Economists support the telling of lies

It is interesting to note the ease with which the financial community condones the telling of lies. In the minds of many of these economists and analysts it seems to be the view that the public is not clever enough to be trusted with knowing what is really going on. K
That keeping the truth to the inner circle which understands these things is the preferable course is clear in two commentaries this week appearing in the Sydney Morning Herald. Yesterday that normally sound and seemingly very moral man Ross Gittins had this to say about economic forecasts by the Treasury:
There's more guesswork in economic forecasting than economists like to admit, but that must be doubly true at a time when such unprecedented (and scary) upheavals are occurring in the global economy. The econocrats always err on the optimistic side at this point in the cycle (the point where we ask whether the landing will be soft or hard) and I'm not one to criticise them for that. You've got to cut them some slack.

Because they get taken so seriously, the predictions of treasurers and central bank governors have the potential to be self-fulfilling - particularly negative predictions at a time when confidence is lacking - so it's not in the economy's interest to have officials spreading pessimism.

The emphasis declaring that telling pessimistic truths should not be disclosed is mine.
And then today it was Ian Verrender's turn. "Treasurer puts the right accent on the positive" they called his daily financial commentary that outlined the dire circumstances confronting the Australian economy in the coming months as things got tough for China. But don’t frighten the populace.
For the moment, though, Swan is keen to keep the mood buoyant and to play up the positives. He knows expectations become self-fulfilling. And the last thing Australia needs now is for fear to take hold.
I suppose we should all the grateful that the mob don't venture into the second half of Granny. If people actually read Ian Verrender and took any notice of his views then what Wayne Swan does or does not say would be irrelevant!


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