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Comment by TheCowboy | Hacker News Reader

The grandstanding against economists is disappointing.

Let's say you were driving at night with someone in the country, and because they either knew the road or could see farther ahead they said, "There's a boulder in a road ahead, we're likely going to hit it if you don't slow down and turn to avoid it."

And you do slow down and it allows you to turn to avoid a crash. How do you respond? Mock them for always being wrong about predicting a crash?

People mistake warnings about possible recessions, which have a probability attached, with forecasting an inevitable doomsday recession. There's no credit given to economists for the recessions or depressions avoided.

Often the warnings are about the risk of a recession with no intervention, and in an overwhelming majority of cases there is some action taken in fiscal and monetary policy to soften the blow or avoid the worst outcomes.

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> There's no credit given to economists for the recessions or depressions avoided.

I don't think we have avoided any recessions, ever, based on the advice of economists. They just aren't that good at forecasting. They don't even agree on the policy that is appropriate to fight recessions when we know there is one.

The "grandstanding" against economists in this thread is entirely justified.

Also, economies aren't easy to control: We can't even get people to wear masks even though the economic impact of not doing so is obvious and relatively straight-forward to calculate.

An economist could come from the year 2100 with 500TB of economic data and news for the past 100 years, and there's a 0% chance that the public would ever heed their warnings.

Not at all. Sweden never wore masks and never shut down schools and yet they achieved comparable results to draconian lockdowns. They already have herd immunity.

It's likely we would get 2 economists from the year 2100 both giving opposite reasons for the next 80 years of events.

They don’t have yet herd immunity and their results are worse with respect to all comparable countries that had a lockdown. What you say is categorically false.

It’s not much worse as you would expect it to be, though.

There are definitely countries in Europe that locked down and yet have a higher per-capita death rate than Sweden.

Comparable aka Finland and Norway, which have similar climates, healthcare systems and culture. Check the numbers and tell me if Sweden is doing better.

No, their results by any metric aren't worse than all comparable countries that had a lockdown. They're in the middle of the pack and only because they had a lot of deaths in care homes, which lockdowns don't protect anyway. There are other regions that prove this like Belarus, South Dakota and others, but Sweden is proof positive that lockdowns aren't necessary and were never necessary.

As for herd immunity, Google "sweden covid cases" and look at that graph. Then change it to deaths. Sweden is practically done with the epidemic. Cases will never drop to absolute zero due to high testing levels and false positives, but it's now down to tiny levels and deaths have hit zero with no "second wave" in sight. At least based on current data it appears Sweden is over and done with it.

Sweden's got 10m people, and 87k cases as of mid-Aug. That's less than 1%, so claiming "herd immunity" is BS. They also have almost 6k deaths. Analysis from a month ago projects Sweden's GDP falling 4.8% in 2020, and eyes a 3.6% growth in 2021 - overall down 1.4% across both years.

Denmark's got a little over half the population, 1/5 the cases, 1/9 the deaths. Projected GDP is down 5.1% this year, up 4.0% next year, overall down 1.3%.

Norway's got half the population, 1/11 the cases, 1/22 the deaths. Projected GDP is down 4.7% this year, up 3.7% next year, overall down 1.2%.

If you're saying Sweden didn't lock down and achieved comparable economic results to their neighbours, I'd say yes you're right. A little bit worse on GDP, but very comparable. But they also had thousands more deaths, and tens of thousands more cases with uncertain futures, to no economic _benefit_ that I can see.

Sources: - https://www.statista.com/topics/6123/coronavirus-covid-19-in... - https://www.focus-economics.com/regions/nordic-economies

We don't know the real herd immunity threshold. It had been previously estimated at about 70%. However daily average deaths in Sweden are now down near zero even though there are minimal pandemic control measures, and seroprevalence studies have indicated an exposure rate probably below 20%. So what accounts for the current situation?

https://www.worldometers.info/coronavirus/country/sweden/

Seroprevalence only measures anti-body resistance, but SARS-CoV-2 is quite similar to common cold viruses and it appears many people have pre-existing immunity to it for that reason. Or so goes the theory.

The 20% antibody threshold seems to be fairly common across many countries however, at least outside non-China Asia/Pacific countries that were not badly affected at all. The body learns how to fight viruses and can do so quite quickly.

The 87k are the verified cases, there are a magnitude more cases. So there is some herd immunity in some areas which may with the current or possibly a bit more lax precautions be enough to keep the new cases at a fairly low level in the fall and winter. Still of course no full herd immunity in all areas.

Some epidemiologist say that we'll live with this virus for 30 years and that pretty much everyone will get it sooner or later. If that is the case some countries have only postponed the inevitable.

Or vaccines or better treatments will soon be available and distributed to a couple of billion people, in that case the harder lockdowns saved some lives or months/years of living.

Public policy, monetary policy, and fiscal policy all have empirical evidence in support of them, demonstrating the usefulness of the field. Your comment does not.

Backing you up here. There is a clearregime change in the data before and after the advent of central banking. Recessions and financial panics are less frequent, and less severe. Just looking at the US, there were ~15 recessions since the adoption of central banking in the 1910's. In the same time period during the 1800s there were >25 recessions, and that's not even comparing for severity. You can see the Wiki[1] for an overview.

[1] https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...

Are you counting the recessions caused by central banking policies being mistaken or outright wrong? There have been at least two in the USA in the past century that can be directly linked to the Federal Reserve, and who knows how many in other countries.

In the USA the two are the Great Depression (which the former Fed chief Ben Bernanke has argued was largely the result of Fed policies) and the early 1980s recession caused by the Fed increasing rates in an attempt to combat inflation. (It worked, inflation dropped, but many people lost their jobs.)

Sure, many people make that argument. The recessions happened regardless of their source. But the financial panics that preceded lenders-of-last-resort and countercyclical monetary policy were significantly more frequent and severe than anything we've seen in recent history.

Edit: just noticed your edit, Bernanke never said that monetary policy caused the Great Depression, but it is the consensus view that policy was too tight during that period and exacerbated it. A mistake that no one is keen to repeat. Certainly the interest rate rises in the 80's caused a contraction, one could argue whether the subsequent recession was worth the cost of fighting inflation. I think all would agree that the stagflation that prompted that maneuver was not ideal.

It's also worth mentioning that older folks alive during the Great Depression had a perspective on it vs the panics during the 19th century. Many observed that the Great Depression, which was the worst in a generation, was tough but manageable compared to the Panic of 1983 where people literally could not buy food.

Yup, there is a lot of interesting perspective you get from reading journals and correspondence from the period. Sources from the late 1800s will include bits from the lives of every day people, almost always along the lines of: John opens a store, panic occurs, his business fails and he moves to a different town; becomes a partner in a canal shipping company, panic occurs, his business fails and he moves to a different town; etc.

s/1983/1893/.

I don't think your analogy is a correct one.

Here's something from 538:

"A 2018 study conducted by Loungani and others looked at 153 recessions in 63 countries between 1992 and 2014 and found that the vast majority were missed by economists in both the public and private sector. This was painfully true in the case of the global financial crisis in 2008, which wasn’t officially declared a recession until it had been going for almost a year."

Economists apparently can't predict the future. And they don't seem to be able to "predict" the present, or the recent past.

So I guess in your analogy, it would be something like, "We were driving at night with an economist in the country, and they said, 'There are no boulders ahead that I can see'", and then you hit a boulder, car was totalled, you were severely injured, spent months in recovery, and then 9 months later the economist gets back to you with, "Recent data confirms that we did, indeed, hit a boulder."

I think your argument is an argument from authority. If you can't "predict" the past, you are not an authority.

All economists can do is project current trends into the future.

Economists do not have -- to use your analogy -- a good theory for predicting when there will be a rock in the road. When economists act like they have such a theory is when people start rolling their eyes.

Economics isn't about making some projection like "GDP number going down so will go down more!" Current behavior contradicts this outright. Economists are broadly warning against being too optimistic about interpreting the current upward trend as meaning that a speedy and full recovery, without any economic damage, is inevitable.

There are many ideas and models about economic shocks and recessions that had important predictive value in demonstrating how this recession unfolded. It's not like this is something beyond understanding when you can compare the actions other countries took compared to the US.

Economists are a priest class that enables the ruling class to make stupid and short sighted decisions.

Many weren't on board with the tax cut bill that passed under the current administration.

http://www.igmchicago.org/surveys/tax-reform-2/

Yes for any given tax policy proposal you can always find one economist who supports it and another who opposes it. Does that tell us anything useful?

This is a very reasonable comment. Social sciences are frustratingly imprecise. But, understanding the history of various scenarios is useful. And, it can result in useful policy changes which avoid the worst, as you mentioned.

I think it helps to have a little charity when it comes to other fields, even if you're not completely on board, because you can end up accidentally limiting your understanding of the world.

I'm also sure a lot of people here can identify with feeling frustrated at hot takes about tech that lump all tech workers together as predators eager to violate your privacy.

The problem I have with economics after reading Debt: The 5000 years by David Graeber[0] (solid read, btw) is that the field was founded on some fundamentally flawed assumptions about its own history. The biggest one being that there's no evidence that a barter economy preceded a cash economy. We've all been taught that this was the case when there's no evidence it was true and there are a lot of unexplained problems with the idea of barter economies (i.e. how were people able to trade items of equitable value regularly, mutual goods exchange mismatch, etc.)

In our lifetimes, economists largely balked at the idea that the housing market could collapse, and then boom, 2008 happens.

I don't necessarily think that the entire field of study is bunk, but our capitalist society tends to prop them up like oracles without much scrutiny because they're the experts, and it's hard to provide a counterweight against that expertise, especially when their philosophy is used to create the vast wealth inequality we see today.

0: https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

> In our lifetimes, economists largely balked at the idea that the housing market could collapse, and then boom, 2008 happens.

I don't buy that without citations. Everyone knows housing markets are like most other markets and go both up and down in cycles. Like most other markets, the bigger the boom, the bigger the bust that follows.

To say that a majority of economists believed otherwise seems like pure hyperbole to me.

From an analysis by the Wharton school[0]:

“It’s not just that they missed it, they positively denied that it would happen,” says Wharton finance professor Franklin Allen, arguing that many economists used mathematical models that failed to account for the critical roles that banks and other financial institutions play in the economy. “Even a lot of the central banks in the world use these models,” Allen said. “That’s a large part of the issue. They simply didn’t believe the banks were important.”

They were fundamentally unprepared and many were unwilling to even entertain the idea that the housing market could collapse. That’s what made stories like The Big Short so surreal, they had all these experts telling them that they were wrong, and economists played a major role in that episode.

0: https://knowledge.wharton.upenn.edu/article/why-economists-f...

> But it was the financial institutions that fomented the current crisis, by creating risky products, encouraging excessive borrowing among consumers and engaging in high-risk behavior themselves, like amassing huge positions in mortgage-backed securities, Allen says. <

Which is probably a big reason why many economists weren't watching harder. If the banks are reporting things are fine while incentivizing bad loans on the down low then it's not especially surprising that a data driven field was caught offguard by tainted information.

Obviously no one knew what form it would take, but people were pointing out inflated housing prices[1] and other shady tactics in the mortgage market for YEARS. There's always cranks on TV saying This Time Is Different (2000, anyone?), but its just incorrect to say that serious economists were "unwilling to entertain the idea that the housing market could collapse."

[1] https://www.npr.org/templates/story/story.php?storyId=467926...

That's correct, but it's a far cry from the claim most economists were "unwilling to entertain the idea that the housing market could collapse."

Also 2008 surprised almost everyone, so saying economists couldn't predict it is not much of a slander. Neither could banks, governments, hedge funds, or multiple other groups whose business it was to watch out for events like that.

Good points, economics as a field certainly has its flaws. Many assumptions of history are also likely made in other fields as well. But even that said, I don't see why the alternatives put forth in "Debt: The first 5000 years" aren't also just that - assumptions...

I'll also just say one thing for the concept of bartering: I don't think bartering requires equitable trade in value. It's just of matter of two people getting what they want. As for an example, my grandfather bartered his land up until 2013 when he died. He owned a farm, but he didn't farm it. Instead he let his neighbor farm it for profit, in exchange for one of his neighbor's cows that we butchered for meat each year. Was this equitable in value? Probably not, but look at it this way: our family received free steaks that lasted us almost a year, every year and it costed us nothing - my grandfather still owned the land and he never planned on farming it. And on the flip side, his neighbor got to grow and sell substantially more crops without having to buy land... (albeit at the minor cost of a cow each year, but was nonetheless was profitable for him)

Well, they really don't have much onus of evidence this time, but...

How often do governments follow economists predictions? Govs mostly react to things after they happen, much more so in monetary matters. When they do follow predictions, it's some stupid, politically based one, not an economics consensus.

Besides, we trust that guy on your scenario because he has a verifiable model of how accidents happen. For some reason, the people that make macroeconomics theories really dislike verifiable stuff, with very few exceptions.

> How often do governments follow economists predictions?

Central banking and monetary policy lowering interest rates? The relief package earlier this year? Seriously?

> the people that make macroeconomics theories really dislike verifiable stuff, with very few exceptions

What are you even talking about?

> Central banking and monetary policy lowering interest rates? The relief package earlier this year?

Those are examples of politicians reacting to events that were already occurring or had occurred.

Counter-point, most respectable economists said that the 2017 Trump tax cut was a bad idea, it was too expensive and helping the wrong people. Fast forward to this year, and now the deficit is ballooning due to said tax cut, leaving the government very little wriggle-room.

As a counter argument it seems to me that if you are an expert in a field you can generally predict disasters and be wrong and people tend to not care so much, but if you predict a more positive outcome and you are wrong people will never forget. I think this kind of societal reaction pushes experts to being more willing to give severely negative predictions.

Another factor that might cause economists to sound doom and gloom is that once you do hit a certain point it's much more difficult to get out of it using conventional policy tools. You run an increased risk for an actual prolonged depression and start doing greater amounts of long-term economic damage.

The "economists" you see on TV have been calling boulders in the road for the last decade and we are in the middle of Kansas. They have no credibility.

This is why it's referred to as "the dismal science".

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