GE models and Grand Theft Auto

Mak­ing good eco­nom­ic pol­i­cy is nev­er a sim­ple mat­ter and is nev­er mere­ly a func­tion of eco­nom­ic under­stand­ing. But the art has been bad­ly served, recent­ly, by it tech­ni­cians. John Kay blames the self-lim­it­ing obses­sions of tech­ni­cal macro-eco­nom­ics and finan­cial analy­sis.

For many peo­ple, deduc­tive rea­son­ing is the mark of sci­ence: induction—in which the argu­ment is derived from the sub­ject matter—is the char­ac­ter­is­tic method of his­to­ry or lit­er­ary crit­i­cism. But this is an arti­fi­cial, exag­ger­at­ed dis­tinc­tion. Sci­en­tif­ic progress —not just in applied sub­jects such as engi­neer­ing and med­i­cine but also in more the­o­ret­i­cal sub­jects includ­ing physics —is fre­quent­ly the result of obser­va­tion that some­thing does work, which runs far ahead of any under­stand­ing of why it works…[but] Not with­in the eco­nom­ics pro­fes­sion.

Extract from John Kay — FT.com

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