Analytical Philosophy
April 8, 2008
Economic forecasters come in basically two flavors. Alamo economists stake out a position and hold to it come what may by interpreting all subsequent information in such a way to support the baseline view. Flip-flopping economists see forecasting as an organic process and with no disgrace in modifying a view as information emerges that does not support previous interpretations. The greatest economist in the first half of the last century, John Maynard Keynes, famously said, “When the facts change, I change my mind. What do you do, sir?”
Alamo economics is predictable to the point of being stale. One knows what an Alamo economist is going to say even if you’re not there to hear it. Sometimes the analysis will be correct, other times not. It really doesn’t matter. If you know the conclusion at the beginning, there is nothing new to learn from Alamo economists. A correct forecast loses usefulness because of an invalid thinking process that constrains the bottom line to a single answer before an issue has been explored. There’s no place for revealed truth in Alamo economics.
Alamo economists take pride in their discipline, but the flip-flopper’s orientation actually requires greater self-control. A flip-flopper is not obligated to constant change, only to the possibility that new data, new circumstances, or unforeseen developments may overturn yesterday’s truth. The flip-flopper reserves judgment until the facts are in and properly examined. It takes long experience to develop that extra sense that discerns data noise from true change. This blog is for investors and other market watchers who seek originality and opinions and who are not afraid to adopt a different view when facts warrant it.
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