As for sunspots and their effects, it’s intriguing to note that these days, a major policy focus is on global warming—an environmental force in which economic activity is thought to influence the climate rather than the other way around. Thus, policy proposals such as carbon taxes are designed to induce economic behavior that will reduce the emission of heat-trapping gases as an unpriced side product of economic activity.
Given the difficulties and fundamental flaws inherent in economic forecasting that Friedman begins to explore in Fortune Tellers, it’s clear that truly daunting problems underlie the making of predictions about the interconnections among future economic activities, induced technological changes, the effects of carbon tax and rationing policies, and the possible climate changes that will result. In particular, predictions about the value to winners and the cost to losers of possible policies will make for some interesting discussions. Perhaps Friedman might take up these topics next.
- George S. Oldfield is an expert in financial economics and a principal with the Brattle Group, an economic and financial consultancy. Previously, he taught economics at the College of William and Mary’s Mason School of Business, Dartmouth College’s Tuck School of Business, and Cornell University’s Johnson Graduate School of Management.