IGNORE ECONOMIC FORCASTING!
Now, if only reports of economic forecasts were treated with similar skepticism. Should they? Indubitably. Consider these two examples from today's Financial Times. They not only demonstrate the fallibility of forecasts but also highlight the price of acting based on them. It should be noted that the extent of their mistakes are not splashed across the front page but are carefully hidden in the back pages. Thus, the first item which reveals just how far from reality IMF forecasters have been is not to be found in the front page article on the subject but only in a back page column while the second item only appears in the paper edition:
In the US, where just 12 months ago the economy was expected to expand by almost 3 per cent, growth is forecast to barely make it into positive territory this year and next.
2.Erroneous World Bank conclusion raises the question of trust
Less than a year ago, the authors of a World Bank paper on agricultural spending in the Philippines posed a question that now looks prescient:"Can the world market for rice be trusted?"
Yes, was their unequivocal answer. And so the authors urged Filipinos not to worry much about their reliance on rice imports.
Other countries, such as those in west Africa, where rice is also a staple, received a similar message, which led to a dramatic expansion of the international rice market. . . .
What seemed like a plausible answer then appears much less so now amid tighter global rice supply, soaring prices and rising food protectionism in exporting countries. . . .
The World Bank study argued that rice production and prices were now more stable and that governments in rice-exporting countries could not easily restrict foreign sales.
But Vietnam, Thailand, India and others have since imposed various measures to limit exports to secure supply for the domestic market.
What is the unforeseen circumstance that is really behind the crisis?
The World Bank, the Food and Agriculture Organization and the International Monetary Fund were unanimous in concluding that the rising appetite for biofuels was part of the reason for the increase in food prices.
Now if economist could not predict that a rise in demand for biofeul would result in rising food prices, I do not know what they can predict.
What is the transnational well paid elite going to do? They will continue to issue faulty report while globe hopping and celebrity hob knobbing while the rest of us will be called upon to sacrifice part of our income to alleviate the suffering they caused.
As tempting as trusting human ability to predict the future, policy makers must remember to err on the side of caution especially when the basic needs of their citizens is at stake. And when it comes to food, Joseph's advice remains valid: Set aside some surplus from the 7 good years to protect from the ravages of the 7 bad ones.
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