Reading Entrails

Really now, we would be better off slaughtering a goat and reading the entrails than listening to these people. Such was my thought a couple of days ago while listening to NPR interview a list of economists. I have had this thought repeatedly since the financial crisis and occasionally before. I found it even more pointed when it occured to me that since a year or so ago economists have been saying that 2007 was the beginning of the recession. This was a boom year for those living through it, and you heard not one word to the contrary from any economists speaking at the time. It's hard to fathom how the recession could have begun so long before the crash without some of their august group noticing, particularly if the field is credited with being any sort of science. Really, we should return to reading entrails for economic prognostication - it would be more accurate.

We live in a time when every economic activity we undertake is tracked and stored in a database. This has been going on at least since the mid 90's, yet I don't think anyone has taken this data and checked the fudamental assumptions of economics. We walk into a store and make endless economic decisions. One can actually see how price is related to demand, or how increases in price cause people to substitute one item for another. Every single granular economic decision that people make has now been documented for a period of several decades, yet we cannot determine we are in a recession till several years later, or that several times the entire world's GDP is pooling in a bunch of obscure derivatives. How can this be? Since this is supposedly a science, it must be brought back into conformity with the data that is now readily available.