I was shocked when I learned the current economic models don't even account for energy inputs. Supposedly if you decide all energy inputs suddenly stop, GDP is predicted to drop on the order of 5-10% instead of, say, cease to exist
Typical models will account for energy price and elasticity, though, and if you want models for more catastrophic situations then those exist, but it's a different type of modelling.
That's the only way you can create models of something as complex as society. It's way more complex and chaotic than weather and still economists think they can predict months and years into the future.
There are also very very granular models.
Do you seriously mean that smaller economies can be modelled several months into the future with accuracy and be correct more than 50% of the time?
("50%" might not always be the right way to look at things, but I assume you mean something better than random or previous.)
"To assess the quality of the forecasts, they are compared with the actual GDP figures. Since GDP is normally revised several times, it is necessary to decide which figure to take as the outcome. Following the literature, we use the first available estimate for real GDP growth. In our case, this is the annual average calculated by the State Secretariat for Economic Affairs (seco) in March of each year on the basis of its quarterly estimates.2"
Physics isn't "complete nonsense" just because we don't know the exact mass of a proton but rather have some small uncertainty there.
Same with inflation. It's hard to measure correctly in the first place and becomes even more useless as it is defined differently at every occasion or when it does not match whatever one tries to achieve.
This was once an essential consideration in historical times, but never the main thing on the bargaining table even then.
Now it would be the extreme case, but the current system is still designed to handle it.
No differently than when large parts of the population (but not rising to the level beyond a voting minority) are systematically excluded from future ongoing prosperity by periodic debasement and/or devaluation of their labor, and the currency or medium of exchange, credit, and accounting that goes with it.
Never to be heard from again, since they are no longer a part of the economic system like they were the day before.
It can be a subtle difference since neither one is a very good position to be in.
But it's a slippery slope and those that can get back to where they were will be a result of overcoming a downward force that was not a factor just a few years ago.
And those that do will still not be in a very good position to be in.
For the rest, fuggedaboudit.
I get your point though.
I would say a few million more consumers becoming much further drained doesn't have anywhere near the chilling effect on Wall Street that you would get from a total energy shutdown or losing the same millions in a mass die-off, true. It's just a step in that direction but I do think the same faulty equations would be clung to, long after their unrealistic calculations have compounded beyond recovery. And surprise people at how soon a downward spiral could occur without any sign of immediate threat, since there's no system in place to give any warning until downward momentum has become dominant enough to be well-registered. When it's more likely to already be too late.
With energy the closest thing in memory may be the way oil drilling was cut in half at the end of 1981. That's nothing like a total shutdown but it was significant. It was an emergency, if they hadn't crashed the price, alternative energy would be 40 years ahead of where it is now. Turned out only to be a speed bump for Wall Street and here we are.
Sitting in the ground the coal has no value, when people dig it up and put it in a steam engine it goes from 0 value to the value of whatever got produced.
Where did the coal in the ground come from? Don't know! How much is there? Probably a lot. What happens to the acrid smoke from the steam engine? Goes somewhere else.
EDIT: because I know someone is going to insist that the value of coal in the ground is accounted for in mineral rights: there were none in Smith and Ricardo's day.
Clearly Smith was aware of constraints in nature:
A mine of any kind may be said to be either fertile or barren, according as the quantity of mineral which can be brought from it by a certain quantity of labour is greater or less than what can be brought by an equal quantity from the greater part of other mines of the same kind.
https://www.marxists.org/reference/archive/smith-adam/works/...
What are you basing this on?
In power and military planning, one absolutely models the effects of power loss. This is sort of like saying physics is broken because our cosmological models don't account for the telescope breaking.
It seems aerospace engineers are just like priests and counselors in the courts of ancient kings.....
Or the more complex models, typical for military use? Reality: Accounting for damage from weapons, when appropriate, is a really big thing in aerospace engineering. And has been for 80+ years.
Vs. 100% of modern economies have been very negatively impacted by sudden cut-offs of energy supplies (due to coal miners' strikes, naval blockades, the OPEC oil embargo of 1973, etc., etc.).
The difference is that the AE's care.
But plane builders do a whole lot more in terms of “what if bad thing x happened” than priests, politicians, and economists, maybe not JUST due to the direct, unambiguous impact of failure.
Energy intensity of GDP is a deeply studied statistic.