I’ve spent a lot of time telling students the last couple of years that, although they must learn the conventional theories and be able to spout them on an appropriate test, there is no clear indication that any of our theories are currently applicable or correct. In fact, I think it is reasonable to suggest that modern macroeconomic theory is pretty much uncertain these days. I also point out that a lot of our measurements – GDP, inflation rates, unemployment rates, etc. – are so filled with arbitrary assumptions and statistical flaws that they are only useful because the errors are constantly repeated.

Here is an article by Russ Roberts (part of the Cafe Hayek gang)I ran across making many of these points, but in a much clearer, more educated and informed, and better-explained way. I commend it to you is you are interested. Here’s a key point from the last paragraph:

Economics isn’t rocket science; it’s a lot harder. We should admit as much and when asked to measure things we cannot measure, we should admit our ignorance.

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