The economy!? Ugh, it’s so damn confusing. Sure, there was that infamous clue to George W. Bush — “It’s the economy, stupid” – from Clinton presidential campaign strategist James Carville. But truthfully, for even the most brilliant professionals in the field economics, is more mysterious and uncertain than it is comprehensible and predictable. Which is crazy, considering the economy leads most evening news reports and routinely makes the front page of daily newspapers.
It is no wonder we’re so uneducated on the subject. Economics was and is hardly a core subject in school. There is little or no mention at the elementary school level and for most high school students it’s not until their senior year that a semester of economics is required.
Even as an adult trying to make sense of economics is a joke, literally. The common belief is that economists cannot agree on anything. “If all economists were laid end to end they’d never reach a conclusion,” George Bernard Shaw famously quipped.
There simply is too much to economic news to fully comprehend, but it does help to at least have some understanding of the broader context within which occur the variable ups and downs, successes and failures, projections and reactions.
ECON 101: GET SMARTER!
“The Outlook for 2017,” an annual assessment of the U.S. economy and stock market by Sterling Dalatri, a wealth advisor with Morgan Stanley, provides some refreshingly understandable observations.
On the quandary of why U.S. productivity remains low, Dalatri offers this reasoning: “Many have tried to unlock the mystery as to why productivity has been so low, with the optimistic conclusion that today’s advances in technology and interconnectedness are not accurately captured using current methodologies and therefore productivity growth is understated along with actual economic output. The more pessimistic among us conclude that because we are constantly connected, we are actually doing less (i.e., that we produce the same output but work longer hours), thus current productivity numbers, as poor as they are, may actually be overstated!”
About projecting the future, Dalatri advises: “I also hope we consider thinking big. I embrace Neil deGrasse Tyson’s call to fund things like a Mars project, which provide potential for significant discoveries in technology. Just as the space race in the 1950’s and 1960’s led to game-changing advancements (e.g., the Internet, GPS satellite navigation, etc.), so too could offshoots of a mission to Mars (e.g., research to extract water on Mars may lead to technology that produces potable water from the sands of Africa).
About the pretentions of his own profession, Dalatri reminds us of the humbling uncertainty of economics: “Investing is a business of making mistakes and those who make the fewest mistakes – especially the fewest large ones – tend to do well over time.” Adding this about the mercurial sentiment or the mood of the investment crowd: “Sentiment is a contrary indicator; typically, when the majority of investors begin to think and act in the same way, it can be wise to move in the opposite direction.”
It was America’s most famous and witty economist, John Kenneth Galbraith, who may have made the strongest case for each of us to become more knowledgeable on the subject: “In economics, the majority is always wrong.”