Economists

I heard Robert Reich on TV tonight plugging his new book. How does he command such TV coverage is a complete puzzle to me, except that he is short on memory among other things. Even though I am conservative by nature, which means in my mind that I would rather spend my money than let the Feds do it for me, Reich would not have lasted 15 minutes with Harry Truman.

According to rumor, Harry S. Truman once commented, he would hire the first one handed economist he could find. Why? Because the economists typically are heard to say, “On the one hand, the economy is recovering, but on the other hand, the economy could get worse.” If we know anything about economists, it is that they argue with both hands. Truman was frustrated by economists. Just like I am.

They predict the past with unerring accuracy. And further it is not uncommon for economists to re-predict the past based on new information to make sure that there past back-word predictions were accurate. This process is akin to telling someone I know things were bad last month, but actually things were much worse. Is that something I really need to know? Is it constructive? No way Nellie.

Here is an example of a past re-prediction. The economists say, “Upon reflection the economy did not actually grow 2.3% in the last quarter it actually only grew at a rate of 1.4%.” Hence the economy was actually worse than we thought. The logic of past forecast corrections is humorous at best, disheartening at the worse. Amazingly, the stock market will drop precipitously on a decrease of a past economic prediction as if the corrected past forecast trumps the present realty.

Here is my hypothetical scenario. I say to myself. Today, it seems the economy is going well. But if next month the economists tell me that last month, which is this month, the economy was actually doing worse than I felt, then I can never truly be sure how I feel this month until next month - presuming the economists do not negatively revise this month next month. Get it! It is no wonder we are in a period of uncertainty. Under the current economic forecasting methods, we do not know how things are going this month until next month.

This logic should be a dead horse by now. But in the interest of a continual beating, here is one more example for clarity. In a corporate environment, the chief economic officer enters the president’s office in May and says, “Mr. President, we need to shut the company down because in April we were bankrupt.”

“And I thought things were going so well.” Replied the President.

“No,” the chief economic officer asserts, “According to my revised economic calculations, we were out of business last month.”

“What about our employees?” Asked the president.

“I know I told you in April we had 45,000 employees, but that was wrong. We actually only had 43,000 employees.” Replied the chief economic officer.

“Now I am worried.” Replied the president.

“But wait can we save the company?” Asked the president.

“Possibly, but we will not be revising our May forecast until June or July. On the one hand we are not doing well, but on the other hand we might be doing better than we think. We will not know the present until the future. ” Remarked the chief economic officer.

“That will be too late. Shut it down.” Demanded the president.

And the country was shut down. But on the other hand maybe it kept going.

In closing, I am actually not as much frustrated by economists, as I am astonished by the fact that they continue to occupy, in the minds of the most TV commentators, a throne of credibility built on a history of sustained incredulity.

Follow me. I know not where I have been and know less about where I am going.

Don’t kid yourself. You don’t either.