Saturday, March 15, 2014

The Failed Predictions of Keynesian Economists

The Weekly Standard reports:
In late 2009 the economist William McEachern impishly looked back at the previous year’s forecasts by the Wall Street Journal’s panel of economic experts. The Journal surveyed its experts in September 2008 when U.S. unemployment was at 6.2 percent; the average prediction among the economists was for the rate to stay more or less flat. By the following September the unemployment rate was 9.8 percent. At the same time, the average prediction among Journal economists was that growth for the last quarter of 2008—the quarter, you’ll note, that was just about to commence—would be 1.2 percent. Instead it was -2.7 percent.

Economists, in other words, not only fail to predict the future, they can’t even predict the present. The OECD offered various reasons for its abysmal record. “The OECD forecasts,” the report says, “are conditional projections rather than pure forecasts.” Why this should let them off the hook is unexplained. The conditional projections, they go on, “rest on a specific set of assumptions about policies and underlying economic and financial conditions.” Oil prices, fiscal policy, the course of the euro crisis—all of these, they say, are beyond an economist’s control and bound to throw him off his game.
The failure of Keynesian economics!