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A Dismal Performance

Much like the Spanish Inquisition, no one expected the Great Recession. Why didn’t America’s highly paid economists have a clue? Will they ever get their act together?

Published on: November 10, 2017
Bradford Tuckfield is a recovering former economist.
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  • AnonymoussSoldier

    I forget who it was exactly on the panel, but I was watching CNBC in summer or something of 08, and he was saying that everything is fine and even went so far as to predict that Bear and Lehman would be fine. Oh dear. Gas prices were through the roof and people were losing their homes, but when I found out that they both went under I recalled watching CNBC and I lost it. Just uncontrollable laughter at how completely wrong CNBC and their little panel was. Not a clue.

  • Pait

    It is untrue that no one expected the 2008 recession. Economists such as Nouriel Roubini, Robert Shiller, and Paul Krugman, to cite 3 who are widely known and read, had explained the risks and laid out very informative future scenarios.

    The enormous intellectual failure of the “freshwater” school as exemplified by the cited Lucas and Mishkin cannot be used to criticize the good work of mainstream economists in general. Nor can their abject later failure to reconsider their errors.

    • Bradford Tuckfield

      Thanks for your comment. It is true that some economists have been right about some things, some of the time. I think of this as akin to a broken clock being correct twice a day. A better analogy is the Baltimore Stockbroker Scam (see https://somemathematicalmusings.wordpress.com/2016/01/11/did-i-just-get-scammed/). If a thousand economists make a thousand predictions in a year, and only one percent of them are correct, there will be 10,000 pieces of evidence that they are good predictors, but that doesn’t make it true.

      I will take Krugman as an example. He writes prolifically and he is very often wrong. For numerous examples of him being wrong see here: https://mises.org/library/fact-checking-paul-krugmans-claim-be-right-about-everything and here: https://blogs.spectator.co.uk/2013/10/niall-ferguson-paul-krugman-gets-it-wrong-again-and-again-and-again-why-does-anyone-still-listen-to-him/
      Between all of his incorrect predictions, he has made some arguably correct ones. But it shouldn’t be permissible to only cite one’s successes – one must consider the full portfolio of (many) incorrect and (a few) correct predictions. Anyway, many or most of his predictions contain hedging adverbs like “probably” so that he is always able to excuse failures. The same is true of Lucas and Mishkin and every other economist I can think of: in between many incorrect statements, there are some correct ones, and all of them are hedged. Maybe “freshwater” economists are more wrong than the others. But they are all wrong much more than they should be and much more than they claim to be.

      If Lucas is an enormous failure, why does The Economist magazine publish his opinions, why does his top-tier university not repudiate him, and how did he get the Nobel Prize, and and why did Mankiw (after the recession began) call him “the most influential macroeconomist of the last quarter of the 20th century”? If Mishkin is an enormous failure, why doesn’t his top Ivy League University repudiate him, and why did they hire him in the first place? The answer is that the economics profession as a whole has not been able to effectively separate truth from error, and has not been able to deliver on its collective promises or ambitions.

    • TPAJAX

      And where has Paul been as the US trade deficit skyrocketed to a mind boggling 500,000,000,000 per year in the red? I have not seen this kind of outrage from Paul as millions of well paying tradable sector jobs were lost. Lost not to robots. Not to martians. But to illegal immigrants at home and near-slave labor abroad. https://uploads.disquscdn.com/images/85d3bc88c44ecd133309bbb04f7800e68a96a4296184659307e682aa2600add1.jpg

      • Pait

        1st, your ad hominem attack on an economist is not related to the discussion at hand, which is on whether economics explains the 2008 recession.

        2nd, your statements about when the US trade deficit increased are not borne by the actual numbers, and your blaming it on an academic economist is nonsense.

        3rd, on robots, there’s plenty of employment for troll bots in service of the KGB.

        • TPAJAX

          Oh you have an active imagination. Let’s pretend we are in a courtroom then:) Pait, your Honor, the state has the right to determine whether a witness is biased and prejudiced. Mr. Krugman’s selective outrage and virtually all his past statements throughout the entirety of his career seem very much to indicate that he is immensely biased in favor of internationalists/MNCs and outsourcing. It is a fact, after all, that with America becoming a net deficit trader since 1975, and with millions of jobs outsourced to date, Wall Street’s well-being has been markedly detached from the well-being of Main Street, as opposed to pre-70s decades in which the two were more closely linked.

          Therefore, how can we possibly trust a biased and prejudiced Mr. Krugman’s instincts on any topic related to the health and well-being of the US economy, and of Main Street [in America]? Main Street in Beijing would be another story, and I believe we should trust that he knows very well what’s good there.

        • Anthony

          Are we only TAI readers conscious of bots and their attempts to move threads (comments)?

          • TPAJAX

            Since when do bots write specific and highly tailored responses to the latest comment? Answer: they don’t. This thread is talking about Krugman, among others, and that’s what my comments are about. I’m sorry if you’re not smart enough to keep up with us here. You can check in, however, to read, and to learn. Maybe someday you can join us! I’ll be your cheerleader through the learning process as you learn the Socratic method.

          • Anthony

            The Socratic Method may be referenced by anyone literate; however its exercising becomes apparent to both the acquainted and practitioner without notation. Thanks, though my observation remains for Pait (unless you misunderstand/confused referent).

          • Pait

            I think the human bot hasn’t noticed that we’re talking about him, not to him.

            This Krugman obsession by the way is amusing. Just a mention of his name provokes a torrent of ad hominem attacks. I understand there are corners on the internet where the mention of any of Einstein’s science provokes a torrent of racist comments. Perhaps Krugman’s name has a similar effect.

          • Anthony

            Some believe Paul Krugman (despite his economic acuity) is epitome of liberal/progressive ideology. They regrettably as you inferred overlook a man’s scientific (economic) contribution to societal welfare because they disagree with his/her presumed politics – there can be no objective truth. We must find a name for the effect!

          • Pait

            I don’t understand how it has come to pass that TAI is so infested with those kinds. Why do NKVD agents and Der Sturmer readers pick this forum for their comments? It’s not that they hope to reach millions of uninformed and malleable voters here….

            One explanation I could give is from extrapolation from left-wing blogs in Brazil – let me call them Bolivarian for a label. One of them is more, shall I describe, intellectual than the others. I venture that it’s maintained as a proof of concept, idea lab, or something like that. There’s a whole hierarchy of less and less sophisticated Bolivarian blogs, going to to the outright crude. I surmise that, lacking an extremist but sophisticated channel of their own, the commenters here treat it as an opportunity to test their ideas for posting elsewhere.

            I suppose that if one were able to access something about the identity of those posters one might be able to prove or disprove the theory. Mostly they are anonymous, suggesting that they are not comfortable in an open and democratic society, so I shall never know.

          • TPAJAX

            Is it not a hallmark of an open and free society that one can choose to remain anonymous, and enjoy privacy rights of their person and possessions? In other words, you appear to have it completely backwards. Travel to an authoritarian country, like China, where online anonymity, encryption, free speech, and the like are not only discouraged but punished. By the way, it is clearly lost on you what TPAJAX means, or rather what it was the name of. Google it.

          • Pait

            In an open society people can choose to remain anonymous, but because there are no crimes of opinion, they have fewer reasons to. One of the most common ones is criminal activity. Others include behavior that they themselves are ashamed of.

          • AbleArcher

            There are crimes of opinion. Most of Europe and Canada and Austrialia share third world hate speech laws and blasphemy laws. Do you just live in your American bubble lucky without those attacks on free speech?

          • Pait

            I forgot. Austrialia and canada and Europe are oppressive dictatorships as the US was during Obama’s terms. Real freedom can only be found in Saudi Arabia, Persia, Venezuela, the Philippines, and now in Trump’s America.

            Sorry for the oversight.

          • Anthony

            Pait, read some of the commentary @ Make Conservatism Moderate again and give me your take.

          • Pait

            There one can see the usual mix of half comprehended economics at the level of what Felt Earth is to physics, clinical paranoia, envy and hatred, and bot activity.

            I understand that these things exist – you may remember that I frequent left-wing Brazilian blogs to maintain an awareness of the phenomena. What I don’t quite understand is why the commenters come to TAI.

          • Anthony

            TAI had become a right of center blog after WRM collapsed his blog into ViaMeadia. The switch gradually attracted a different breed of acolyte – less interested in reasoned argumentation rather than bombastic right-wing talking points disguised as red state conservatism (whatever that really means). Gradually, most regular long-time contributors (with much to contribute whether you agreed or disagreed) opted to move on – I miss many of them. As you know, a vacuum fills and TAI began to attract first a handful then the deluge. I speculate the “relaunch” is an attempt to rein in commenters you reference who are not paid subscribers, as they are probably hard on the profit margin. The bots come because they are on a mission and are probably paid.

            Regarding your initial reply to my query, when you read some of that darkened attempted polemic you come to mind of what Isaiah Berlin wrote about the 1930s: “the most insistent propaganda in those days declared that humanitarianism and liberalism and democratic forces were played out, and that the choice now lay between two bleak extremes….”

          • AbleArcher

            Or it could be that things are simply changing and you’re being left behind lol. Could also be that more ppl paid attention to the last election than perhaps ever before, and they sought info and joined forums, like me. Why would a bot be paid? Why would TAI even care since they still drive clicks and views and ad-cents. Other sites don’t care to be sure. I don’t even see the authors engage much in the threads, so do they even know what’s happening below their writings?

          • Anthony

            To be expected from one with an agenda; I or my type are never left behind during Human transitions. Be less inclined to gloat and realize that not all are transfixed by Bull….

          • AbleArcher

            Well it sounds like youre just sitting here talking about how great the status quo is, or missing it as if it’s gone. I suppose it could’ve been great for you, but that would make you part of the elite minority if you’re in America. If you’re not in America then why do you care so much about what happens on a site called the American interest?

          • Anthony

            You have no idea what I’m referencing (projection perhaps). And, quite frankly what is the intent here. I’ll leave with this: just remember going forward we can’t change what is. Maturity requires us to face up to it and then try as hard as we can [bot or not] and with as much intelligence and historical information as we can muster to make America and the future better). I’m done here, thanks.

          • AbleArcher

            Yeah you just keep sweet talking me dumpling. You’re not done. You’re here to whine and complain because the place apparently was an echo chamber and now it’s not. For christs sake you’re on this thread asking Pait to talk you know what with you about those on a newer thread. I’ll put the word out. Bring even more newcomers here for you to complain about.

          • Anthony

            I think you’re right on all accounts and most importantly around October/November 2016 I was informed that there would be an influx of pseudo American “reading names” (and acronyms) posting throughout internet. If you look at those you have both observed and identified, they have eponymous names, secret Disqus accounts, and sign-up dates between November 2016 and current time. Finally, I also think a main objective (of bots) is to direct thread engagement as well as inject propaganda disguised as partisan argumentation. Still, one thing you’re certainly clear on: they are no promoters of American Democracy. And, thanks for the Brazilian/Bolivarian example

          • Pait

            Good suggestion about joining dates! I’d noticed the secret accounts – not very necessary in a free country! – but I hadn’t paid attention to the dates.

          • Anthony

            Thanks but it was probably unimportant to you, so you overlooked it (small detail). Yet, they becloud and further ruin a comment section once valued for it thoughtful (if disputed) engagement. And, they are not interested in a free country (though ironically the freedom allows their mischief).

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