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Forecasting Track Records

Paul Krugman:

Who You Gonna Believe?: I went through my mail today, and got the usual batch of letters declaring that I’m wrong about everything, and that we should do the opposite of anything I say. Hey, it’s a free country. But I found myself wondering, as I often do, about the determination with which people believe pundits who please them ideologically, no matter how wrong they have repeatedly been — wrong in ways that, if you believed them, cost you money.

Suppose you had spent the last five years actually believing what you read from the usual suspects — the WSJ opinion pages, National Review, right-wing economists, etc.. Here’s what would have happened:

  • In 2006 you would have believed that there was no housing bubble.

  • In 2007 you would have believed that the troubles of subprime couldn’t possibly spread to the financial system as a whole.

  • In 2008 you would have believed that we weren’t in a recession — and that the failure of Lehman was unlikely to have bad consequences for the real economy.

  • In 2009 you would have believed that high inflation was just around the corner.

  • At the beginning of 2010 you would have believed that sky-high interest rates were just around the corner.

Now, we all make mistakes and get things wrong — although it’s striking how often the trolls on this blog feel the need to accuse yours truly of saying things I didn’t. But after this string of errors, wouldn’t you at least begin to suspect that the people you find congenial have a fundamentally wrong-headed view of how the world works?