The Economists

Will this go down as the era of the economist? Especially in recent months, we’ve hung on their every forecast, even as the magazine that sports the name usurps all others as the must-read of the day. Then there’s the book called Freakonomics (with the inevitable follow-up in bookstores now). Not only was it a blockbuster bestseller, it advanced the idea that, never mind interest rates, the economist’s unique tools are every bit as useful in predicting (and even altering) social factors such as crime rates. In the future, who would need sociologists, psychologists or criminologists when an economist can do everyone’s job?


– Helmut Pastrick (left) is the chief economist for Central 1 Credit Union, the umbrella organization for the credit union system of B.C. and Ontario;
– Marc Lee (centre left) is the senior economist from the Canadian Centre for Policy Alternatives;
– Cameron Muir (centre) is the chief economist for the B.C. Real Estate Association;
– Niels Veldhuis (centre right) is a senior economist at the Fraser Institute;
– John Richards (right) is an economist and professor in the Public Policy Programme at Simon Fraser University

On the other hand – and this can’t be ignored – never before have so many been so wrong about so much. And not only did economists fail woefully in their crucial mission to warn us that something bad was coming around the corner, the gathering evidence suggests they didn’t just miss the damn thing; they caused it! Yes, there’s a consensus building that economists paved the way for the recent (current?) financial crisis through their insistence, meekly accepted by politicians, that free markets are infallible and require no regulation. Or maybe there isn’t a consensus. Because that’s another thing that’s been going on with economists lately. Even as politicians crowd toward the middle of the road, economists are keeping to their respective corners. More than ever, Friedmanites kick sand in the faces of Keynesians and vice-versa. All of which makes economics a particularly interesting field of study just now. Accordingly, we’ve tabbed five of the province’s most prominent practitioners, a very diverse group. The men were each given a questionnaire, and their answers appear below. As you’ll see, they retain views and interests that are – how to put this? – divergent. If the idea was to learn at least as much about the economists as about the economy, well, mission accomplished. 


How did you rate? Give yourself a letter grade on your record in forecasting the past 18 months. 


 
Cameron Muir: Aside from not seeing that little thing called the global financial crisis hurtling toward us, I’d say a B. I base that on the strength of how quickly we responded to events last year and predicting during the darkest days last winter that home prices would stabilize by the third quarter.


Helmut Pastrick: F for the financial crisis.


Marc Lee: B+. Amid the housing bubble, I saw a recession coming a few years ago but underestimated how big the hit would be to the financial markets and also how quickly they have recovered. I also expected B.C. housing markets to fall harder.


John Richards: I have been working on social policy issues for the last five years. No one asked me to forecast the markets, which is fortunate because I had no insight into the precarious state of the sub-prime U.S. mortgage market, the excess leverage of New York investment banks or the nature of AIG’s insurance operations.


Niels Veldhuis: The Fraser Institute does not engage in economic forecasting. The fact is, economists, like nearly everyone else (including fortune tellers), do a rather poor job of predicting the future. This was certainly the case in the past 18 months but generally holds true throughout time.