This quote from Charles Kindleberger is one of the more insightful recent comments on economics I have seen. I was rereading Manias, Panics, and Crashes and this line jumped off the page. History is important. It provides context.
Economists generally have a high opinion of their science versus the other social sciences and the liberal arts. It would like to consider itself in the same league as physics. It is not. Economics need historical clarity because it generally cannot run experiments.
I would say that the best investment analysts are students of history. To understand today needs a deep sense of where we have been and the path to any current situation. Central bankers are slaves to past monetary crises. Consumers are constrained by their past fears. Businesses fight the last strategic battle and usually don't see the threats of the future. Forward expectations are tempered and biased by the past. Yet, a poor understanding of the past leads to the wrong conclusions.
Economics always need to ground theory, tests, and narrative to the time, place, and structures of the past. History looks to make sense of a wide set of events and tries to find commonality and causality. Lessons from the past are wrongly learned through the misinterpretation of history.
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