Welcome back to Gary's economics, today we're going  to talk about economic predictions in the media

okay so we started this channel two years  ago and the very first thing we did was did  

a video about Covid predicting how it  was going to affect the economy and in  

that video we said that a huge amount of  money would be given from the governments  

to the rich that would cause a huge increase  in inequality a huge increase in house prices  

a huge increase in inflation and basically  a cost of living crisis for ordinary people  

so here we are two years later and we can see all  of that stuff has happened and the question that  

it raises is if all those predictions were right then  why is nobody in the media talking now about how  

so much money has been transferred from the  government to the rich and the super rich and  

this raises really interesting questions about  making predictions in economics and in the media  

so back when I was a trader there was a very very  heavy incentivization to be to be right and I had  

a very good track record as a trader and I made  some predictions that were right and within two  

three years of me starting working as a trader  I became pretty famous and pretty well known  

and very well paid in that industry because I was  making predictions that were consistently correct  

um but now in the media you know at the beginning  of Covid I was because my background was trading  

I tried really hard to make a lot of clear  predictions about what was going to happen  

because I feel like a lot of people in the media  just say whatever they like and they're not really  

very clear about what they actually believe so  I made a lot of clear predictions that if you go  

back and read my early articles for 'Open Democracy'  or watch my first video on this channel you'll  

see that those predictions all came correct now  at the same time 'The Guardian' which is obviously  

a massive newspaper their Chief economics  correspondent Larry Elliott wrote an article  

saying that Covid is going to make house prices  collapse now we can obviously see in hindsight  

that his prediction was wrong and we can see  in hindsight that my predictions were right  

but what punishment is there for Larry  Elliott of the Guardian for being wrong  

and what reward is there for me being right  well really there's none basically because the  

media is not like trading if you're a trader and  you're right all the time you get paid a million  

pound; if you're a trader and you're wrong all  the time you get fired. If you're in the media  

and you're right, a year later nobody remembers  and if you're in the media and you're wrong  

a year later nobody remembers. Now the problem  with this is it creates a situation where if  

you are a really good Economist and you keep  making correct predictions the media will not  

generally push you to the front and if you are an  economist who works in the media and you're bad  

and you make very bad predictions nobody's ever  going to call you out so what this means is if  

you are a really good Economist and you want to  explain to people what's happening in the media  

how do you do it how does the media determine who  gets the important jobs and and who gets ignored  

well if you don't have a system that actively  finds the good people and actively discourages  

the bad people basically you're going to end up  with the people who know the right people getting  

into the best jobs, you're going to end up in a  situation where it kind of becomes a posh Boys  

club where everybody went to the same school and  everybody knows each other because that's the only  

way to get in so if you're a really good Economist  you turn up on the trading floor, you're right year  

after year, within a year you'll be famous you do  that in the media you probably won't get noticed  

and it creates this problem where very good  economists can be very well rewarded in financing  

and trading but they'll generally be ignored in  the media and it will be the same in government  

what this means is the people who are  supposed to be protecting our economy  

economists in academia, in journalism,  in government, in central banking  

basically have no incentivization to actually  be correct; nobody ever goes back and checks and  

hindsight their homework the end result is most  of these guys chat nonsense most of the time  

um if that's the situation that you have you can't  really be surprised when the economy that we end  

up with is very weak. So what I would suggest is that economists who are in very powerful positions  

like for example working at the Bank of England  or senior professors at Oxford or senior jobs  

in the media, I think they should be forced to  make predictions and you know those predictions  

can say look if this happens then that will  happen if that happens then this will happen  

but if they're not forced to make predictions then  there's no way we have of no one who's good and  

who's bad so I think we should force them to make  predictions and then go back in hindsight and see  

who was right and who was wrong and that will give  us an opportunity to find the best economists and  

put them into the best positions because as it is  at the moment we've pretty much got a situation  

where anyone who's a really good Economist is  going to go and work in the city; and journalism  

and central banking end up being a posh boys  club and that's not good for society okay enjoy