I am not an economist. I am an economic historian. The economist seeks to simplify the world into mathematical models — in Krugman’s case models erected upon the intellectual foundations laid by John Maynard Keynes. But to the historian, who is trained to study the world “as it actually is”, the economist’s model, with its smooth curves on two axes, looks like an oversimplification. The historian’s world is a complex system, full of non-linear relationships, feedback loops and tipping points. There is more chaos than simple causation. There is more uncertainty than calculable risk. For that reason, there is simply no way that anyone — even Paul Krugman — can consistently make accurate predictions about the future. There is, indeed, no such thing as the future, just plausible futures, to which we can only attach rough probabilities. This is a caveat I would like ideally to attach to all forward-looking conjectural statements that I make. It is the reason I do not expect always to be right. Indeed, I expect often to be wrong. Success is about having the judgment and luck to be right more often than you are wrong.
Niall Ferguson, “Why Paul Krugman should never be taken seriously again”, The Spectator, 2013-10-13
May 9, 2014
QotD: Real history and economic modelling
Comments Off on QotD: Real history and economic modelling
No Comments
No comments yet.
RSS feed for comments on this post.
Sorry, the comment form is closed at this time.
