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April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review Dec. 16, 2009 / 29 Kislev 5770

Economics 101: How little they really know

By Jeff Jacoby

Jeff Jacoby




http://www.JewishWorldReview.com | Yes, says Larry Summers, the president's top economic advisor and a former secretary of the Treasury: "Today," he told ABC's George Stephanopoulos in a Sunday interview, "everybody agrees that the recession is over."

No, says Christina Romer, who heads the White House Council of Economic Advisors: "The official definition" may suggest that the economy has bottomed out, she said in her own Sunday interview on NBC's "Meet the Press," but when moderator David Gregory pressed her on whether the recession is over, Romer replied: "Of course not. . . . The people on Main Street and throughout this country, they are still suffering. The unemployment rate is still 10 percent."

If the administration's top economists can't agree on something as fundamental as knowing when a recession has ended, how can they possibly be certain that they know how to end it?

Back in January, the incoming Obama administration warned that passing an immense "stimulus" package was an urgent priority if unemployment was to be held below 8 percent; without it, the economic team forecast, unemployment would climb as high as 9 percent. If the package is passed, Summers was asked in early February, "how soon before the American public starts to feel results, the creation of jobs?" Summers's reply: "You'll see the effects begin almost immediately."

Congress gave the new president the stimulus he wanted — at $787 billion, it was the largest spending bill in US history — yet the share of the workforce without jobs rose well above the promised 8 percent. By November it had reached 10.2 percent, the highest level since 1983, before dipping to 10 percent in December.

What do economists really know? Are their insights into the workings of a modern economy comparable to, say, the medical profession's understanding of the intricacies of human health? Are economists' grasp of the forces that drive the business cycle on a par with aerospace engineers' grasp of the forces encountered by aircraft during flight? Perhaps no apples-to-apples comparison is possible. But consider: Medical science has conquered polio, tuberculosis, and smallpox; air travel is safer than ever. Yet economists still don't know how to prevent recessions, or whether stock prices will go up or down, or whether it is possible to "stimulate" a $14 trillion economy without causing unintended harm.


Letter from JWR publisher


On Sunday, as the Obama administration's senior economists were declaring the recession over/not over, Paul Samuelson, the first American to win the Nobel Prize in economics, died at 94. In a column published during an earlier crisis a decade ago, Samuelson had suggested that modesty is appropriate when economists purport to diagnose an ailing economy.

"What we know about the global financial crisis is that we don't know very much," he wrote. The formula for economic recovery was unclear, and it was worth remembering that "economics has never been a science." In words as apt today as in 1999, Samuelson observed that officials trying to ease the economic distress were essentially winging it. "It would be reassuring and dramatic to declare that they had succeeded. But the duller truth is that we don't know — and neither do they."

In testimony before the congressional Joint Economic Committee last week, George Mason University economist Russell Roberts made a similar point with regard to job-creation and the stimulus. "There is no reliable way of knowing whether the stimulus package has averted a worse situation — or whether it's part of the problem. There is no consensus in the economics profession on this question, and no empirical evidence that can settle the dispute."

Most people assume that fixing the economy is the government's responsibility — that it needs to do something to get the unemployed back to work. "That may not be possible," Roberts said. Government fixes have a habit of generating unintended and unfortunate consequences. Government intervention, far from dispelling economic anxiety, often exacerbates it. "Doing less might, paradoxically, be more successful than doing more."

Economics isn't rocket science or any other hard science, and it never will be. Human motivations, appetites, relationships, expectations — the raw stuff of economic life — cannot be perfectly modeled or reduced to an unvarying equation. Unlike the tides or electromagnetic waves or chlorophyll, human beings have free will. Men and women choose for themselves, and no economist or policymaker can ever know with perfect certainty what those choices will be. Roberts quoted Friedrich von Hayek, another Nobel laureate, who had that uncertainty in mind when he summarized the economist's truest function.

"The curious task of economics," Hayek said, "is to demonstrate to men how little they really know about what they imagine they can design."

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Jeff Jacoby is a Boston Globe columnist. Comment by clicking here.

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