by Anthony Painter

There are two fallacies about economics. First, that it can explain anything other than the bleeding obvious. It is not difficult to look back at last year’s growth, add or subtract a quarter of a percent or so, then say that will be this year’s growth rate. It would be useful to know if the economy is going to collapse by 5%. Economists don’t see those icebergs.

The second fallacy is that it is difficult. It’s not; it’s dead easy. Some people describe economics as the “dismal science”. They are being generous. It is not a science. See fallacy one for an explanation of why.

In increasing acts of desperation, economists are casting around other academic disciplines to: (i) explain why economics has been getting it so wrong; (ii) try to regain our trust so that they can get it wrong again; and (iii) say something new and clever-sounding given that everything else they’ve been saying is so bleeding obvious yet often wrong.

Psychology is the first victim of this “great plundering”. Hence “nudge”, irrational exuberance and all the rest.

So when Matthew Bishop and Michael Green write, “this crisis brings with it a tremendous opportunity [for economics] to help policymakers, financiers, business leaders, and other practical people do better”, forgive me for ploughing all my savings into the safest, most secure asset I can find. Futures on sales of Keynes’ General Theory would seem to be a good bet. (more…)