“Capital Insights” with Jack Kern: Rock Star Economists Pull A Dangerfield
- Mar 05, 2009
“If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.”—John Maynard Keynes (British economist and writer, 1883-1946)
There are certain professions where the level of expertise and necessary practice are best left undiscovered. Example include professional fishing, working at a water treatment plant and attending Zamboni Driving School. (Question, does anyone actually flunk out of Zamboni Driving School?)
Another profession, equally steeped in mystery, surrounded by tons of charts, tables, miscellaneous facts and doyennes of desire (think Erin Burnett) is economics. With almost a secret alchemy, economists have the cool demeanor, even under the most difficult circumstances to offer an opinion, no matter how misplaced, and have very little concern about being challenged. We depend on them for guidance against the ceaseless flow of federal and local data, and listen to their pronouncements about difficult market conditions, and future economic policies as if they are incarnates of the Oracle at Delphi (not Larry Ellison, the other one.)
Here’s an example of their fortune-telling skills:
Percentage in March, 2007 feeling that monetary policy is “about right,” 81%, and now a year later 63%. Where were they a year ago? At the beach?
Percentage saying that stimulus package will have a modest impact shortening the recession, 60.3%, with 29.4% saying it will have little or no impact.
Now taking these two facts, an economist would draw the conclusion this way:
How can monetary policy be ok at 63% if only 60.3% believe in the short-term value of the stimulus package? Where did the other guys go?
A non-economist (a Congressman for example) would say, 29.5% feel that the stimulus package will have little benefit, let’s vote for it.
Coincidentally the same group of economists, and there are 252 of them, when asked if the TARP Rescue plan should include funds for foreclosure relief said yes (38%) and no (45%). Since the political winds seem to seed a change in spending priorities, the ones saying no probably need to get on the ball, and the others should start lining up speaking engagements.
So much for economic consensus! When Keynes made his statement about dentists, he didn’t envision CNBC and rock star prognosticator status for economists. Now with bubbles in tech, housing and the stock market all bursting, economists have become Rodney Dangerfields, (I don’t get no respect,) quietly pleading their forecasts on any news outlet that will carry it.
I shudder to think about how the administration and the treasury policy wonks are listening to the President’s Council of Economic Advisors and continuing to ignore meaningful, salient facts. The last time someone tried this, they had a special place to go and seek out knowledge, and ultimately that didn’t work either.
It was called Stonehenge. (And the U.K. economy hasn’t been the same since.)
(Jack Kern is the managing director of Kern Investment Research, and while he won’t admit to being an economist, he won’t deny it either. He is known for having called both the recession and the stock market decline correctly, and still can’t get a decent corned beef on rye, except in Manhattan.)
A disclaimer: No economists were consulted or harmed in the making of this column.