Note to JB: (Time lags and causality)

James Rogers jamesr at best.com
Thu Sep 25 12:16:02 PDT 2003


On Thu, 2003-09-25 at 10:25, Gordon Mohr wrote:
> To the extent that government policies do affect
> growth, I suspect the lag is on the order of
> decades, with the growth in any one year being
> a function of the last 10-20 years' tax, spend,
> borrow, and regulatory environment.


I would like to bring up the discussion from many months back about how
major financial institutions are able to accurately project long-term
macro-economics 10-20 years out with surprising accuracy.  At that time,
I mentioned that I'd seen proprietary economic models in the late 1980s
that not only predicted the timing and magnitude of the late '90s stock
bubble, but the recession that followed as well.

Given that we can reliably predict recessions and booms 10-15 years out,
then it would seem that the party affiliation of the President *during*
the recession is meaningless as a causal factor ipso facto.  Partisan
political specifics are not one of the myriad of factors that go into
these predictive models.  The only thing I would grant Jeff on this is
that if a correlation exists, then there may very well be a way to
predict political outcomes by a trivial adaption of the macro-economic
modeling mechanism.  But everything about this strongly suggests that
the relationship between administration at a given time and the state of
the economy is *correlative* rather than causative, i.e. the political
balance is effectively determined by the same underlying mechanisms that
determine the macro-economy.

Shades of Asimov's psychohistory.

Cheers,

-James Rogers
 jamesr at best.com





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