Economics is a very interesting and a very useful subject, economics is capable of doing a lot of positive things. The Stock Market in any country operates on the principles of economics and it also indicates the economic situation of a country. The recent recession has shocked many economists all across the globe and most of them are bemused. It is very important to find a solution to this present recession as it is affecting the lives of several people all across the world. Job cuts have become very common, companies have cut bonuses and the whole world is facing a very difficult situation. This paper will examine whether or not economists or economics can predict the future. A comprehensive understanding of whether or not economics can predict the future will be provided in this paper.
The Current Recession
Economists or Economics has thoroughly failed in predicting the future and this is quite evident from the fact that the current recession has overpowered all the other problems in the world. Had Economists being successful in predicting the future then we would not have been facing this mammoth problem of recession. Several people all across the globe have lost their jobs, companies have stopped recruiting people, people expected to be recruited are facing nothing but disappointment day in and day out. Economists have the ability to predict the future to some extent but they are mere human beings and they don’t have the ability to predict the exact happenings of the future. The demand and supply concept in economics is utilized to predict the future, for instance, if the demand of a product is more than the supply, the suppliers conclude that they must supply that particular product to meet the demand of the people, and this way this concept is utilized to measure the demand and the quantity of the required product.
“While current economic forecasts may still seem to some to be mystically derived, today’s economic forecasters tend to rely more on data, computer models, and economic theories rather than divine inspiration although, given the accuracy of their forecasts. However, forecasting has become an important part of planning for any other business. Any business operates based on some forecast about the future. In some small, stable businesses, the former may work reasonably well but, the chances are, the more thoughtful, and thorough the forecasting process, the more useful it will be.” (Economic Forecasting, 9 April 2009).
The Crash of Various Stock Exchanges
Economists have again failed to predict the crash of various Stock Exchanges, be it Nasdaq, Dow, or for that matter the Sensex. All these stock exchanges have plunged and touched unprecedented lows during the last 5 months. This again outlines the limitation of Economics and Economists, had they predicted the crash, the situation would have been completely different. Many investors would not have lost money in the Stock Market had the Economists predicted the crash. The bailout packages have been launched by the US economy and Barrack Obama is the flag bearer to deal with the problem of recession, had the economists predicted the crash of the Stock Market, there would not have been a need for a Bailout package. AIG the insurance giants and also the sponsors of Manchester United are one of many top companies to have suffered because of the recession, they would not have suffered as much had the Economists predicted the future. Banks like Northern Rock and others have gone bust and this is all thanks to the recession. The shortage of liquidity has affected several banks in Europe and the US, this could have been much better had the Economists predicted the future.
There are several limitations of the Economists and Economics and this is large because of the unpredictable factors. Recession is one such example that shows that the future is unpredictable and Economists can only predict it to an extent. Predicting the exact events of the future is just not possible.
Conclusion
This paper threw light upon the limitation of Economics and the same has been proved by taking into consideration the current events. The example of Recession time and again outlines the fact that the future can never be predicted be it using Economics or for that matter any other subject. Economics and Economists can come very close to predicting the future but they cannot predict the exact events. This recession could have been prevented by taking appropriate measures, one measure should have been restricting the people in the US to take hefty loans, this could have prevented recession but again the limitation of the subject refrained the Economists from predicting the future. To conclude it is very fair to say that Economics cannot predict the future, though it can be used to avoid unpleasant situations in the future to some extent.
References
Economic Forecasting. In BNET. 2009. Web.