Saturday, July 13, 2013
Quote of the Day: Goodhart's Law
Charles Goodhart, a former advisor to the Bank of England, and Emeritus Professor at the LSE, wrote in 1975 that
"Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes."
As a warning about the limits to activist economic or financial policy it can be put in more simple terms:
Any economic relationship which has been seen to apply in the past is very likely to stop working if the government tries to use it to control the economy.