The crystal balls of economic forecasters wield a lot of power

„The function of economic forecasting is to be respected by astrology.” Harvard professor John Kenneth Galbraith is one of the most respected and influential economists of all time.

A rare education-policymaker hybrid, Galbraith advised various US presidents — including Franklin D. Roosevelt, John F. Kennedy, and Lyndon B. Johnson. He later served as a diplomat while writing a string of economic bestsellers.

Immersed not only in arcane economic theory, but living in the throes of political and international affairs, Galbraith understood that technical economic forecasting, albeit full of scientific pretensions, was little more than souped-up guesswork.

For all the complex equations, such predictions are almost always ignored – at least by „events” including extreme weather and wars, to say nothing of the jolts and spills of commodity prices and financial markets.

Even if not, the computer models that generate economic forecasts are based on the assumptions and biases of the experts who make them. Such models cannot begin to capture the infinite complexities of the human psyche—how tens of thousands of people, on average, may react to changes in unpredictable circumstances.

Don't get me wrong, I'm a card-carrying economist and have done a lot of forecasting myself in both academic and business settings. It's always a useful exercise to think about how the economy might respond to certain policy changes, how investment and living standards might be affected, or how taxes might be raised, and gather relevant data.

Nevertheless, when considering detailed statistical analysis, it is imperative that key public policy decisions are based on a range of other important factors, including public sentiment, political judgment, and raw intuition.

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Instead, with Britain locked in a high-tax, slow-growth trap, choices about our economic direction of travel or efforts to improve lives and livelihoods in a challenging and unpredictable world are increasingly out of the hands of political leaders. Voters are supposed to be accountable but instead are guided by faceless technocrats-officials.

During the pandemic, the catastrophic results were driven by activist-academic models and forecasts that turned out to be hopelessly wrong.

It's true that some ministers were only too happy to contract the hard questions – should we lock up – to bespectacled boffins.

But MPs (and journalists) who rightly raised strong objections to the collateral damage of the lockdown, were ignored and confused, accused of ignoring the deaths predicted by doom papers produced by scientist-turned-forecasters.

Still others now believe that — given the enormous pressures of the lockdown, the canceled medical services and the emotional turmoil — the lockdown has killed more lives than it has saved.

Then there is the long-term academic and psychological damage to a generation of children and students who endured two years of disrupted schooling.

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