01 February 2012

The Sad State of Mainstream Economic Analysis

I have a new post up at In Mala Fide.  An excerpt:

To be honest, this sounds like a lot of pious baloney. As Michael Beckley points out in a new article in International Security, “The United States is not in decline; in fact, it is now wealthier, more innovative, and more militarily powerful compared to China than it was in 1991.”
Yep, and the Roman Empire saw continuous growth right up until it declined. A trend line is not a guarantee of future performance, as anyone with half a brain knows. Yet this clown somehow thinks that this particular trend line will continue on its path. The best way to predict the economic future is to look at fundamentals of the economy (e.g. legal system, regulatory system, tax policy, etc.) and see what effect the current policies and practices will have on the future. Of course, this is significantly more difficult than identifying a trend line and extrapolating (probably because fundamental analysis requires thinking whereas trend analysis requires Excel and rudimentary data entry skills, which many trained monkeys are capable of performing), which is why most mainstream economists never bother with it.

The rest can be found here.

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