Never trust the prophet motive in economic forecasting

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Any symptom of politicians going mad is always welcomed by this column.

Any symptom of politicians going mad is always welcomed by this column. Ken Clarke accused the Chancellor of something like it in the House the other day, when remarking on the fact that the Budget contained a 30-year projection for the economy.

It is yodelling insanity. No one knows what the economy is going to be like in 30 years. No one knows what the economy is going to be like next year. If it was possible to know these things, everyone would be writing books like William Rees Mogg's How The World Economy Is Going To Hell In The 1990s, or whatever the old booby published years ago ("The duration of the American slump in the 1990s will match that of Britain in the 1930s.").

Economists are spectacularly ill-equipped to tell what the economy is going to do. An analysis by Victor Varnowitz of forecasts between 1970 and 1974 found that of 48 predictions made by economists, 46 missed the turning points in the economy. "Six years later," economic observer William Sherden writes, "the big three economic forecasting firms failed to predict the severity of the 1980 recession, the worst since the Great Depression, and missed the drop in real GNP for the second quarter of 1980 by 270 per cent."

The Treasury says forecasting has improved recently, and that predictions have a higher success rate than hitherto. This is true. But not because forecasting has improved. Naïve forecasts (which say that next year will be the same as this year) do better than predictions that actually predict something. Recently, one year really has been more like the next; that's what happens when central banks are given independence and stability descends.

How well do the economists who run the American economy predict its turning points? "Worse than chance," Mr Sherden says. And the further ahead they predict, the worse the performance. A sample of 5,000 forecasts by 50 leading economic forecasters between 1976 and 1988 showed the following: that 45 per cent of the growth forecasts were wrong at the beginning of the year predicted. Six months through that year, 60 per cent of the forecasts were wrong.

Intellectual hubris is rotting the Chancellor's foundations. He has said that he will balance the budget over the business cycle. This is meaningless. He has no idea where we are on the business cycle. Ask him: are we halfway through? Two-thirds of the way through? Near the end? Beyond the end? Economists could make a case for any of these answers. But they are no more reliable than Kondratieff Wave Maniacs. Frankly, we don't even know whether the recession has really ended.

It is entirely possible that tomorrow morning something will happen to persuade homeowners that enough is enough; the housing boom will collapse and drag down a whole sector of the economy. The opposite is equally plausible.

If the Chancellor is not dishonest, he is mad. The first possibility is probably the safer for Britain.

The exhausting battle to breach 'Stalingrad'

Antony Beevor has followed his great success Stalingrad with another great success, Berlin. The first is an amazing source book, full of material ranging from private diaries to letters, graffiti and archives.

The scale of the slaughter was so extraordinary that we often fail to comprehend it. Three million Russians died, for instance, not in gas camps but in prisoner-of-war camps. When Germany faced East she behaved very differently from when she faced West. So, well done Beevor. Bringing the detail of this human hell to light is a great achievement.

However – there is a however – there are those who say Mr Beevor brings a novelist's art to history writing. He was indeed a novelist. But he wasn't a very good novelist and quite large parts of Stalingrad are brutally unreadable.

A short blast of prose reveals, for instance, that General Rokossovsky on the Don front was told that General Rodion Malinovsky's 2nd Guards Army was to be transferred to the Stalingrad front to block Manstein's offensive but Vassilevsky at 51st Army's HQ was dismayed at Stalin's reaction while Yeremenko ordered the 4th Mechanised Corps and the 13th Tank Corps to block the advance of the 6th Panzer Division, which had moved 30 miles in the first 24 hours crossing the Aksay.

I'm having a go at the universally praised Berlin to see if the balance between narrative and research is better handled.

The Martian's Speaker Martin

* Students of Parliament are familiar with the ugly dialect of politicians.

It's a private language, disgusting in its way, and one of the larger causes of an alienated electorate. People who fail to "connect with" the strategically integrated, cross-cutting reviews of targets and objectives to deliver the aspirations of government may like to call up the Hansard section of www.martian.fm, where the records of a parallel parliament are kept for posterity.

"Mr. Speaker: Order! ******* order NOO, ye unhealthy ******* bags o' *****. Your Majesty, pray continue.

"Hon. Members: ******! "Mr. Speaker: Order! You! No, not you. **** just behind ye. Aye you, with the wig and the ******* bridalwear. Put it away. Put it away, noo! The Queen does not want to see your ***** ****!"

There is a modernising argument that wants to devolve certain of the Queen's powers to the Speaker. The ability, for instance, to call a government in the event of a hung Parliament. If our Speaker Martin had the vitality of their Martian Speaker, the argument would have much more merit.

As he said, persuasively, I feel, in another context: "******* order! For ****'s sake! The Hon. Gentleman at the back there with the burgundy tie – shut your row or I'm coming over to sort ye oot! It's not a tie, ye say? Put it away, man! Troosers on, all of yez. Show some ******* dignity!"

* The Bodleian Library's graffiti was described in The Spectator last week as one of Britain's national treasures. Side by side with limericks starting "In Oxford one day in a punt..." there are numinous thoughts like: "Isn't it true that to know anything is to know the good and so to know everything?" And: "Is the world really everything that is the case?"

But let me nominate this for the best academic graffito. Appearing in the Brasenose facilities in the north-west corner of their old quad, it was a variation of the Cartesian proposition. It went: "Non cogito ergo nescio utrum sim necne." In English: I don't think therefore I don't know whether I am or not. A particularly appropriate thought considering its college of origin (this was 30 years ago, of course). Any other contenders?

* Asking questions is one of the most difficult parliamentary arts, and far harder than answering them.

When Iain Duncan Smith started on his Prescott question last week he had a serious point. The chubby Deputy Prime Minister had made earnest promises at the start of New Labour's regime. If in five years public transport hadn't improved and more people were not travelling by bus and bicycle, he invited us to judge his record and chuck him out.

This invitation was easy to make and clever: it gave the old fraud five years to drive his fat cars around the country, assuming everyone would have forgotten what he'd said so long ago. As we invariably do. The success of Mr Prescott's rhetorical device has encouraged its use more recently in the health service billions. If the multibillions haven't worked in 10 years, chuck us out, they advise. Oh, let's make a note in our diary.

At any rate, Mr Duncan Smith told us, delays on the Underground have doubled, punctuality and reliability on the railways have gone to hell, and it's anyone's fault except the Government's. Transport is a rich feeding ground for an opposition politician. The more the Government acts, the worse things get. And don't get me started on the Tube, where no risk at all has been shifted to the private sector.

Mr Duncan Smith began by saying: "Does the Prime Minister recall his Deputy saying just days after the 1997 election..." and was immediately felled by a Labour heckle: "We won!" Laughter and thigh-slapping. The press gallery asking: "What? What did he say? Who was it?"

The Prime Minister said: "*** off, ****, you ****** isn't you **** ****** ***** underneath!" Sorry, wrong Hansard. Actually Tony Blair's answer was good (dishonest, but good). He said traffic had gone up because the economy was doing so much better than under the Tories. But thanks to the heckle, he could have said anything he liked.

Blair stumped, but not out

*New Tory David Cameron bowled a well-paced ball that hit precisely the right spot on the wicket. Tony Blair hardly moved his feet and knocked him to the boundary.

The council in his constituency, Mr Cameron said, had set the country's lowest tax rate but was investing in recreation centres, social housing and doorstep recycling. "Does it not show that we can have quality local services without fleecing taxpayers?" This attacks Labour's spending rationale at a fundamental level. The Prime Minister's brilliantly irrelevant answer said: "If we look at the top 10 council taxes levied in the country, five of them are levied by Conservative councils and none by Labour."

Tory councils have more expensive houses. But that's another answer, and answers are easier than questions.

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