Mr Haldane's comments certainly appear to justify the claims of Brexiteer MP Michael Gove that the UK electorate had “had enough of experts”. The doom and gloom that characterised the economic arguments of the Remain campaign – the so-called Project Fear – appears to have been categorically undermined by the recent strength of the UK economy.
Does this mean that economics is broken? Not necessarily. As our economist Chris Dillow writes on page 12, we cannot be sure that these forecasts were wrong – would UK GDP growth have been even stronger had we not voted to leave the EU? And far from a categorical mea culpa on its Brexit forecast, Mr Haldane is sticking to his view that there still will be an economic impact from leaving, while even Brexiteers don’t dispute that there could be economic pain ahead.
However, Chris does concede that there is “plenty wrong with mainstream economists”, and he is not alone in this view. Author, journalist and fund manager Tim Price pulls no punches in devoting an entire chapter to the shortcomings of the economics profession in his excellent new book Investing Through the Looking Glass. Its main crime, he argues, is hubris – presenting itself as scientific in nature, with all the certainty that the physical sciences embody, when it is anything but. And what Mr Price describes as “an aggressively overconfident belief in the certainty of economic theory” lulls the rest of us into giving too much credence to their bold headline proclamations.
Elsewhere, suspicion is growing among a new generation of economists that the entire academic basis of economics is flawed. Among them are the Post-Crash Economics society at Manchester University – itself part of a wider global network called Rethinking Economics. In a recently published book, The Econocracy, its founders bemoan the growing gulf between the classical, mostly neo-liberal economics that dominate the syllabus and the real world. “[Economists] are being trained (not educated) to speak a language no one else can understand”, they argue, urging a rethinking of economics education to better engage the seven billion individual decision makers that form the global economy. Mr Haldane, incidentally, has contributed the foreword.
Indeed, we all need economics as a lens through which we can make sense of the world – except that right now that lens is giving us a distorted view. We should also temper our expectations of the predictive capabilities of economists, and instead understand the nuances beneath the surface of headline figures. Only in this way can we become better forecasters - as we explain in this week’s cover feature.
