Ask a Washington dinner party full of moderately well informed people what will happen with Iran over the next five years, and you’ll end up with a consensus that gee, that’s tough. Ask them what GDP growth will be in fall 2019, and they’ll probably converge on a hesitant “2 or 3 percent, I guess?” On the other hand, ask them what’s going to happen to the climate over the next 100 years, and what you’re likely to hear is angry.
How can one be certain about outcomes in a complex system that we’re not really all that good at modeling? Anyone who’s familiar with the history of macroeconomic modeling in the 1960s and 1970s will be tempted to answer “Umm, we can’t.” Economists thought that the explosion of data and increasingly sophisticated theory was going to allow them to produce reasonably precise forecasts of what would happen in the economy. Enormous mental effort and not a few careers were invested in building out these models. And then the whole effort was basically abandoned, because the models failed to outperform mindless trend extrapolation -- or as Kevin Hassett once put it, “a ruler and a pencil.”
