When I read the above title in the latest new scientist I thought….it wouldn’t be hard to teach an economist anything since the range of their knowledge seems pretty dismal. Even worse they actually believe what they are saying and even worse than that so to do politicians.
Haldane has been studying the global financial system with Robert May of the University of Oxford, an early proponent of chaos theory. Since May’s pioneering work in the 1970s, we have known that markets don’t behave in a predictable way. Still, that hasn’t stopped the European Central Bank and the G7 industrialised nations claiming this week they can “calm” market turmoil.
May argues that there is another issue that makes prediction close to impossible. Whether by accident or design, complex mathematics often obscures flawed or simplistic assumptions in financial models. No wonder, then, that mysterious concepts endure, such as the “invisible hand” that signifies the self-regulating marketplace. It’s high time that economics caught up with ecology.
From New Scientist – subscription required but worth it.