#5 Are models trustworthy? - KOMPAS with Carl-Johan Dalgaard
The Danish economy is doing well. Really well, actually.
That's the opinion of Carl-Johan Dalgaard, a professor of economics and so-called chief economist. He has just taken the temperature of the economy in a report published this week:
"Things have gone really well in recent years. It wasn't that long ago that many feared a hard landing on top of the inflationary outbreak, but we have landed in a boom. It has been a positive surprise," he says.
But despite the positive trends, there is extraordinary uncertainty about the Danish economy right now. In fact, the word 'uncertainty' is found 193 times in the report, and there is no doubt who is behind the tremors that have created the uncertain foundation: Donald Trump.
With his shifting signals and announced tariffs, the US president has reintroduced unpredictability as a permanent feature of the global economy. This makes it difficult to model the future, explains Dalgaard:
"He appears to be a political and economic randomness generator. That makes it difficult to predict the consequences."
When reality behaves unexpectedly, computational models are put under pressure. After all, they are based on past data, not future shocks. And even though only 5–7% of Danish exports are sensitive to US tariffs, the signal is clear: The models cannot capture everything.
Models are not laws of nature
A current example: The abolition of the Great Prayer Day was once sold as an economic necessity. But how much of the decision actually rests on objective calculation – and how much is a political choice disguised as technique?
"You have to listen to economists' models - they are still our best guess at the consequences of political decisions. But you also have to remember that models are not laws of nature," says Carl-Johan Dalgaard.
This is exactly where KOMPAS comes in. In a world with wild problems, we need more than precise numbers. We need awareness of what models can – and cannot. They do not show the future. They show possible futures . And that makes the political responsibility even greater.