Re: From an Economist -- How Did Economists Get It So Wrong? And still getting it wrong!

[David Farber <dave () farber net>]

Begin forwarded message:

From: Tony Lauck <tlauck () madriver com>
Date: September 7, 2009 5:55:11 PM EDT
To: dave () farber net
Subject: Re: [IP] From an Economist -- How Did Economists Get It So  
Wrong? And still getting it wrong!

Predicting the future course of markets is logically impossible.  
Beware of economists or whole schools of economics that claim to do  
this.

The following quote from Human Action (1949 Edition), by Ludwig von  
Mises [http://mises.org/resources/3250] explains the situation clearly:

"3. Forecasting as a Profession

When the businessmen finally learned that the boom created by credit  
expansion cannot last and must necessarily lead to a slump, they  
realized that it was important for them to know in time the date of  
the break. They turned to economists for advice.

The economist knows that such a boom must result in a depression. But  
he does not and cannot know when the crisis will appear. This depends  
on the special conditions of each case. Many political events can  
influence the outcome. There are no rules according to which the  
duration of the boom or of the following depression can be computed.  
And even if such rules were available, they would be of no use to  
businessmen. What the individual businessman needs in order to avoid  
losses is knowledge about the date of the turning point at a time when  
other businessmen still believe that the crash is farther away than is  
really the case. Then his superior knowledge will give him the  
opportunity to arrange his own operations in such a way as to come out  
unharmed. But if the end of the boom could be calculated according to  
a formula, all businessmen would learn the date at the same time.  
Their endeavors to adjust their conduct of affairs to this information  
would immediately result in the appearance of all the phenomena of the  
depression. It would be too late for any of them to avoid being  
victimized.

If it were possible to calculate the future state of the market, the  
future would not be uncertain. There would be neither entrepreneurial  
loss nor profit. What people expect from the economists is beyond the  
power of any mortal man."



Tony Lauck
https://www.aglauck.com/





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