"Growth, No Growth is a specious argument.  The real question is what do we want to grow."

The whole point is that no one can predict the future.  The best near term subsitute to a crystal ball is crafting public policy with near and long term feedback loops that constantly inform and allow policies to be adjusted to achieve desired end states.

I'm not whether we disagree or not, but while the economists may caveat what they say, policies based on economist's advise do not.  (And if you'll allow me to generalize, economists that advise policymakers are particularly bad at admitting their fallibility.)  Thus, we get policy made as if "best guesses" were absolutes - and even when their are error bars around those best guesses, we still assume that those error bars fully bound all possible futures.  

Answers to your questions.

No, but that's a pretty low bar.  The world is rife with examples of how bad economically-literate people are at predicting market changes, from random stock pickers that beat mutual fund managers to forward price forecasts on fuel prices that are extrapolated off linear trends and are wildly inaccurate.  So yeah, it's the best tool available, but it is really dangerous to make policy predictions with an assumption that it's got much accuracy to it.

Qualitatively, yes.  Quantiatively, no.  Do interest rates prime the economy?   Absolutely.  Are supply and demand related through price?  Absolutely.  But saying that a 0.5% rate cut will grow GDP by a known percent, or that a $1 increase in gasoline price will lower demand by a known percent is almost pure speculation.  This is why I said that economics is very good at explaining what happened - but not so good at explaining what will happen.  (For example, an economist would argue - quite rightly - that the last decade has proven that gasoline demand curves are highly inelastic.  This is true, and interesting - but largely inconsistent with the vast majority of economic forecasts prior to 2000 which assured us  in one way or the other than $70/bbl oil would cripple the US economy.)  This is good so far as it goes, but is a shaky foundation upon which to build a discipline, unless the discipline is willing to admit and seek to address it's limitations.  After all, given perfect knowledge of the future (as all backwards predictions have), I can make astrology look like a scientifically valid discipline.  I'm not suggesting that economics isn't a lot more rigorous than astrology, but just going back to my first point that this is a pretty low bar.

Great question, and I'm honestly not sure.  But I go back to the policy point.  One can make the broad observation that we choose from an impoverished option bag (a psycological point) and that virtually all policies that were anticipated to be economically disastrous (think SOx trading, the first generation of CAFE, etc.) have actually had way lower costs than we forecast, in large part because of that impoverished option bag.  And if one makes that point, one quickly would conclude that the future is much less knowable than economics would have us believe.  And yet we don't.  We get the S&Ns of the world assuring us that carbon will have to get to $100/ton because their bag doesn't include stuff that works for less... and policy makers act on that information. So maybe my answer is not that there is a better tool, but that the tool needs to be presented with a lot more humility.

I think a PHD is overrated, but I get your question.  : )  Again, there are important economic tools out there, and we clearly need people making major economics decisions in this country to be familiar with those tools.  But as anyone who's ever built an econometric model knows, (a) you can never build enough complexity into a model to represent all the things that will actually affect your forecast and (b) complex systems behave in unpredictable ways.  And so we make massive simplifying assumptions.  Capital is efficiently allocated, all market participants are rational, people knowingly maximize their utility function...  We don't build these assumptions in because they're true, but rather because if we don't, then we can't apply any mathematical models.  And so what I really want out of our Fed chief is not a fancy degree, but the gut level experience to look at a model and say "your math is right, but your answer is crazy."  And the ability to do that ultimately comes from experience - and it's not very mathematical when it's done really well.

One last point, to illustrate my larger beef.  At any given time, the Congress has numerous policies to consider, all of which have a "score" based on their net fiscal cost.  Decisions are made between competing provisions based on that score.  And the score is based only on the net impact on tax revenues.  So let's say we want to pass a tax break for some clean technology.  You and I may be quite confident that this industry is poised for explosive growth, would create a ton of jobs and lower the cost of power.  None of that matters for the scoring - just the tax impact.  The economists at the Congressional Budget Office put very precise, very accurate forecasts together on the costs, but put none into the benefits.  And so we make policy with one hand clapping.  And clapping wrong, since even the option bag they have is impoverished.

Your points about the need for humility in economics are well taken. But economists aren't incentivized to be humble. Humble predictions aren't as clear, and policymakers like clear answers. That's where much of the problem is. Another is that people don't like to think in probability distributions. They like to focus on "the scenario that will happen," even when we don't know what that is.

There are mathematical ways to account for uncertainty. We could put some "give" in our cap-and-trade schedule. I expect this often doesn't happen because it's too complicated for the policymaker.

I'm appreciative of your helpful counterbalancing arguments in favor of experience-driven intuition over fancy math. But there are computers right now that basically run hedge funds, and some of them make a ton of money. That's just straight up math. Often using ridiculously unrealistic models of stock pricing, I might add.

The two schools of thought should continue to have a healthy tension. Humility on both sides is warranted. Your post is well taken.

I speculated in two places, so don't take my word for it that:

Policymakers really like clear answers and can't handle complexity. I don't deal with policymakers, I'm just stereotyping.
Cap-and-trade policies etc. really are based on "first-best-guess" as opposed to a "smeared guess" that gives rise to many possible paths depending on what happens. I don't work on policy so I don't know these details, I'm just assuming.