Sunday, June 26, 2016

The Forecasts Are Always Wrong

I always thought Brexit would create more political problems for Ireland and Europe than economic ones. All the forecasts of economic 'doom and gloom' that appear to accompany every change the Establishment disapproves of tend to turn out wrong.

Roger Bootle has noticed this as well and thinks Brexit will turn out to be the great escape:
I am afraid the consensus of economic experts has an extraordinary record of getting big practical issues horrendously wrong. The UK has just made a momentous decision that is bound to cause some dislocation. In 1931, the UK was forced off the Gold Standard. The economic establishment warned that this would be disastrous. Instead, it ushered in the fastest period of growth in our industrial history. In 1992 the establishment warned that we had to stay in the European Exchange Rate Mechanism (ERM) or catastrophe would be unleashed. We were forced out and the economy blossomed. In the late 1990s we were warned by Uncle Tom Cobley and all that we must join the euro – or else. We didn’t – thank goodness – and we prospered. The weight of academic and establishment economists did not foresee “the death of inflation” or the financial crisis of 2008/9. A prolonged period of modesty from them would be appropriate.
That's not to say it will be an easy economic ride for Ireland - but what if Brexit turns out to be good not just for the British economy but for ours as well?

I think the reverse about the prospect of a President Trump, by the way. While the commentariat are focused on the politics (and the name calling), it's the economic impact of Trump in the White House that should concern us most. A President who wants to Make America Great Again will insist on all those 'tax shy' American companies we currently host on this fair island returning to their homeland - or else.

I'd suggest the next time Trump offers to visit us that our Taoiseach join him for a round of golf rather than indulging in leftist virtue signalling in the Dáil.  One forecast I am certain of: we'll need all the friends we can get in the turbulent years ahead.

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