1. How Economic forecasting works. A. Construct grossly simplistic model, otherwise factors like emergence, fat tails, black swans etc make model unworkable. B. Find historic data set that fits model. C. Ignore correlation=/= causation arguements. D. Extrapolate to future.
2. Ignore date that shows economic forecasting is grossly innacurate and worse than random at time-scales of any significance. Ignore the fact that Economics is the only science whose Nobel was won by a non-specialist: a psychologist.
3. When it comes to trade, pull out the nuclear weapon....the gravity model. A self-evident theory back in the days of horses, carts and sailing ships and no internet or service-based economies. Yes folks it’s mostly easier to trade goods with your neighbours.
4. Despite evidence that gravity (distance) in goods is becoming becoming less important, and that gravity in services is more to do with cultural, linguistic and economic correlation continue to use ancient, backward looking models.
5. Then apply all of the above to future projections about U.K. (80%+ Services) Trade with slow-growing, diminishing EU and faster-growing ROW and make important sounding predictions 15 years hence.
6. Ignoring the fact that you’ve been wrong about virtually everything ever and sell that to gullible folk as the voice of expertise.
7. When I was a trader for major international banks and having a job meant getting future predictions right ( Skin In The Game h/t @nntaleb ) we learned that the last people to listen to were Economists.
8. So the next time you’re told that Economic experts predict that leaving the EU will make the U.K. worse off, tho k twice before you believe it.
9. If you look at growth differentials ( as predicted by Economic experts), or stuff like demographics, open societies, protectionist policies,innovation etc then it’s not hard to make a case that the EU is a heavy anchor on our future prospects.
unroll
