There’s a great deal of truth here

Almost a decade later, the Queen might be tempted to lob another grenade at the economics fraternity: why did you get it wrong again about Brexit?

In fairness, the economics profession had its Cassandras in the run-up to the financial crisis and not all economists thought a vote to leave on 23 June meant instant Armageddon. Even so, it is a valid question. How can it be that the Bank of England, the Treasury, the IMF, the OECD, not to mention the vast majority of academic economists, all predicted so confidently and yet so wrongly that the UK economy would plunge straight into a stonking great recession after a Brexit vote?

On both occasions, economists have been guilty of groupthink. On both occasions they pretend to have forecasting powers that don’t really exist. As the economist Paul Ormerod points out, in the short term it is nigh-on impossible to sort out genuine information from noise.

But is everyone going to learn the right lesson from this?

If we cannot forecast what is about to happen then how in fuck can we plan the economy?

Well, quite, at this macro level we simply cannot, can we, because we simply do not know what is about to happen nor can we accurately model the effects of whatever we might do about it.

So much for the Curajus State then, eh?

And, of course, that kills off absolutely everyone further left who wants a properly planned economy, doesn’t it?

37 thoughts on “There’s a great deal of truth here”

  1. So Much For Subtlety

    You wish. Lenin had never run so much as a fish and chip shop. Never held a real job in his entire life.

    Didn’t stop him thinking he could do it better than the professionals.

  2. You wish. Lenin had never run so much as a fish and chip shop. Never held a real job in his entire life.

    I see Obama is now giving Trump advice on how to be a President of the USA. Another chap who never had a real job in his life.

  3. Something Obama will never tire of giving Trump advice on how to be a president. He will be a far more hands-on ex-president than he ever was a president.

  4. What bothers me about planning an economy is not its impossibility. It may, after all, become possible. Rather, it’s the psychology of those who woul want to do it. Anyone who seeks that, or any, control over other’s lives is an undesirable.

  5. “And, of course, that kills off absolutely everyone further left who wants a properly planned economy, doesn’t it?”

    Not really. They don’t care that there is a better way of doing things that doesn’t involve them in being in control of everything, its the being in control thats the thing they want. Regardless of how shit it is for everyone else they’ll force everyone to do it, at gunpoint if necessary, because the power rush is their aim, not increasing the sum of human happiness.

    Just as there are always humans who will rape and murder, there will always be humans who get their kicks from ordering other people around. If society is going to improve over the coming years we need to devise some method of preventing such people entering public life.

  6. I’m reminded of Chile’s Project Cybersyn.

    Planning an economy is the ultimate intellectual conceit.

  7. ” there will always be humans who get their kicks from ordering other people around.”
    Best thing to do with people like that. Only way. Kill them.
    Always has been. Always will be.

  8. David Moore – problem is that not enough people seem to understand this and hence insufficient demand for politicos that do (or at least dont act like they don’t).

  9. “Best thing to do with people like that. Only way. Kill them.”

    That used to be the way, because its was kill them rather than be killed. Now they have legal ways of controlling people that are very difficult to fight – they have the State on their side, and fighting that rarely ends well for anyone.

    I personally prefer a more sideways attack at the problem – I would say that no-one may seek to obtain any public office until the age at least of 40, preferably 50.. By forcing the control freaks out of politics for as long as possible one exposes them to more of the real world, which should knock plenty of corners off, and not feed their egos, which is what the usual PPE/policy wonk/SPAD/MP/Government position conveyor belt allows. Thus should mean we are governed by slightly more rounded human beings.

  10. Yes that’s right .Planning’s so difficult the poor born- to -privilege munchkins must give up at the start and resort to chaos theory.
    After the war when such talk would have seemed fatuous ,even to members of the Conservative Party ,than which which nobody is more reliably fatuous, Harold Macmillan was told that the country needed 300,000 more houses (by planners who did not have a clue what they were talking about and were just making it up apparently).He went ahead and did so coordinating private and public sectors.In 1965 Harold Wilson ,in his useless, silly way, set a national target of 500,000 houses. Edward Heath promised the same in his 1966 Manifesto declaring that the houses but not the house prices would go up.Whereupon Mrs Chaos lands from Outer Space and sets the private sector with all it s wondrous magic to do some building but doesn’t give a fuck about house and land price inflation which turns out nicely for the Chaos party because the mug voters’ houses go up in value though their wages don’t.Wage inflation bad/ house price inflation good! A message well understood.
    Now we have managed to eject ourselves from the EU, there would appear to be some need for forward planning, But in its all round walliness ,with the Party’s real leader hiding in the Witmey woods, there is a vacuum filled by extraparliamentary Bash the foreigner voices.They will go down well in European negotiations.
    The health service is a humanitarian disaster; the housing system is a sick joke, train passengers yearn for renationalisation. Doesn’t look good for the Mystic Union of no thought ,no plans. Be free of the coarse realities! Float in the warmth of love!!

  11. @DBC Reed

    I think you might need to reduce the meds. Or up them. But your current dose is clearly not working.

    Meantime, when I opened the curtains this morning the sky hadn’t fallen in and the Conservatives were running the country. I know that really sucks for you but there you go.

  12. The reason they were wrong on Brexit is far simpler than why they didn’t see the financial crash coming – the Treasury and others believed David Cameron when he said he thought we would want Article 50 triggering immediately.

    There was no actual government policy on when Article 50 would be triggered. That one comment from Cameron is all the economists had to go on as their starting point. From that it is easy to construct a nightmare scenario – we would vote out and trigger Article 50 immediately, being totally unprepared for the slog of negotiations, represented by bumbling Colonel Blimps types and constantly on the back foot, outplayed by the wily foxes in Brussels.

  13. @DBC Reed
    Surely housing and the NHS are examples of planning going wrong.
    Not the best examples for saying the free market does not work.

  14. There’s no getting away from some amount of planning in government. All the fundamental features of a state: the army, the judiciary, these are all planned organisations.

    Indeed the current miserable state of the MOD is because it has been left to self-organise organically, rather than being planned by someone capable of ranking national security above their own self-enrichment.

  15. “The health service is a humanitarian disaster; the housing system is a sick joke, train passengers yearn for renationalisation.”

    That’ll be the health service that is the very definition of a centralised socialist economy, the housing supply system that the State controls entirely via the planning and building regulation system, and the train network that is again pretty much entirely controlled by State bodies (including the planning system of course – try building a new railway or station anywhere).

    Not looking very good for centralised planning of complex systems really is it?

  16. Andrew

    “Indeed the current miserable state of the MOD is because it has been left to self-organise organically, rather than being planned by someone capable of ranking national security above their own self-enrichment.”

    What on earth makes you think the MOD isn’t planned within an inch of it’s life from top to bottom? Anyone who dares to ‘self-organise’ would find their career instantly curtailed.

    The military, generally, provides great evidence of the failure of central planning. Success in the British forces has generally been the result of local level control and adaption, not central planning.

    The great failure of the US military to achieve any success for decades has been their slavery to planning, and their punishment of anyone stepped out of line. That goes back as far as Billy Mitchell.

  17. “Obama is now giving Trump advice on how to be a President of the USA”

    Sounds like Eddie the Eagle giving ski jumping classes…

  18. The Queen when she asked why had nobody seen this… the economic crisis… coming, asked the wrong question.

    She should have asked why did everybody ignore those who did see it coming?

    We know the answer of course.

  19. @ DBC Reed
    Firstly the 300,000 houses target was set by the Conservative Party manifesto not by a planner. The Labour Party had failed on the 200,000 target. Secondly, MacMillan did not “co-ordinate the public and private sectors” – he “made a bonfire of (wartime) controls” (which your beloved Attlee had kept in place for six-and-a-bit years after the war ended) letting the private sector off the leash. Thirdly, council house-building was *not* co-ordinated centrally, but by each local authority (except to the extent that the Ministry of Housing produced a range of approved designs for council houses), which built houses that *it* thought it needed to house families from slum clearance and some of those on its “housing list”.
    Fourthly, some of us have memories, so terminological inexactitudes can get spotted.

  20. The reason they were wrong on Brexit is the same reason they were wrong on Trump. They only talk to people like themselves, all of whom have done extremely well from the way things used to be – ever-increasing central planning, managed globalization that concentrates wealth in the sectors of the economy to which they belong, etc. etc.

    At least in the US there was a reversal after Trump did win. Before the election, pretty much all the economists not only claimed it was impossible for him to win, but that a Trump win would be a disaster for the markets and for the economy. The market disaster lasted all of the morning of the Wednesday after the election, and most economists then admitted that growth prospects for the US economy were significantly better under a Trump presidency than they would have been under Hillary!!! Fiscal expansion and deregulation being the primary reasons for this re-rating.

    Of course this raises a question which has yet to be satisfactorily answered. If economists readily admitted after the election that the prospects under a Trump presidency are better than under Clinton, why did they so adamantly support Clinton in the first place? My answer boils down to the fact that they are scum, like most people in the liberal bubble that dominates the knowledge professions, and that they were talking their own book. They were emotionally invested in a Clinton presidency because they think that Trump is not one of them (he eats his steak well-done, I hear. Horrors), and the fact that he would make things better for most of their countrymen (the deplorables in fly-over country) was not something that really mattered to them.

    I would venture to say that the situation is pretty much the same in the UK. An Ecksian purge of the knowledge professions is looking more and more appropriate.

  21. I logged on here because I read a report on an investment/economics blogsite (to which I am forbidden (by them) to link, lest hackers access data on subscribers’ portfolios) which asserts that “The UK economy ended 2016 on a high, with business activity growing at the fastest rate for almost one-and-a-half years. Hiring has also revived …” quoting “PMI rose from 55.1 in November to 56.4 in December, its highest since July 2015. At 55.3, the average reading for the fourth quarter is consistent with the economy expanding by 0.5%, with growth accelerating throughout the quarter.”
    PMI is jargon: “purchasing managers index” the %age of corporate buyers who have increased orders to buy stuff in the month/quarter compared to the previous month/quarter – it is a leading indicator for production.
    The anticipation of Brexit is leading to a growthg in GDP because the doomsters have predicted a slump which has led to a fall in the £aterling exchange rate which has led to an increase in export- and export-substitution-demand.
    It is one of life’s occasionally pleasing ironies that the very vehemence of the Guardianista doomsters is leading to economic growth that proves them wrong.

  22. @ BiCR
    Not quite – you must plan the economy so that there is enough of all the good stuff for the nomenklatura and their WAGs

  23. “If we cannot forecast what is about to happen then how in fuck can we plan the economy?”

    Tim, you are missing their key assumption. Socialists believe that a fully planned economy will eliminate economic uncertainty, making forecasts 100% reliable. If the economy is too complex for them to manage, they will simplify it – by eliminating choice and entrepreneurs. Providing there is equality, socialists would be happy with drastically lower living standards – eg a semi agrarian shithole.

  24. @ Theophrastus
    Socialists also believe that they can command the weather so that crops exactly meet the prediction in the economic plan.
    All the biggest famines – Ukraine, China, Ethopia – in the twentieth century were caused by socialist planning (admittedly none of these needed the weather).

  25. Bloke in Costa Rica

    john77, it goes without saying that the wise shepherds get to live high on the hog. It’s Kip’s Law writ large.

  26. David Moore hits the nail on the head. MoD Abbey Wood has 8000 plus people who do nothing but plan for MoD equipment procurement, and have done more damage to UK combat readiness than the Russian army ever could.

  27. @J77
    Nice try: to convert the era of post war reconstruction into a laid-back Tory wonderland where the market worked for the good of all, and sent price signals that never failed,like now, yok yok.
    Macmillan had been in such high command of the Ministry of Supply during the War that his later elevation to become the “Viceroy of the Mediterranean” scoffing at Churchill’s telegrams and setting fire to them amidst the cheers of senior officers made him the obvious choice to take over the build 300,000 houses plan which was framed by no less a planner than Lord Woolton of pie fame, Rab Butler (re-planned the Education System before the war was over) and David Clarke of the Conservative Research Department ,not forgetting Churchill himself. The CRD (see above) began planning for ” a large reallocation of shipping resources and foreign currency to obtain softwood ; a special increase of nine per cent in the output of the cement industry, almost one million tons of coal and about 2000 million bricks”.You get the flavour:(not a milieu for old Etonian failures and half-arseniks) Macmillan’s Ministry was renamed the Ministry of Housing and Local Government to show the changed priorities (Now it is has, significantly, changed back to the Department of Communities and Local Government for which Sayid Javid has to produce a white paper this month to repair as much damage to the housing system from Tory land price inflation as Macmillan had to contend with from the Luftwaffe.Good luck on that one , mate.
    Toby Lloyd now policy head of Shelter is very fair : ” the mixed economy seemed to work well” although he is quick to point out that this era produced tower blocks.
    A person whom I have met, he certainly knows more about the subject than you do

  28. DBC Reed you moron, if the mixed economy was so fucking good why did it collapse in a heap in late 60s and into the 70s? Why was Mrs T even possible, politically speaking, if the much fabled mixed economy of Whitehall knows best was doing the business, in economic terms? After all, from 1945 to 1979 you had in charge either Tories who you laud to the skies, or Labour who you presumably approve of too, plus Ted Heath for 4 years in the early 70s, who was a 50s throwback style Tory on the economy anyway. So why had all these wonderful people made such a shit heap of the economy by 1979 that a free marketeer like Mrs T could stroll into power with a big majority for change?

    Has it ever occurred to you that any old idiot could have directed the British economy from 1945 to 1965, because all our near European competitors had been bombed to buggered and were concentrating on domestic reconstruction? That there was zero economic competition for the wonderful economy that the Man for Whitehall was creating in the 50s and 60s? And that when those competitors managed to rebuild their economies they ate the your much vaunted mixed UK economy for breakfast? How did British Leyland (the National Champion created by Whitehall) fare against those pesky Japanese upstart car makers Nissan,Toyota and Volkwagen? Ground them into the dirt one assumes with their superior Whitehall direction. After all I’ve got a Austin Princess Mark 8 on my drive like hundreds of thousands of other UK citizens.

    Oh, sorry, I got that wrong. I’ve got a Volkswagen Golf on my drive like many other UK citizens, and the company that made the Austin Princess is a footnote in the history books, along with the economic credibility of the Mixed Economy.

  29. @ DBC Reed
    That the period of posr-war reconstruction lasted into the mid-50s says a lot about the mess Attlee and Co made by concentrating on nationalising the commanding heights of the economy instead of doing something to repair the damage.
    Terminological inexactitude number (oh, I lost count long ago) “to convert the era of post war reconstruction into a laid-back Tory wonderland where the market worked for the good of all, and sent price signals that never failed,like now,” is not what I said. The first few years of post-war reconstruction didn’t have much of a market working for the good of all because Attlee retained most of war-time and actually introduced bread rationing (which wasn’t needed during the war). The relaxation of controls by Churchill’s government led to the fastest economic growth over any 13-year period since 1914.
    Lord Woolton was a conservative politician (and he did not create the pie namedafter him so “of pie fame” is just sloppy failure to do your homework), previously a businessman not a civil service economic planner. The name is a little bit similar to Wilson but the person was not.
    Setting fire to Churchill’s telegrams – what *have* been drinking? In fact MacMillan got on well with Churchill, but much less so with Eden.
    Who was an Old Etonian failure? Harold MacMillan won an Exhibition to read Classics at Balliol – so the intellectual elite of the intellectual elite, volunteered at the outbreak of WWI and promoted twice before spending two years in hospital recovering from his wounds, made a great success of the publishing house, both before and after his poltical career – which, you may not have noticed, included rising to become Prime Minister.
    Are you misquoting Toby Lloyd or did *he* get the tense wrong? We still have a mixed economy: the 40-odd% that is government spending isn’t all transfers from taxpayers to pensioners and welfare recipients.
    Tower blocks, like prefabs, were a product of Socialist planning, and like them failed the test of time.

  30. @J77
    It is literally pointless arguing about the post-war mixed economy: if you cannot see that Macmillan was able to use a lot of statist , dirigiste, top- down planning methods, left over from the war, to achieve his targets, then you have no comprehension of political history. Notice I am not accusing you of lying as you do me in a totally trivial manner: I am saying you never knew things in the first place.
    Trivia time: you imagine I said that Lord Woolton invented the infamous pie that bore his name.Why should any grown-up think that this stupendous bureaucrat should waste time inventing a vegetarian concoction himself? We rehearse the Macmillan argument again : to repeat ,Macmillan left Eton a year early and there has been speculation about homosexuality Who knows? But your description of Eton as an “intellectual elite of an intellectual elite “makes you look a ridiculously gullible snob, when in fact, he wasn’t there at the time.Nor did he finish his degree.Not something that bothers me , and I have a great deal of time for Macmillan but it obviously offends your hero-worshipping propensities for anybody to introduce any balance.
    The story of Macmillan burning a long telegram from Churchill in Algiers was told by an Ex-officer at a business lunch in my youth to which my father had taken me. I have come down in the world, thank goodness.
    Toby Lloyd makes it quite clear that Macmillan takes the can for Monstrous tower blocks-but it would have been hard to escape these in that era when there was a craze among architects for them.
    Please read “UK Housing White Paper risks huge backlash “in FT Jan 5th.Clearly the old argument between backwoodsmen and Top down housing reformers in the Tory Party has reached a crisis point with Sajid Javid trying to get builders to build on plots with extant planning permissions in their land banks with the likes of Andrew Mitchell trying to stop him. Who is more like Macmillan : Javid or Mitchell? (Putting aside grovelling snobbery)

  31. @ DBC Reed
    Learn to read before your next reply: “Harold MacMillan won an Exhibition to read Classics at Balliol – so the intellectual elite of the intellectual elite” I did *not* say *Eton* was intellectual elite (albeit its entrance requirements require above-average academic ability and are less financially exclusive than Holland Park Comprehensive). I don’t particularly like most of the Old Etonians I have met (Mac, whom I met once for a few seconds, when he treated two children as equals, is an exception) and in my youth, Winchester scholars were regarded as the intellectual elite among schoolboys [any other public school scholar, such as MacMillan or myself, *might* be regarded as part of the elite *by non-scholars*, but that is another matter and *not* what I said].
    You said “no less a planner than Lord Woolton of pie fame” – no, he was not famous for the pie *because* he didn’t invent it (I previously pointed out that he wasn’ta “planner”).
    The Attlee government was able to use a lot of dirigiste top-down controls left over from the war *and failed to build enough houses*. MacMillan used the Public Works Loan Board to provide finance to local authorities to build council houses; I mentioned earlier (and you seem to have chosen not to read) the top-down control that the Ministry of Housing continued to design council houses; BUT the growth in housebuilding was mostly due to the “bonfire of controls”. Private sector housebuilding was *allowed* to grow and this led to companies like London Brick, Wimpey and Taylor Woodrow expanding their businesses (Rugby Cement was determined to expand anyhow) which meant local authorities were able to build more houses faster (“direct labour” departments were much slower and more expensive than Wimpey at building council houses even when materials were available).
    Everyone who voted for him to become Chancellor knows that MacMillan didn’t finish his degree – wiki doesn’t say whether, of the twenty-eight guys who went up to Balliol in 1912, one failed his medical (as should be expected) or whether he had been badly wounded or extraordinarily lucky but it states that twenty-six had been killed* and Mac had spent the last two years in hospital. When WWI ended in November 1918 Mac, having got a First in Moderations, could have chosen to return to “a place filled with ghosts” the following October mixing with adolescents seven years younger, or skip it and continue as an adult which he had been for more than four years.
    Who knows? – well you don’t or you wouldn’t just be repeating a second-hand smear from a(?n ex-) communist who wasn’t even there.
    Harold MacMillan was undoubtedly a hero “in the 4th Grenadiers any conspicuous act of courage ‘was rated by the Guardsmen as “being nearly as brave as Mr MacMillan”‘ – but I don’t worship heroes: I am not an Ancient Greek nor a left-winger (who mostly worship “heroes of the revolution who have never doing anything brave in their ill-spent lives”) and the heroes I have known didn’t want to be worshipped. I admire MacMillan because he was the best peace-time Prime minister we have had in my lifetime and did more for the poor than any other, and more for them than all the Labour Prime Ministers put together.
    I haven’t read Toby Lloyd’s claims but the first tower block in the UK was built in 1951 before MacMillan became Minister for Housing and most of them were built under the Wilson government a decade after he ceased to be Minister for Housing; do your bloody homework!

    *Did you see the final “Blackadder” where the naive lieutenant says “I am the last of the Trinity tiddleywinkers” which is funny to us but would not have been to any survivors as it was too close to reality?

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