Forecast numbers don't a By PAMELA KRAMER Making economic forecasts is a lot like making weather predictions: sometimes you win, sometimes you lose. And some economics professors joke about the seemingly arbitrary nature of economic analysis; if you want to avoid a roadblock, just assume it away. OF COURSE, there is a lot more to economic theory than that. A number of economists disagree with basic prin- ciples of the econometric model used by University researchers for their annual "U.S. Economic Outlook." But the model used for these forecasts (the 1982 version was revealed Thursday and Friday) is not simply a set of complex equations, arbitrarily thrown together to reach some kind of conclusion. The Michigan Quarterly Econometric Model of the United States" consists of sets of equations, based on historical evidence, that try to sum- marize how people behave in the market. Developed 29 years ago, it earned then-University Professor Lawrence Klein a Nobel Prize for the impact it had on economic predictions. And, just as the economy has had its good years and its bad years, the predictions coming out of Ann Arbor have enjoyed striking success as well as miserable failure. They have been "very accurate and not so accurate" over the years, said University economist Saul Hymans in 1977-a year in which the forecasted growth in real Gross National Product was off by nearly 13 percent. PART OF THE problem with economic predictions, said Harold Shapiro, economist and University president, is that all forecasts are con- ditional. "Taking, the extreme exam- ple, you assume a' major war will not' break out, or there won't be a great flood," he said. This inevitable "assuming away" of such catastrophes is fine, until one of them occurs. Take 1974, for example. The preceding year's prediction of a 19.3 percent growth in GNP met with ways an actual growth of minus 18 pe An oil embargo will do it everytin The researchers' U.S. outlook for 1975, meanwhile, wa tle closer to the mark. Agai forecast overestimated eco growth, predicting minus 9.4 pe the actual growth in GNP was 24.5 percent. SINCE THOSE two unfor years, however, the economist, consistently underestimate( economy's ability to grow. Al their GNP growth prediction the observed growth by 13 per 1977, it was off by only 1.3 per 1980, and by a mere 0.3 percent in Market reactions to the pred also cause problems that mayl inaccuracy. "If someone looks at our fore Washington today and they say, don't like the implications of tha then they make a major policy c there's no question that that make the forecast wrong," exp Shapiro, a major contributor add up scent. University's annual prediction. ne. "THAT IMPLIES a degree of impor- tance that I may aspire to, but is s a lit- somewhat doubtful," he laughed. Only n, the if a study'is backed up by similar nomic results from other sources will its ercent; results have such an impact, he said. minus "If macro modelers could actually predict what would happen to some key tunate variables, such as the interest 'rate, s have they could easily get rich," said George I the Johnson, University economics though professor and researcher at the In- missed stitute of Public Policy Studies. "But in cent in the process of getting rich, they would cent in alter the economy such that their 1976. predictions were wrong." ictions Actually, Johnson continued - lead to pausing briefly for a humorous aside about thepossibility of being taken to the cast in woodshed by Shapiro - there is con- 'Hey, I siderable skepticism among economists t,' and about the ability for forecasts such as hange, the Michigan model to forecast future could developments. plained See ECONOMISTS, Page 5 A.^ 41'-^ Harold Shapiro Ninety-Two Years _ igrn i' gWARMER Of IF Mostly sunny Sunday with 4 ~Editorial Freedom tI ihna 0 Vol. XCI, No. 64 Copyright 1981, The Michigan Daily Ann Arbor, Michigan-Sunday, November 22, 1981 Ten Cents Ten Pages II SU uts Blue in,'Bonnet Bow '4 "'Buckeyes upset Wolverines, 14-9 By DREW SHARP drives on us. Other than that, they m- ~ Michigan's Rose Bowl aspirations didn't do anything. We shouldn't have ...'\, awere finally laid to rest yesterday at lost. This is one game we should have Michigan Stadium. won. Foiled by a .relentless Ohio State AT THE OUTSET, it looked as though defense the sixth-ranked Wolverines Michigan would live up to its eight-point ,!5.ef ~fell to the Buckeyes, 14-9. The loss det- favorite role. Anthony Carter took Bob oured Michigan's post-season plans to Atha's opening kickoff and streaked 52 aim* t .,one of two TD's for the game, with 2:50 But this was where the Ohio State - a, remaining, gave the Buckeyes the vic- defense made its first stand, stopping ' ..tory, marking the fourth consecutive Michigan three times inside its four- year the visiting team has come out on yard line. Haji-Sheik' delivered a 19- top in this annual showdown. yard chip shot to give the Wolverines an "In this game, we simply squandered early 3-0 advantage, but the Buckeyes "°"wt R. a'.k opportunities," said a disappointed Bo defense gained confidence with the Schembechler afterwards. "This is display. Dail Pjust like the other games we've lost. We "THE SECOND time they came close Daly Photo by BRIAN AASCK just haven't been doing a good job of- to scoring, we' told ourselves that they A HERD OF Ohio State Buckeyes swarm over Wolverine fullback Stan Edwards. Ohio State crushed the Wolverines' Rose Bowl hopes, sending Michigan fensively. We played hard and the were not going into the end zone," said to the Bluebonnet Bowl in Houston Dec.31 instead. defense played well. They only had two See BUCKEYES, Page 9 Spy incidents report~ed on U.S. campuses By JOHN ADAM While administrators and students at the University debate the appropriate response to alleged Taiwanese spying activities on campus, reports of similar foreign intelligence activities have sur- faced on other college campuses across the country. At the University of Minnesota in Minneapolis, Iranian students who op- pose the Khomeini government claim that a pro-Khomeini campus group, the Moslem Student Association, is repor- ting their political activities back to Tehran. The Minnesota Daily, the cam- pus newspaper, has carried two front- page stories on the alleged spying and reported that similar incidents have cropped up at San Diego State Univer- sity. AT MICHIGAN State University in East Lansing, Peggy Miller, an advisor at MSU's International Center, said a number of partisan signs had been posted around campus and that articles in the MSU newspaper, the State News, had made campus spying "sort of an issue." A reporter from the State News had received threatening phone calls after writing news stories on alleged spying by Taiwanese agents. At the University of Kansas in Lawrence; Chancellor Gene Budig an- nounced that the university "will not tolerate any actions, by any individual, which have the effect of eroding the academic freedom of another in- dividual." HERE AT THE University, the foreign spying issue was raised last summer when a former University student, Chen Wen-Chen, was found dead in July while visiting his relatives 'in Taiwan. His death led a number of Taiwanese students and staff members to allege that their fellow students were reporting their supposedly anti-gover- nment activities back to Tapei and that Chen was murdered by the Tapei government for his dissent in the United States. Yet, officials in Ann Arbor, unlike those at some other universities, have been reluctant to take action on the allegations. "The University cannot, should not, and will not act solely on anonymous charges," University. President Harold Shapiro said in an in- terview last July. But because the students often fear for the well being of 'their families in their native countries, they rarely agree to testify publicly about the alleged spying. "Everybody likes a witness, you see, that's the problem," according to Joseph Mestenhauser, the director of the University of Minnesota Inter- national Center. The Minneapolis university has been conducting an ongoing inquiry with the Ministry of Foreign Affairs in Taiwan, about the imprisonment of Minnesota alumnus Rita Yeh, who was convicted last January to 14 years in a, Taiwanese prison. AT CARNEGIE-Mellon University in Pittsburgh, where Chen was an assistant statistics professor at the time of his death, university President Richard Cyert established a 24-hour "harassment hotline" to deal with what he claims is the common problem of foreign students spying on their coun- trymen. This hotline coupled with a faculty ad hoc committee on the matter and Cyert's frequently professed views that such spying will not be tolerated "makes everyone (on campus) aware that there is a control" against in- telligence operations conducted against students. Cyert added, "I do think there is less activity as a result." See SPIES, Page 3 TODAY- Promises, promises IT IS ONCE AGAIN the time of year for campaign promises, handshakes, and elections. The annual LSA-Student Government elections will be held tomorrow and Tuesday and 50 students are vying for the 15 seats on the council. Four campus political parties are running slates of candidates and five students are cam- paigning as independents. LSA-SG election officials will be staffing polls at the UGLI, the Union, the Fishbowl, and at most dormitories for most of the day Monday and Tuesday. December. And merchants along the S. University St. shopping strip, anxious to be finished with the Thanksgiving holiday in which turkeys and cranberries are the only fast-setling items, erected the usual plastic green and red streetlight decorations more than a week ago. The first reported sighting of a seasonal TV commercial was one giving a pitch for mistletoe and Minute Maid orange juice (it was sadly not the traditional Santa Claus riding the electric Norelco razor down the snow-covered slopes). San- ta Claus in fact has already arrived in Ann Arbor and plans on making several more visits here before the Big Day. Santa was at Arborland Shopping Center on Washtenaw Ave. yesterday and will be there again today.. The om- icinftawill not ann-ar at ri nr;nn all n musician, charmed the highbrow set when his band was guest artist with the Nashville Symphony Orchestra in a benefit performance. Daniels had the crowd standing, stomping, and clapping wildly when his 60 minutes of down- home music was over Thursday night. Backed by the 65- piece symphony orchestra, Daniels and his five-member band played at the Grand Ole Opry House. The group, whose sound is a hybrid of many musical styles but cer- tainly not classical, played all its well-known hits, including "The Devil Went Down to Georgia," "The South's Gonna Do It Again," "Long-Haired Country Boy," and "In America." The unusual pairing attracted a curious mixture of 3,800 symphony patrons and Charlie Daniels fans, raising an estimate$ 500on0 for the financially straned symnhonv. family," explained the new Mrs. Wassel. "And we wanted our family and friends with us when we tied the knot." when the couple approached K mart Store Manager Gloria Varga with the idea, she thought they were kidding. Assistant Store Manager Bill Throne gave the bride away and store employees Mike McGuigan and Norma Elston were the best man and maid of honor. Cafeteria personnel provided refreshments, the camera section sent a photographer, home improvements set up tables, and the appliance section loaned a stereo. Karen Mader, a notary public and the wife of another store employee, performed Friday's ceremony. "Some people may think we are blooming idiots," Mrs. Wassel added, "but we wanted our wedding to be snecial and different and we got both." I i I i