2012 June 07 Thursday
How Objective Are Economists?
Just came across this 2009 piece in the Huffington Post: Priceless: How The Federal Reserve Bought The Economics Profession. It gets at a question I wonder about more broadly: Who can be trusted to have motives that cause them to be objective, competent, uncorrupted, and honest? Who to listen to?
We need better ways to know who to listen to. Look at, say, prominent financial reporters. They've got huge incentives to be captured by the industries they report on. They need contacts. The contacts do not want negative stories about their firms or their industry. That cuts the value of a large number of financial reporters. Ditto reporters who cover government agencies, academia, and other areas. Plus, competence is a problem. Is the reporter who covers Goldman Sachs as smart as the investment banker who works for Goldman Sachs? Unlikely. If you are smart enough to get into Dartmouth and get a job offer from Goldman Sachs why become a much lower paid financial reporter?
We need better ways to find who to listen to. Got any ideas for how to do this?
The journalism "profession" is populated mostly by whores. In addition to being captured by the subjects about whom they are supposed to report, any journalist who tries to buck the iron laws of political correctness that permeate most news rooms and editorial boards is summarily found guilty of a thought crime and swiftly punished. If there is a solution, it's to read as widely as possible and to be skeptical about whatever you read. Plus, stay away from the totally corrupt MSM.
All you need to know about the credibility of economists overall can be derived by looking at who ultimately pays them. Academia, banks, government: the major employers. Thus the majority end up as shills and apologists. Some few no doubt do make a living via their actual understanding of economics (say, those who work for major speculators) but I don't think you would hear much from them.
Cheap Chalupas is a good example of the type. Smart enough to realize that a great deal of modern banking is founded on fraud, too much of a tool to call a spade a spade.
Here's CBS CEO Les Moonves attending an Obama fundraising dinner and talking about how "partisan" journalism has become (from Breitbart - http://www.breitbart.com/Big-Journalism/2012/06/07/Moonves-Outs-Journalism-at-Obama-event):
CBS chief Les Moonves and his wife, Julie Chen, waited patiently for their wristbands. Obama, Moonves said, "has shown great leadership" on the issue of gay marriage.
Though he heads a news division, Moonves said, "ultimately journalism has changed … partisanship is very much a part of journalism now."
"The journalism "profession" is populated mostly by whores. In addition to being captured by the subjects about whom they are supposed to report, any journalist who tries to buck the iron laws of political correctness that permeate most news rooms and editorial boards is summarily found guilty of a thought crime and swiftly punished. If there is a solution, it's to read as widely as possible and to be skeptical about whatever you read. Plus, stay away from the totally corrupt MSM."
"All you need to know about the credibility of economists overall can be derived by looking at who ultimately pays them."
Just take a look at this guys:
It's always refreshing to hear something completely different from what we're used to. It's like discovering that the Earth actually goes around the Sun, after a whole life of believing the opposite. When we can smell just a little bit of TRUTH in what we read or hear, we immediately have the most wonderful feeling in our minds: "Yeah man, that makes sense! No wonder I couldn't understand a damn thing my government tells me"
If you are trying to determine reliable sources, establish a "Trust Index". Journalists love to print predictions; for each journalist keep a list of predictions and eventual outcomes. Daniel Yergin is a classic case, if you go back and look at his predictions, a vast majority turn out to be wrong. I keep a mental list of the common "experts" in a field and track their work over time. After a few years, you get a good sense of who is real and who has an agenda. A blog that formalized this technique and published "Trust index" rankings would be wildly popular. This has been done for politicians (with some success) with various voter guides.
As a former reporter, I'd mostly agree. Reporters are whores. However, I'd add that political reporters aren't really whores because they really like their Johns. Political reporters are almost always liberal. Their editors are always liberal. They don't need to be paid to write things that they don't believe, they'll write those slanted stories anyway.
Regarding financial journalists, they're almost all financial idiots. If they had any natural ability with math and logic, they wouldn't have become reporters, or, at least, they wouldn't have stayed reporters. Financial reporters more accurately fit the description of whore. The don't know s@#%, so they write what their advertising tell them to write. In particular, forty years of research has shown that it's nearly impossible to beat the market, so 99.9% of people should just buy index funds. That's reality. The fact that every once in a while somebody gets lucky and buy Google stock and make a bunch of money doesn't disprove this reality anymore than the fact that every once in a while somebody hits the jackpot at a casino. By buying index funds, you become the casino, not the gamble. Many financial reporters know this, but they continue to tell readers to go after hot stocks or sectors or mutual fund managers.
Regarding economists, I once bumped into an econ grad student who was my teacher in undergrad. I asked him how things were going. He said not so well. He couldn't find a full-time job at any university or government agencies. He said that he made a terrible mistake in his emphasis in grad school. His research showed that governments and, even economists through their theories, can't really change economies through direct intervention. The best thing that they can do is set up property rights, enforce the law and create a reasonable infrastructure. Other than that, stay out of the way. Well, he said, what government agency wants to advocate that. In addition, most universities want professors that are sought by governments to help set up programs. Nobody would ever want him to work on their projects and thus his name - and the university's name - would never get any play.
So as can see, economists got one thing right: Incentives work.
re: "Who can be trusted to have motives that cause them to be objective, competent, uncorrupted, and honest? Who to listen to?"RP
Read the Dialogues of Plato for a start. Also remember Diogenes never found his HONEST MAN as far as we know.
As to Economics as a profession, a subject and as a source of wisdom: what a laugh. I was a STEM major before the acronym was coined. Economics was not a requirement to get my Baccalaureate so I had the luxury of being a Math minor. When in grad school a fellow student, a Princeton man, and I had a long discussion about the nation's economic woes of the time. He was a bright, self confident and arrogent lad as only the Ivys produce IMHO. He dismissed my common sense arguments about thrift, small government, low taxes ( at a time I was literally a pauper as so many grad students are in reality ), and the evils of the dole. He inquired on what courses I had durring college in economics. When he heard from me that I had none he laughed at my ignorance and suggested I read Robert L. Heilbroner's A Primer on Government Spending: Vintage Books, 1963.
I purchased and read the book. I told him it was clap trap. I next read Keynes' General Theory in part as the book was unreadable and totally misused math as a crutch to obfuscate.
We never got anywhere in our discussion. He considered me to be an uneducated fool and I considered him to be deluded. I did continue to self educate myself on economics and stumbled upon the works of Mises and Rothbard as well as others. Much of what they wrote made sense and still does. Unfortunately their advice boils down to laissez fare economics. What government functionary wants to hear the words: let the people alone.
Any honest man commenting on economic policy is in reality doomed to be ignored.