David R. Francis: Not Even Economists Understand the Economy
[David R. Francis writes a weekly column for the CS Monitor.]
Why is it that economists don't understand – at a deep and scientific level – how the economy works?
Two centuries after Adam Smith's "Wealth of Nations," and more than seven decades after the Great Depression, they're still fighting over what works and what doesn't. The debate is far from theoretical. The fate of nations, politicians, and millions of working people depends on policymakers getting it right....
In 1970, I wrote a Monitor column asserting that Dr. Friedman's "monetarist" school of economic thought was "winning more and more converts" because its advocates' forecasts for the American economy had been more accurate than predictions of Keynesian economists. It was seen then as a "revolution" in economist thinking.
Lately, though, some monetarists are having second thoughts.
Growth in the nation's money supply "doesn't predict [the economy] as well as it used to," says Paul Kasriel, research director of Northern Trust Co. in Chicago. Mr. Kasriel, who won a top accuracy award for his economic forecasts in the years 2002 to 2005, says he renounced monetarism a couple of months ago....
Read entire article at CS Monitor
Why is it that economists don't understand – at a deep and scientific level – how the economy works?
Two centuries after Adam Smith's "Wealth of Nations," and more than seven decades after the Great Depression, they're still fighting over what works and what doesn't. The debate is far from theoretical. The fate of nations, politicians, and millions of working people depends on policymakers getting it right....
In 1970, I wrote a Monitor column asserting that Dr. Friedman's "monetarist" school of economic thought was "winning more and more converts" because its advocates' forecasts for the American economy had been more accurate than predictions of Keynesian economists. It was seen then as a "revolution" in economist thinking.
Lately, though, some monetarists are having second thoughts.
Growth in the nation's money supply "doesn't predict [the economy] as well as it used to," says Paul Kasriel, research director of Northern Trust Co. in Chicago. Mr. Kasriel, who won a top accuracy award for his economic forecasts in the years 2002 to 2005, says he renounced monetarism a couple of months ago....