Why Are Economists So Clueless?

Over the course of my lifetime I have deduced that the economics profession has wonderful hindsight, but virtually no foresight.  They can tell you what happened but are clueless about what is going to happen.

The profession in general viewed the frothy housing market of the mid-2000's as benign, and they saw the complex derivatives fashioned by Wall Street as wonderful innovations that were going to bring great benefit to the world's economy.   Virtually the entire profession was clueless about the pending financial collapse, and largely in denial as the collapse was occurring.

Each year since this most recent financial collapse economists have said
 the US was now turning the corner, getting back to the average 3% per year growth they expect from the United States.

Each year they have been wrong.

Earlier this year they were at it again.   The economy is picking up steam, they said.  The Fed will need to increase interest rates soon.  Then the data comes in.  Opps, negative growth in the first quarter.

There is an old joke about using statistics the way a drunk uses a light post - for support, not illumination.  I believe that is often very descriptive of the economics profession.  Economics is rooted in group think.  It's a problem that plagues all professions, but seems to particularly cripple social sciences.

Who becomes an economist?  It takes a certain peculiar mix of personal attributes and aspirations to lead one to pursue economics as a career.  So all economists share some ways of viewing the world that are quite different from most other folks.   But the biggest part of understanding economics is understanding the behavior of the entire gamut of human personality variability.  

So the only frame of reference an economist has, when seeking to interpret data and project what that means to the larger economy, is his/her own personal perceptions, and those like-minded colleagues.

Their predictive failures have become so glaring it was a fashion a year or so ago in the profession to pontificate that the economic concept of the "rational person" was a fiction that did not reflect the reality of how most people in the world behave.   But economists still don't have any notion of how understand the world without the "rational person".  They have no other options to try to figure out how to predict economic consequences.

What does that means for the rest of us trying to plan our economic future?  The media run to economists constantly to predict the future for the rest of us, despite the fact history demonstrates they are pretty clueless.

Justice Oliver Wendall Holmes once said a page of history is worth of volume of logic.   That seems to me a good guide to evaluating the opinions of economists.