Wednesday, 2 May 2018

UK Government Economists Ridiculed

Worse Than Alice's Wonderland

We found ourselves chuckling recently over our regular liturgy of morning coffee.  Economics has been called the dismal science.  It has been mocked for generations.  Yet, there are few cases of prophecy and prognostication by economists that have turned our to be so far of whack than those produced by the UK Treasury when the electorate voted to leave the EU.

Doomsters in the Treasury became so bearish at the prospect of the UK leaving the EU that calamities aplenty were forecast.  Here are a few of the dooms pronounced by the Treasury mandarins:

  • As a result of the leave vote, the UK would suffer an "immediate and profound" economic shock.
  • Instability and uncertainty would be the order of the day.
  • There would be a recession and sharply rising rates of unemployment.
  • Nigh on 800,000 people would end up out of work.
  • House prices would tank into a slough of despond.
  • Tax rises would inevitable as a result of leaving the EU.
  • Government spending would be slashed.

Brexit Boom: Manufacturing Set to Outpace the Rest of Economy as Exports Surge 

Moulders fill their ladles with molten iron at Kirkpatrick Foundry on February 21, 2018 in Walsall, England

What has happened?  Well, as is so often the case, the opposite of economist predictions has rapidly become the reality in the UK.

One should be a little more temperate, we suppose.  After all, we are talking about the prognostications of government economists.  Our expectations should have been low to begin with.  That means, of course, that our dismal scientists are influenced not just by the limitation of the simple attempting to predict the complex, but economists and predictors with a political bias, attempting to run a scare campaign in order to get a certain political result.  In other words, we are dealing with propaganda--an official analysis vastly distanced from the real world.

Real-world economists have been slating the Treasury's vivid imaginations--as well they might, since the integrity of their rather inept profession is at stake.  Jack Montgomery of Breitbart London writes:
A new study has estimated that the impact of a vote to Leave the European Union predicted by George Osborne’s Treasury was out by around £100 billion. . .

“Instead of employment falling by hundreds of thousands, it has risen by hundreds of thousands,” notes the new report, which will be published in an upcoming edition of Standpoint magazine, according to The Telegraph.  “Instead of house prices going down, they have gone up. Instead of the public finances lurching more heavily into deficit, they have been better than at any time since the Great Recession, making the prospect of an eventual surplus far from silly,” it adds.

The report, which was authored by noted economist Professor Timothy Congdon, does not pull its punches, attributing the Remain campaign’s bogus estimates to “a mixture of malice and ignorance, of wicked politics and trashy economics”.

Morever, the report is clear that the estimates do not merely represent a “giant error” insofar as events have proved them wildly inaccurate but a “gross miscarriage of government”.

This echoes similar findings by a team from Cambridge University’s Centre for Business Research, which judged the ‘Project Fear’ reports “very flawed and very partisan”, and Professor David Blake of the Cass Business School, City University London, who described them as “dodgy dossiers” worthy of Tony Blair, and an “extraordinary abuse” of economic modelling.
So, the Treasury's prophecy of what Brexit would mean turn out to be not just a "giant error", but a "gross miscarriage of government".  What don't you blokes tell us what you really think!

BREXIT BOOM: Factory Orders Hit Four-Year High, Hiring Increased to Cope with Surging Demand 

As for David Blake's disparaging comments, they caused a belly laugh.  For generations the jibes about economics and economists have ridiculed the tentativeness of the profession.  Four economists always produced six differing opinions.  Churchill longed to meet  a one-handed economist, but was disappointed by finding that every one couched their views with the standard mantra, "on the other hand . . ."  But Prof David Blake left the world in no doubt what he thought when he disparaged the opinions and speculations of Treasury over their assessment of the  economic effect of Brexit.  His descriptive slur of their work being a rubbish heap of "dodgy dossiers" worthy of Tony Blair (ouch!) and an "extraordinary abuse of economic modelling" represent plain speaking and candor never before seen from exponents of the "dismal science". 

The Treasury's fabrications must have been very, very sloppy.  Cant on steroids, one may say.

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