Dr John Llewellyn, chief global economist at Lehman Brothers, writes about lessons from 35 years as a professional economist:

1) Economic events (‘shocks’) – seldom produce just one consequence. Usually, the effects ripple on for years.
2) Good economic policies do not guarantee good economic performance; bad economic policies inevitably result in bad performance.
3) It is structural, not demand-side, policies that most influence economic performance over the long term.
4) People respond powerfully to economic incentives.
5) Economic and social policies have to be considered as a whole.
6) Competition is one of the most powerful of forces that motivate the perpetual quest for more efficient ways of doing things.
7) History seldom, if ever, repeats precisely. Economies have the habit of producing new mixtures of circumstances that require new approaches.
8) Complicated economic policies whose rationale is hard to explain usually fail.
9) Some of the biggest, and most important, economic issues remain unresolved.
10) Just because professional economists don’t always have a confident answer, it does not follow that all proffered solutions have equal validity. Demonstrate why the current fad is wrong and will fail is a valid contribution.

via New Economist

>

Sources:
Ten useful lessons for a sexagenarian    
John Llewellyn
The Observer, Sunday August 7, 2005
http://politics.guardian.co.uk/economics/comment/0,11268,1544056,00.html

Category: Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

8 Responses to “Ten Useful Economic Lessons”

  1. spencer says:

    8) Complicated economic policies whose rationale is hard to explain usually fail.

    This is also true for investments.

    Avoid any investment you do not really understand.

  2. Ten Useful Economic Lessons

    Via The Big Picture
    Dr John Llewellyn, chief global economist at Lehman Brothers, writes about lessons from 35 years as a professional economist:
    1) Economic events (’shocks’) – seldom produce just one consequence. Usually, the effec…

  3. Norman says:

    Sorry, but I can’t contain myself: 1 though 10 = Globidegook!

  4. Larry Nusbaum, Scottsdale says:

    8) Complicated economic policies whose rationale is hard to explain usually fail.
    This is also true for investments.
    Avoid any investment you do not really understand.
    Posted by: spencer | Aug 28, 2005 11:41:25 AM

    Spence: I UNDERSTAND THE ONES THAT GO UP AND DON’T UNDERSTAND THE ONES THAT GO DOWN.

  5. Larry Nusbaum, Scottsdale says:

    7) History seldom, if ever, repeats precisely. Economies have the habit of producing new mixtures of circumstances that require new approaches.

    This is the single reason that the real estate bubble predictions have been wrong……so far.

  6. dude says:

    Very Interesting principles. Not sure I agree with all of them. Numbers 7 and 8 seem to contradict one another. Seven says that we must continually create new approaches to manage the economy, but eight says that we should keep the appoaches simple. It seems inevitable to me that if we must constantly seek new approaches, that all of the simple ones will eventually all be used and as the economy become morew complex, so must our approach.

  7. Economics for Non-Economists

    The Big Picture has Ten Lessons from economist Dr. Jon Llewellyn. This is a great opportunity to benefit from 35 years of economic experience. Here is Dr. Llewellyn’s list: Economic events (‘shocks’) – seldom produce just one consequence. Usually, the

  8. dsquared says:

    Not sure about this list …

    1) Platitude. How many things in the world have just one consequence?

    2) Tautology, unless there is some way of identifying “bad” economic policies other than by their consequences.

    3) False. Since the war, Japan, Germany, the UK, the USA, Scandinavia, Italy and France have had extraordinarily different structural policies and, “over the long term” it’s really quite difficult to distinguish different trends in long term performance unless you’re a) taking the last ten years as “the long term” or b) looking ideologically.

    4) Not obviously true at all – cf France and Scandinavia. Can only be rescued by turning into a tautology by redefining “economic incentives”.

    5) Not really very meaningful, except that in as much as it does have a meaning it completely undercuts the previous points.

    6) Probably the least objectionable so far, although rather windy (and very focused on the last few centuries; it wasn’t competition that created the Chinese empire at a time when we were living in mud huts).

    7) Again, not really objectionable but very windy indeed and as the intellectual rationale for “It’s Different This Time”, not without danger.

    8) “Complicated economic policies whose rationale is hard to explain”. Are there any other kind? Bad news for free trade, Keynesian expansion etc etc.

    9) True but not much content

    10) True but rather unambitious.

    I think I would reverse 8) and give my own view of the matter: “Simple-sounding maxims offering an easy way of explaining complicated economic issues are always wrong and usually dangerous. Including this one.”