A former Keating Government Treasury boss has complained that we’re flying blind on the economy, as the current Government throws everything, including the kitchen sink, at solving the country’s current jobless and looming recession problems.

Yet history tells us that you have to be careful in listening to mainstream economists when the ‘you know what’ hits the proverbial fan.

Like African Americans in the US and the Jewish fraternity, who can poke fun at themselves in public, as an economist, I can confidently be aggressively objective about the strengths and weaknesses of economists.

As someone who uses economists for lots of my analysis, I know they are strong on trend-picking but month-to-month stuff is too hard for most expert economy-watchers.

And when you get into huge, curve ball Coronavirus crises (such as the current one) worrying about what we can see in the economy and what we’re spending and what the debt in the future will be, are the concerns from people not of the real world! Marrying economists to the real world — now that’s a concept you don’t often see!

The complaining economist in question is Greg Smith and the AFR today looks at the issues he’s worried about. “We're running the country blind because we don't have updated numbers,” Smith told John Kehoe. “Everything has an opportunity cost and the problem at the moment is very large decisions are being taken in a rush before the proposed budget.”

Like a good, number-caring economist, Smithy wants an economic statement of what’s going on because the Budget has been delayed from its usual second Tuesday in May to October. That was a good move, given the desperation that the Coronavirus has created. But seriously, stressing about seeing the numbers now is a luxury that only an economist would care about.

In the real world, the PM and Treasurer are propping up the economies foundations, plugging holes and making structural decisions on the job. Some of them will be great and others will be ordinary — but we’re in an ‘all hands on deck’ situation and ‘expect the unexpected’ is the attitude.

The threat over the past six weeks was no place for an economist who wants numbers. But the economists who have been advising the Morrison Government were real world ones — thank God!

Back in the GFC, Ken Henry, who advised Prime Minister Kevin Rudd and Treasurer Wayne Swan, virtually changed spots. Like most economists, (including me), Ken was a supporter of lower budget deficits, less government intervention, pro-market solutions and less protection. It’s tagged Neoclassical Economics. But when the GFC hit, I wrote a story where I canvassed the view that when a Great Depression Mk II threatens, we all had to become Keynesians and the government just had to get in there and spend.

J.M.Keynes became the famous UK economist of the Great Depression who was at odds with mainstream economists at the time. They wanted governments to get their economic houses in order, repay debts and tighten their belts because it was excessive borrowing that sowed the seeds of the huge market and economic slump of the 1930s.

In fact, the Bank of England sent economist and banker, Sir Otto Niemeyer, to Australia to tell the country’s governments (federal and states) to pursue policies that would have made the Depression even more depressing. The likes of NSW Premier, Labor’s Jack Lang, told Otto to shove his debt-repayment plan and kept on building the Sydney Harbour Bridge!

Keynes had the opposite advice to Sir Otto, with his famous effective “spend and prosper” recommendation that someone like President Franklin D. Roosevelt took to heart in his New Deal policy that helped the Yanks beat the Great Depression.

History also has shown that these big spending policies cause inflation and eventually unemployment in normal economic times. But when a Depression threatens, we forget about economic prudence and economists who want to see forecasts of key numbers, which could only be based on assumptions that could prove meaningless and wrong in the long term.

If you want proof, just think about how our economy might go this year. The optimistic case says we’re all back to work by the end of June and no worrying second wave infections will force us back into lockdown again. And all this Government stimulation helps the economy rebound strongly, assisting stocks to surge higher, which means the planned spending by Canberra could actually be less because less is needed.

On the other hand, the less optimistic scenario says we go back by June and a second wave of infections happens and we’re back to square one and lockdown time is back!

I could create five different scenarios, where the numbers and forecasts would be unbelievably different with each case. For the past six weeks I’ve ignored economic stats because they’re meaningless in the whole scheme of things — I’ve been watching infection and death rates.

As an economist, I never thought I’d ever have written such heresy but these are extraordinary times that call for extraordinary actions, like we’ve seen from the Government over the past six weeks. We’ve even seen the Labor Opposition be extraordinarily supportive of the Government, which is great and even most economists have put on hold their need to see the numbers Greg Smith wants to see – and that’s a great, real world thing as well!

This is not the time for La La Land economists.

Go real world economists!

P.S. When the GFC hit and most economists and governments went “Keynesian”, the President of the European Central Bank, Jean Claude Trichet, kept the EU on a more inflation-concerned policy path, refusing to play ball on the loose interest rate and spending policies of places like the US, the UK, China and Australia. Europe suffered as a consequence and he eventually was replaced by the Italian banker/economist, Mario Draghi, who took the EU’s top job with the famous promise: “Whatever it takes…”

That’s my kind of economist. When a pandemic hits, it’s no place for staid, stuck-in-the-mud economists!