struth

    “Models” in every field, from economics to climate, are as accurate, reliable, and as informative as the ones in fashion.

  9. DM of WA

    The same problems infect all the “soft” sciences and so-called social sciences:
    failure to apply the scientific method, absence of mathematical rigour, lack of scepticism, group-thinking, unrecognised confirmation bias. What else did I miss out?

  10. john constantine

    Solyent Green Smoothies?.

  11. Mother Lode

    Try sacking the lot of them, and put in people who know what they are talking about.

    It reminds me of when you hear about a polly royally screwing something up and, rather than take responsibility and surrendering the generous stipend stepping down, they announce their determination to redouble their efforts and fix up what they broke in the first place at full pay.

  12. Dr Fred Lenin

    This modelling is pure speculation , pie in the sky crap , there are so many intangibles that throw the whole thing out . I place no credence on speculative mpdellkng its just like picking the Quaddie at a race meeting ..Look at treasurys budget guessing based on 5 pc growth when even the growth they reveal is 2pc and probably really less the whole thing is a confection of guesswork, not worth the paper its printed on . Economists a lot of them are Ecommunists ,and as useless as communusts usually are .

  13. Stackja

    Give ‘right answers’ and get good pay.

  14. ella answer-key

    “What else did I miss out?”

    Write at top of your research: YOU CANNOT FORECAST THE UNFORESEEN.

  15. Tim Neilson

    As the late, great Yogi Berra observed, “predictions are difficult, especially about the future”.
    He was a lot wiser than Haldane and his ilk.

  16. Leo G

    How does a person use a model which can’t adequately explain the present to model the future?
    Not honestly, I think.

  17. Dr Faustus

    He (Haldane) blamed decades of education policies – that had left numeracy levels in England only just above Albania – for holding back improvements in productivity. He said the lack of numeracy skills was stark in comparison with other countries, which placed more emphasis on workers having more than a basic level of maths.

    According to the OECD, adult numeracy skills in the UK are pretty much spot on the OECD average – thrashing non-OECD Indonesia, but being eclipsed by Japan and Germany.

    The OECD also shows Japan and Germany following the same long-term downward trend in labour productivity as the UK – and the mathematically-challenged Indonesians enjoying a steady year-on-year 4% productivity growth.

    Perhaps the Guardian misrepresented him…

  18. Rabz

    So, “rational consumers” are as mythical as unicorns.

    Gee, who’da thunk it.

  19. Rob MW

    Bottom line, the bank of the union of socialist Englishmen/women/trannies/gays & the yet to decide’s has a Keynesian computer model that cannot be predictive of Keynesian demanding consumer behavior so the Keynesian demanding consumer is classified as “irrational”. FMD……. Keynesian economics foretells that there are too many Somali Lamborghinis in Iraq, Afghanistan and Syria.

  20. Hydra

    I think it is extremely rational in the face of lower interest rates and longer loans with lower repayments that you consume more.

    But the real underlying problem is why is consumption factored into the models at all?

  21. H B Bear

    I’m thinking this Haldane bloke might molest badgers in his spare time.

  22. Snoopy

    I’m thinking this Haldane bloke might molest badgers in his spare time.

    He never travels anywhere without his shaving brush.

Comments are closed.