Senior fellow Charles Kenny's piece on economic growth was featured in Businessweek.
From the Article
On Nov. 2, Federal Reserve Chairman Ben Bernanke confidently predicted that in 2012, the U.S. economy will grow at a rate of 2.5 percent to 2.9 percent. A few months earlier Bernanke predicted that the economy would expand 3.3 percent to 3.7 percent next year. A few months before that, the Fed projected growth in 2012 to be somewhere between 3.5 percent and 4.2 percent.
These shifting forecasts tell us two things: The U.S. continues to experience excruciatingly slow growth, and economists continue to have little success predicting it.
Understanding the drivers of economic growth is crucial to planning investment strategies, fending off recessions, and working out a country’s debt sustainability, among other things. If we knew how to raise long-term growth rates, it would be far easier to deal with Europe’s debt problems, tackle global poverty, and improve the quality of life for everyone on the planet. So it is no surprise that, every year, thousands of papers are published in economic journals and online, employing sophisticated models to explain past and predict future GDP performance of countries everywhere.
You would think that, armed with so much learning, their powerful models, and reams of data, economists would have anticipated that the recovery in the U.S. and Europe would stall, that growth in such places as China, India, and Brazil would accelerate, and that poverty rates would plummet in Africa. You’d be wrong. In fact, the myriad consultants and institutions purporting to understand the root causes of fast and slow growth resemble those stockpickers who offer a sure-fire return, but who are regularly outperformed by someone selecting a portfolio by throwing darts at a board. Anyone who says he knows the secret to growth is lying.