Two Economists Walk Into A Bar...

The September 14, 2009 Business Week "Facetime" column by Maria Bartiromo had an interview of economist Charles Plosser. The interview reminded of two old sayings about economists:

1. If all the economists in the world were laid end to end they still would never reach a conclusion.
2. Put any two economists in a room and your will get three different conclusions.

Consider Mr. Prosser's credentials:

• President of the Federal Reserve Bank of Philadelphia.
• MBA and PhD from the University of Chicago, one of the top economic schools in America.
• Economics professor and dean of the business school at the University of Rochester for twelve years.
• Famous for his work and the naming of the "real business cycle" theory.

Thus, it is obvious that Mr. Prosser is very smart and experienced in the economic world. The scary thing is some of the answers to Ms. Bartiromo's questions that she posed during the interview (bold face and caps added by me for emphasis):

Ms. Bartiromo: You said back in July we will probably have to begin raising [interest] rates sometime in the not-too-distant future. It's now September. What is the not so distant future?

Mr. Prosser: YOUR GUESS IS AS GOOD AS MINE. It clearly depends upon the path to recovery...

Ms. Bartiromo: If you were a voting member of the Federal Open Market Committee this year, how would have voted in the past two sessions?

Mr. Prosser: I GUESS I would have been with the majority.

Ms. Bartiromo: What is the most dangerous threat to the economy and the recovery?

Mr. Prosser: THAT'S REALLY HARD TO SAY.

Ms. Bartiromo: Where are we in this economic cycle?

Mr. Prosser: Each month we get a little more GOOD NEWS. We still have some BAD NEWS to come. I SUSPECT, but we're kind of bouncing around...I HOPE we'll see some positive growth in the second half.

I do not know about you but if this highly educated man is guessing about the future, who sees both good news and bad news at the same time, does not know what the most dangerous economic threat is and is relying on hope, than what chance do the likes of Obama, Pelosi, Reid, Biden, Dodd, Franks, and other politician-lawyers have of accurately predicting what their ideas and policies will do the economy and the American taxpayer? How can we believe the administration's number about jobs saved, jobs created, the specific impact of the stimulus package, etc. when Prosser is guessing and hoping?

"Love My Country, Loathe My Government" has a number of steps to address their economic ignorance. First and foremost, reducing the size of government would greatly reduce the political class's ability to take large crapshoots with the economy. More specifically, Step 36 states: "Require all members of the political class, upon election to Congress or the White House. to take and pass a course on economic theory and principles. This will help them better understand how their actions will impact the lives of Americans, both short term and long term." Since many Americans have to take tests in order to licensed in their chosen profession, in makes sense and seems fair that the political class should also be "licensed" to practice their chosen profession that usually includes making grossly erroneous decisions on the economy.