Monday, June 3, 2013

Economics and Forecasting as Professions

We now proceed to Sections 2 and 3 in our study of The Place of Economics in Learning. These two sections talk about Economics as a Profession andForecasting as a Profession.
Economics as a Profession
Early economists shared the product of their intellectual labor to influence public opinion in the formation of sound policies to govern civic affairs. In doing this task, they did not see themselves as professional economists. The emergence of professional economists is a direct outcome of interventionists’ policy. They now utilize popular libertarian rhetoric in convincing the public while in reality they only advocate their interventionists’ concerns.
The service of early economists aiming for public good is now deceptively changed with the emergence of professional economists. A special breed of men has risen as specialists and has been serving in various capacities as experts and advisers. They can be found in all power centers and their influence is widespread. You can find them in government bureaus, economic legislation, political affairs, diverse political parties, editorial newspapers and periodicals, pressure groups, business advisers, big banks, and even as cabinet members. They provide the necessary measures to suppress the free operation of the market economy.
As a result of the dominance of professional economists, creative statesmanship is now largely missing. It is because interventionists’ control does not provide the necessary intellectual and social climate conducive to the development of qualities of creative statesmanship.
Forecasting as a Profession
In the face of the reality of business cycle, another type of skill or “profession” is expected from economists. This is related to business forecasting.
Businessmen want to know in advance the end of business boom so they can adjust and avoid losses. Some are looking for specific formula to guide them in their decisions. However, such formula does not exist due to the unpredictability of the future. There is no possibility that economists could know in advance the precise date where “good business” would end.
Such forecasting skill is the task of an entrepreneur. Depending on the accuracy of the forecast, an entrepreneur is taking financial risk.  Mises describes this entrepreneurial advantage as follows:
“The entrepreneurial idea that carries on and brings profit is precisely that idea which did not occur to the majority. It is not correct foresight as such that yields profits, but foresight better than that of the rest. The prize goes only to the dissenters, who do not let themselves be misled by the errors accepted by the multitude” (p. 871).