ABSTRACT
Economics is known as the dismal science. But economists have been known to tell jokes. One joke they tell at the expense of environmentalists goes: ‘The Stone Age didn’t finish because people ran out of stones.’ It’s not a joke that will necessarily make you laugh out loud but there is truth behind the irony: markets have been good at inducing us to invent our way out of resource scarcity. But does this mean resources will never become scarce? Whatever their skills as stand-up comics, economists are dismal scientists. It’s virtually impossible to use controlled scientific experiments to predict how the economy will behave. Instead economists rely on theoretical models; the veracity of these are statistically tested from historical and cross-sectional data. John McCaine – at the time he spoke surely one of best-briefed men in the world – reminds us how spectacularly wrong economic advice can be.
