Every year, Wall Street strategist Byron Wien of The Blackstone Group conducts a meeting with wealthy people to discuss the global economy and investing. This year the group–50 individuals, including more than 10 billionaires–had an extremely pessimistic outlook and a decidedly negative view toward the Obama administration. Wien reports that the focus group…
…saw the United States in a long-term slow growth environment with the near-term risk of recession quite real. … The Obama administration was viewed as hostile to business and that discouraged both hiring and investment. Companies and entrepreneurs were reluctant to add workers because they didn’t know what their healthcare costs or taxes were going to be.
Economist Robert Higgs observes that to elitist economists,
…such evidence means nothing. In fact, they hold it in complete contempt because (1) their formal mathematical models do not have a variable called “regime uncertainty,” and (2) even if they could be persuaded to take this factor into account, the canned data on which they rely—the product of the Commerce Department’s Bureau of Economic Analysis, for the most part—do not supply them with an “official” data set for their analysis. What you can’t measure, according to their “scientific” credo, does not exist. Their de facto motto (of which I have more than once been on the receiving end) is: you’ve got no formal model; you’ve got nothing.
The last eight words speak volumes: if “you’ve got no formal model; you’ve got nothing.” The characterization describes big government liberals and holds true for economic “stimulus” mongers like Paul Krugman as well as junk science mongers like Church of Global Warming Pope Al Gore. In a nutshell, the thinking in both camps comes down to: “To hell with data, we love models.”
Higgs points out that despite his 15-year investigation verifying that regime uncertainty is a serious factor in businesses’ staffing and expansion plans, academics…
…at MIT, Stanford, Harvard, Chicago, Yale, Princeton, and the other esteemed universities—are to my knowledge unanimous in their disregard of the idea that regime uncertainty might be contributing to the prolongation of the present recession (or might have contributed to the prolongation of the Great Depression…
And Higgs grows understandably nasty.
So, if you prefer to go with the experts, you should disregard my argument and my evidence and make your bets on the basis of what the experts say. You might wish to consider, however, that these are the same experts who, virtually to a man, failed to predict the present recession (and most of the preceding ones, as well) and that, according to their positivistic tenets, predictive power is the sine qua non of a scientific theory, as much in economics as in physics or chemistry.
We have to deal with the scourge of arrogant, reality-ignoring, elite theorists in economics, global warming, and the social sciences. The “experts” tell us to forget the data. Forget logic. Forget all of reality. They, the great seers of the way that things should be, will tell us the way in which we must imagine things to be. How shall the seers pass on their wisdom? Why, they’ll use their “models,” of course.