economy words | Riaan de Lange Economist, Author and Lecturer
KNEW/NEW & KNOW / NO – it’s not an Economic Estimation, Prediction or Forecast
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ust as confusing and complicated as the English language can be – knew opposed to new and know opposed to no – so too can Economics. As an Economist, there is nothing more freighting than being asked as for an opinion (estimation, prediction and forecast) as to what the future holds – there are simply too many variables to provide an informed answer. That is why any Economist worth their salt would, when faced with such a question, provide a two word response: ‘it depends’, before proceeding with extreme caution. For possibly the single biggest chink in Economists’ armour is that they assume rationality of all economic role-players, and you know that its danger lies in the word’s construction, for it is said that to assume, makes an ass out of u and me.
Those Economists brave enough to offer an opinion (estimation, prediction and forecast) without any caveat, are constantly reminded of their failure. Laurence J. Peter, best known for his formulation of 26
the Peter Principle said that ‘An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.’
The Peter Principle postulates that ‘In a hierarchy every employee tends to rise to their own level of incompetence ... in time every post tends to be occupied by an employee who is incompetent to carry out his/ her duties ... Work is accomplished by those employees who have not yet reached their own level of incompetence.’ When accepting the offer to contribute to the magazine, I decided that I would not be tempted to speculate, or offer any opinion on the future of the Gibraltar economy. Rather, I decided to write on that which I knew and not what new I was expecting, for what I knew, I know and no, I do not know what the future holds for the
Gibraltar economy any more than you do. Peter Drucker, considered the father of management theory having recently died at the age of 95, said that ‘The best way to predict the future is to create it’. As an Economist that does not possess a crystal ball (the last one broke, don’t’ ask how), what I can offer is my observations, my opinions, which might well not concur with yours, but then these are mine. In learning about the economics of Gibraltar, there are two key publications that you need to acquire. One which costs £5 and one free. One which is recent 2015/2016 and one which is a bit dated 2013 – the 2014 edition expected soon. In addition to the two documents, the 2015 Budget also provides valuable information and insights. The value in Economics lies in the triangulation of these documents. A challenge in working with the publication is that one presents the information for a calendar year and the other two for financial years. GIBRALTAR MAGAZINE JANUARY 2016