The oft-cited (by Democrats or Republicans, depending) Congressional Budget Office makes similar demurrals when it owns up to its forecasting failures, which are regular and very large. “Sources of large forecasting errors,” one CBO report says, “have included the difficulty of predicting: Turning points in the business cycle—the beginning and end of recessions; changes in trends in productivity; and changes in crude oil prices.”
The world is a crazy place, no doubt about it. Most events that occur—even the actions of governments, sometimes—are beyond the control of economists, much as they might like to daydream otherwise. But isn’t that the point? This admission just begs the question of why anyone should pay attention to their wizardry to begin with. The forecaster’s chief conceit is that by feeding numbers into one end of a statistical model he can see the future come out the other side. The conceit touches off a phantasmagoria of argument in Washington, where politicians and policymakers sift the numbers from one set of econometricians or another, and then use their favorite figures to determine how they will orchestrate the activities of the folks back home. In thrall to economists, government policy-making is a fantasy based on a fantasy.
Perhaps I’m wrong to say the OECD economists aren’t very good at what they do. They may be champs, for all I know. It’s just that what they are trying to do is worse than worthless. The fault, if that’s the word, lies with the people who are soliciting their forecasts, and why.