In a piece on Forbes, former Federal Reserve Chief Paul Volcker describes, just like CalPERS, America’s largest pension fund, CIO Joe Dear once did:
“During my lifetime, the subject has become much more mathematical, much more abstract, and much more useless in terms of contributing to effective public policy.”Paul Volcker
He goes on to say:
“There are some horrendous examples [of forecasting failure], with the recent financial crisis being the most obvious one,” “There are hundreds of economists poring over their computers, but I think they have just demonstrated their inability to be forecasters.”Paul Volcker
His opinion aligns with my calling economics a voodoo science, yet not without offering a remedy related to a new normalization of truth. My prescription is based on how we must build systems of humanity that, in Einstein’s words, determine what can be discovered.
Economics must change from an expiring afterthought, the extrapolation of hindsight unable to extrapolate to foresight to break the norm, into a federation identifying and advising on the rules of human gameplay following the laws of nature.