“IT’S LOUSY ECONOMICS”

Russ Roberts on the Keynesian economics of Christina Romer and President Obama.  Remarkably, Professor Romer lacked the intellectual integrity to defend her policies before the American people.

Roberts goes on to charge the Congressional Budget Office with scientific malpractice:

The truth is that our knowledge of the complex system called the economy is woefully inadequate and may always remain that way. We ask too much of economics. Even our best attempts to measure the job impact of the stimulus spending make this clear. In November of 2010, the CBO estimated that the stimulus had created between 1.4 and 3.6 million jobs. Not a very precise estimate.

But even this estimate was more of a guess than an estimate. The CBO estimates didn’t use any of the actual employment numbers after the stimulus was passed. Instead the CBO based its “estimates” on pre-stimulus relationships between government spending and employment, relationships that failed to predict the magnitude of our current problems.

The CBO’s results and those of other forecasters using multi-equation models of the economy are not science but pseudo science–what the economist F.A. Hayek called scientism—the use of the tools and language of science in unscientific ways.

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I liked Keynes .. but do not think he was a good economist. — F. A. Hayek

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