“Isn’t it interesting that the same people who laugh at science fiction listen to weather forecasts and economists?” -Kelvin Throop III
Around my office, “weatherman” is something of a code word for an easy job with virtually no accountability. I realize that isn’t fair to weathermen, but it’s really not about them. However unfair it is, it’s about the idea of a job that doesn’t demand success. That what you predict doesn’t matter, because you’re not actually expected to be right. A lot of the humanities get this kind of attitude too: that it’s a dream job because there’s no wrong answer, you get to make up whatever you want and get away with it. I’ve heard this attitude directed towards economics too.
Certainly, there are economists who are completely insulated from real world application. In fact there are entire institutions where lack of accountability is valued. But it doesn’t need to be that way. Economics, if done honestly, should tell us about how the economy will function. It should provide guidance on both how the economy will act with and without some future actions. As such, there should be some level of real world application. If an economist truly understand the economy, they should be able to make accurate predictions about it. And to laymen like myself who don’t have the training to fully judge the math and the process, the accuracy of those predictions should be the measure of an economists credibility.
I’m sure some of my friends find my heavy use of Paul Krugman as a source questionable, given how highly partisan he is. My answer is that he regularly makes statements like this, where he is staking the validity of his method on a real world prediction. And he regularly makes statement like this, pointing out that his methods produced a successful prediction. And it isn’t just about cherry picking, his record is incredibly consistent. Especially on the important things.
I think this is a fascinating time for economics, partially because the regular rules are out the window. Under normal circumstances a businessman’s instincts could mask poor economics, allowing for accurate predictions without understanding the reasons behind them. But now, when the economy is acting unusually, understanding is essential. The surprising thing is that the few people who seem to understand what’s happening, and have a track record to prove it, are being largely rejected for proposing unpopular solutions.