Why is this? The most straightforward possibility is simply that the concept of econ-brain is too lossy an abstraction to reliably evaluate thinkers with. Ideally we’d try to diagnose what led to each of these successes and failures in granular detail. But as a rough heuristic, is being more econ-brained actually a good way to improve your forecasts? Some possible responses:
I think of the economy as a useful abstraction that we have all agreed is true and that is based on a compression that is an amalgamation of the incentive landscape of everyone engagin in it. We all agree that it is the underlying reality to which things propagate and so we’ve built trust and cooperation around it.
I think of the economy a bit as a hyperstitition as a consequence and since everyone believes the same thing economic forecasts work because humans behave somewhat predictably to the economy since we all know from Hayek that it is the ultimate propagator of truth! (not)
I think there are multiple distorting factors yet mainly it is about the larger superorganisms within the economy being incentivised to distort the functioning of the economy for their own gains. In state heavy countries, it is the state that does this. In market heavy countries large corporations have done the same thing. I would like to claim that this is due to Friedman with the idea that the utility function of a company is based on the stakeholders as you can just disregard negative externalities (this is not fully what he has said but it is the slippery slope he started). I see this as a sort of defection at a higher level and I think that you don’t get the market as the underlying information aggregator that it is due to the fact that the instruments are institutionally captured so it gets distorted over time but narratives keep it going in the short term.
I think of the economy as a useful abstraction that we have all agreed is true and that is based on a compression that is an amalgamation of the incentive landscape of everyone engagin in it. We all agree that it is the underlying reality to which things propagate and so we’ve built trust and cooperation around it.
I think of the economy a bit as a hyperstitition as a consequence and since everyone believes the same thing economic forecasts work because humans behave somewhat predictably to the economy since we all know from Hayek that it is the ultimate propagator of truth! (not)
I think there are multiple distorting factors yet mainly it is about the larger superorganisms within the economy being incentivised to distort the functioning of the economy for their own gains. In state heavy countries, it is the state that does this. In market heavy countries large corporations have done the same thing. I would like to claim that this is due to Friedman with the idea that the utility function of a company is based on the stakeholders as you can just disregard negative externalities (this is not fully what he has said but it is the slippery slope he started). I see this as a sort of defection at a higher level and I think that you don’t get the market as the underlying information aggregator that it is due to the fact that the instruments are institutionally captured so it gets distorted over time but narratives keep it going in the short term.