Monday, October 19, 2009

I'm not saying that it's true, but ...

I spent part of yesterday catching up on the week's news. The following piece on RTE made me smile, not only because it takes a swipe at economists, but because billonaire businessman Denis O'Brien does his fair share of making a nuisance of himself (including making this speech). I've had my fair share of arguments with economists over the years who have a very particular way of looking at the world. I remember one exchange where an economist was insisting that his model was right and the world was wrong (and the model was meant to be explanatory not normative - i.e., he was trying to explain the world, not detail how the world ought to be). My line was that the world is as it is and if the model didn't explain what was going on then it was the model that was wrong. He categorically refused to accept that! His model was the truth and the world was some sub-optimal version of it, rather than vice versa.

Mr O'Brien also said the country's third level sector supported 250 academic economists whom he accused of 'writing blogs, twittering and taking out ads to stop NAMA'.

He said they generally made a nuisance of themselves - which would be fine if 99% of them had not failed to predict the economic meltdown facing the country. He said the other 1% predicted doom all the time.

'I have a sense that all these economists need to come and work for real businesses to really understand how the economy works and see the actual stress and strain of running a business... only then will they have something to contribute,' he said.

A fairly damning assessment of academic economists in Ireland. I'm not saying that it's true, but ... To be fair, what's really being said is that because they are not advocating what is best for Denis O'Brien they are not up to scratch. Of course, what is best for O'Brien and what is best for the country are not necessarily the same thing.

The rest of the article is part of the softening up process for the forthcoming budget wherein public sector workers are going to get hit again with a wage cut. Through tax levies public sector take home pay is down between 10 and 15 percent so far this year. It's likely that they'll cut base pay in the budget by up to an additional 15 percent depending on overall salary. Of course this cuts disposable income, which cuts consumer spend, which cuts indirect sales tax revenue, which cuts the overall tax base ... I better stop there before an economist steps in to correct me.

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