While we face many serious issues in the Commonwealth, I propose that
a little levity never hurt anyone and would like to share a few of my
observations - most learned the “hard way” in the great university of life.
Many people ask economists to advise them as to what the future may bring -
at least in terms of the economy. One of the things I have learned is that
economic forecasting is very difficult especially if its about the future.
For this reason, he who attempts to earn a living by a crystal ball should
also learn to eat ground glass.
     When it is necessary to examine various economic data within a series
of statistical tables and one searches  for a decision as to which data  to
first evaluate - the decision is often like trying to determine which side
of a slice of bread to butter - it doesn't matter. What ever is selected
the whole thing will be like the “Generalized Iceberg Theorem” which
states, “seven eighths of everything can’t be seen - no matter how hard you
try.”
     It is an economic truism that each problem solved introduces new
unsolved problems - which by their very nature - keep economists employed.
     Returning to the matter of “buttered bread” mentioned earlier,  the
story is told about the man whose bread fell and landed buttered side up.
He ran straight away to an economist friend and reported this deviance from
one of the basic laws of the universe which holds that the bread should
have fallen buttered side down on an expensive carpet and, after much
discussion, finally convinced his friend that it had actually happened.
After weeks of pondering this strange event the economist reasoned that the
bread must have been buttered on the wrong side.
     Now a word about the term “average” which economist frequently use. It
is similar to the following definition: “when you stand with your feet in a
bucket of ice water with your head placed in a lighted oven - on the
‘average’ you feel fine.”  With respect to our frequent use of
“assumptions” I am reminded of “Burn’s Law” which states, “ If assumptions
are wrong, the conclusions aren’t likely to be very good.” This principle
refers to the late comedian Robert Burns and his method for weighing hogs.
He obtained a perfectly symmetrical plank and balanced it across a
sawhorse. He would place the hog on one end of the plank and begin piling
rocks on the other end until the plank was perfectly balanced. At this
point he would guess the weight of the rocks. Economists sometimes use a
similar line of reasoning. It is a bit like the application of the “Rule of
Accuracy” which states, “when working toward the solution of a problem, it
is helpful if you know the answer providing, of course, you know there is a
problem.” As for “estimates”  none are ever  complete failures since they
can always be used as  bad examples.
     After long years of meticulous study my own observation is “any theory
can be made to fit any facts by means of appropriate additional
assumptions.” This is because some matters are of such gravity that they
must be considered in relation to all the relevant factors involved. If an
examination of these factors should show it to be desirable  to take one
course rather than the other, then it would perhaps be best to do so. If,
on the other hand, such examination shows the better wisdom to lie in some
other course, then it is possible that the other course would have to be
followed. It should be one’s intention to study all pertinent factors
before determining whether it should be one course, or the other, which
should be followed and if at first you don’t succeed, just transform the
data set and hope the reader will remember that to err is human but to
really foul up requires a computer.
     Returning to the subject of forecasting, or methods to divine the
future, there is an interesting story about a prophet in Tokyo who, in
1936, was asked to predict what would be happening to the people of his
city in five, ten and twenty years time. He began: “I prophetize that in 5
years time, in 1941, Japan’s influence will extend from the Aleutian
Islands Islands in the north around the globe to Thailand.”
     His audience said: “Ah, then you think that Japan will be in very good
shape in ten years time”. “No”, replied the prophet, ”my guess is that in
ten years time the nation will be confined solely to the home islands,
there will be no overseas colonies and most of our cities will have to be
rebuilt, and money will be so tight that few Japanese will be able to
afford an automobile.”
     “So you think we face a very difficult and harsh future in 20 years
time.” “No - by the 1970’s I prophetize that most Japanese families will
own a car, real income will be ten times greater than it is now and that
several years before that year 90 percent of all Japanese will sit looking
at a box in the corner of their room which will show live pictures of a man
walking on the moon.” He was locked him up as a madman, of course.
I hope it doesn’t happen to me.

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