From Buenos Aires to Buckingham Palace to Beijing to right here in America, economists are an endangered species. A few years ago the Argentine government began fining economists whose reports differed from official government figures. Inflation, said the government, is running at an annual rate of 10 percent. Not so, responded some private economists: the number is closer to 25 percent. So the government fined several consulting firms close to $125,000 each for publishing inflation estimates that “lack scientific rigor” and of “deceiving” the public into making poor financial decisions. The government’s sole goal, officials announced, was to ensure that Argentines have access to “good data”, which of course they could obtain by scanning shop shelves and trading their pesos for dollars on the black market.
Then there was an assault on economists’ credibility by no less than Queen Elizabeth, whose private wealth was estimated at £320 million by Forbes magazine, including her personal investment portfolio of about £100 million, until the credit crisis wiped out about 25% of the latter and an unknown portion of Her Majesty’s other assets. So strapped was the Queen that she rattled her begging bowl before her government to obtain additional funds. And when opening the London School of Economics’ New Academic Building, home to still another climate change institute, asked “Why did nobody notice it?”, meaning the financial crisis. Rather than letting the question go unanswered, a group of prominent economists wrote to Buckingham Palace, “In summary, your majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.” Oh.
Fortunately for Britain’s economists, the Monarch no longer has the power to use the Tower of London as more than a place in which to display the crown jewels. But Beijing is not London, and the rulers of the Chinese people are not powerless to deal with economists whose forecasts deviate from the government line. Never mind that the People’s economy is not in robust health, requiring the regime to force its banks to extend credit to clapped-out manufacturing firms. Or that the nation’s leaders botched their interventions in the stock markets. Or that growth is slowing. Or that capital is flowing out of the country. “The fundamentals of China’s economy remain strong,” says a governor of the central bank. “China’s economy was off to a good start this year,” announced premier Li Keqiang. Better believe it, if you are an economic analyst in China. Criticism that might encourage foreigners to “short China” is verboten, or whatever the Chinese equivalent is. What is demanded of economist is “positive energy” reports The Wall Street Journal. Bearish remarks are not allowed. President Xi Jinping made the rounds of the state’s news organizations to tell them to “tell China’s story well” in order to enhance the nation’s influence in the world. No specific consequences of lapses into reality have been mentioned. None are necessary: pessimistic reports have been repudiated, replaced by optimistic ones.
And so to America. A nervous passenger on a Syracuse-Philadelphia flight noticed that her seatmate, olive-skinned and with a foreign accent, was scribbling in what seemed a foreign language. When he rejected her efforts to engage him in conversation, she handed a flight attendant a note, the plane returned to the gate, and the “foreigner” was escorted off the plane. It turns out the offending scribbles were a mathematical equation being worked on by Guido Menzio, a University of Pennsylvania economics professor en route to Ontario to deliver a lecture on search theory.
Fortunately, professor Menzio was able to establish that, unlike his fellow professionals In Buenos Aires and Beijing, and those who failed to warn Buckingham Palace of an impending financial crisis, he is not an enemy of the people.
