The Sketch: Economists can't even report the past, let alone predict the future

Simon Carr
Wednesday 14 July 2010 00:00
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The Office of Budget Responsibility has one of those names we used to laugh at the Chinese for favouring. Sincere Trading Company. Honest Hose and Tool Suppliers. They project the core values of the company through the name, you see.

Quite what the Office of Budget Responsibility is projecting remains to be seen. In theory they are independent of the Government, but the designers lost courage. In the end, the Office is independent to the extent that a foetus is independent of its mother. In this case, the thing exists outside the uterus, but is supported, maintained, funded and presented to the outside world by its host.

The zygotes that constitute this ectopic growth off the Treasury came to show themselves to the select committee. Sir Alan Budd – a blinking, twitching, nut-brown economist with an over-active mouth. He had two sidekicks called, from memory, Tumpton and Bumpton.

The newly elected chair of the Treasury Select Committee led off for the committee and alas, failed to make the case stick; in fact he failed to make the case at all. The story doing the rounds is this: a leaked Treasury document embarrassed the Government with claims of too-high unemployment, so the independent OBR redefined "unemployment" and produced a much lower figure – just five minutes before PMQs, thus allowing our handsome leader to trounce his opposition. And, fuelling claims of splits and pressure, the head of the OBR quit.

That's quite a story. Andrew Tyrie's big moment was to ask why the document was published at five to 12. Budd said it was published at 11am. And that seemed to be that. Budd had been "taken aback" by the fracas, and yes it had all been a mistake, "of course one makes mistakes all the time". And he admitted, despite many years in the public service, to "naivety".

There was affectionate laughter which made me wish we'd been allowed to bring bazookas into the room.

These economic forecasters charge fortunes for their drivel – and we all hurry to believe them. One of them, asked about whether we were going to have a double-dip recession, said there was a 40 per cent chance of it happening – or possibly of it not happening. His "fan of probabilities" allowed for all outcomes.

A 40 per cent chance of a one-off, unrepeatable event is meaningless. Maybe it'll happen, maybe it won't. The forecaster will always be able to say, "See, I said there was a 40 per cent chance."

At least one of them used the phrase "our best guess". But, far from forecasting the future, these fellows can't even report the past – how many times did they adjust the dates of the economic cycles in the 1990s and 2000s?

PS: John Bercow based his defence of Speaker Martin on his antipathy to "snobs and bullies". He now calls his critics "socially insignificant" (an ermine-collared phrase from the Earl of Bercow). And earlier this week he tore into a little Tory Whip on the front bench with such vindictive persistence that we bullies can only welcome him to the club. (There is the little matter of the initiation ceremony, John – bring a change of linen, and a chicken.)

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