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