With "recovery" exceptionalism and self-flagellation returns

As one can hear more and more positive forecasts and predictions - and the summer recess ended as well - the media is filled again with "analysis". Economists and analysts, politicians and gurus are once again on the scene and pre-crisis narratives are once again sold, without discount. Although this time at least their opposite is on the imaginary shelves...

The self-flagellation, so popular among Hungary's "intellectuals" is back directly or indirectly as well. If a politician of the respective country's makes a statement on the inevitable fast recovery and even faster future growth of Romania, Slovakia, Bulgaria etc. it is immediately bought by the media and distributed, without any comment, contextualization etc. As if the last half a year would have never happened. Nobody seems to be interested in the respective countries beyond a set of basic data, nobody seems to have learned the lessons of debacles. Moreover, a modest, but very visible flow of articles on Slovakia as the country offering the model to follow appeared again, quite in pre-crisis fashion. The past is bright and the future will also be, as they implemented the right economic model. Doubts are not dismissed, they are rather omitted from the picture. One quarter of growth - even though it means quite serious decline on a year-on-year basis and was driven by state spending certainly not sustainable on the long run - was enough for this conclusion. As if nobody would be willing to consider the limitations of dependency on only one industrial sector, the possible impact of the competition for investment on the level of wages, especially with high unemployment depriving the state from predicted incomes, not to speak of the possibility of a second wave of economic decline.

I should also admit that the opposite of the phenomenon mentioned above emerged as well: the Hungarian exceptionalism, although its basis is the same: there is no need to reconsider economics and growth models in ECE. Hungary, after a series of measures made in accordance with the proposals putting forward examples like Slovakia, the Baltics etc. (even if those were not real reforms) is set to introduce the euro as the first of the remaining new EU members. It was not only expressed by the responsible finance minister, but by JP Morgan for example. (Although I would be very careful with accepting any kind of analysis without reservations and not only because of their performance a year ago, but because the more such material I read the more convinced I'm that contrary opinions exist, they are only rarely considered by those who edit headlines.)

Even though I have my opinion - due to reading some economic material - on the substance and sustainability of recovery, I do not want to exclude the possibility that I'm wrong. But I can only be aware of it if I have at least a minimal knowledge of the conflicting interpretations in a way that confronts the opposing ideas. If they are served for the public separately, every one of them as "truth" there won't be really a serious debate on those issues, not to speak of a kind of accountability of those, who pretend to have the ultimate knowledge of our society, who sometimes seems to think of themselves as the persons who should have the reins of the society. How could I point out their mistakes if they are so easily forgotten, buried under the time expired?

It is clear that there is a demand for predictions and forecasts in the societies, we are socialized as if our sciences would be capable not only describe reality (although this ability is certainly limited) but to make more or less valid predictions. Having this possibility, being able to know what is in store for us is a comforting thought. However, the very multi-vocality of the media regarding the possible paths of growth and development could reinforce one's feeling that we are dealing with serious intellectual dishonesty. Instead of having a heated debate on those issues - what would be a logical conclusion of the opposing ideas - people usually refrain from criticizing others differing forecasts. It is not only an issue of self-defense, in the very rudimentary form of "not having criticized means not to face having made an unproven critic later" but an issue of democracy. It is once again a way to deprive people the possibility of choice through veiling not only the different opinions but through pretending to have the all-encompassing science at hand, instead of facing the sober reality: economics, as any other social science has its serious limitations and its predictive force is quite limited. Not to speak of the idea of knowing the optimal way to organize a society, the implications of which I tried to outline in an earlier post. (And even if one is ready to admit the limits of economics it can be overridden almost immediately by his personal obsession with reforms and reforms and reforms. My favorite László Csaba was capable to express his doubts on the perfection of forecasts of economists for the nearst future and minutes later base his proposals on the assumption that forecasts for 2011 are perfect!)

Maybe the best known "provocator" of established economists, Paul Krugman is wrong when he attacks his colleagues vehemently, maybe he uses too aggressive tone and phrases his critic harshly (and maybe he uses ad hominem reasoning) but looking at the quality of the debate accessible by the public without these techniques ... (And ridiculing him, as it was done by some Hungarian econoimists is certainly not a legitimate means of serious discussion, especially when this is done without any sign of scientific counterarguments.)