The "Yes Men" of Academia

Here is a bit from a post by Dean Baker on his Beat the Press blog that takes Ezra Klein to task for misunderstanding the point of a documentary about the financial crisis of 2008:

I always enjoy reading Ezra Klein’s blog. He’s an excellent writer and he does his homework. However, he really missed the story in his review of Inside Job (even though I do appreciate the favorable mention).

Ezra criticizes the movie for making the story one of corrupt economists blessing the evil doers of Wall Street:

“What’s remarkable about the financial crisis isn’t just how many people got it wrong, but how many people who got it wrong had an incentive to get it right. Journalists. Hedge funds. Independent investors. Academics. Regulators. Even traders, many of whom had most of their money tied up in their soon-to-be-worthless firms.”

This is the right point, but I think Ezra takes it in the wrong direction. Certainly all of these people were not on the take in the same way as some of the film’s heroes (i.e. former Federal Reserve Board Governor Frederick Mishkin who got paid six figures to write a report praising Iceland to the sky in 2006). However, it does not follow that they had incentive to “get it right.”

Getting it right meant that you had to say that the honchos were wrong. You had to say that Martin Feldstein, Gregory Mankiw, Larry Summers, Alan Blinder, Ben Bernanke, and the Maestro, Alan Greenspan, were missing the largest asset bubble in the history of the world right in front of their eyes.

This would really put you on the firing line if you were an economist at the Fed, the IMF, or even an academic economist hoping to advance in the field. After all, you could be wrong, in which case you might as well spend the rest of your working career wearing a tin foil hat.

On the other hand, what is the cost of going along? It turns out that economists are a remarkably forgiving lot – not in respect to workers in workers in the United States or retirees in Greece – but certainly when it comes to each other. The mantra “who could have known?” has provided a pretty much blanket amnesty. Next to no one got fired and very few people even missed a scheduled promotion for missing the housing bubble; the collapse of which may wreck the economy for a decade. In fact, even Daniel Mudd and Richard Fuld, the men who bankrupted Fannie Mae and Lehman respectively, have both found their way back into very high-paying jobs in finance.

What I particulary enjoy about Baker's comments is the inner workings of academia, i.e. you are allowed to be stupid and get things wrong so long as you go with the crowd, but if you get things right while being out of step with the majority, your career is ruined. This is precisely the problem with the "global warming" crowd. This is a cabal of academics who have truth by the tail and they will sabotage your career if you don't toe "party line".

This kind of "group think" means that real academic progress is slow (and in economics, it means that like in Orwell's 1984, the past gets rewritten and whole chunks of economics is forgotten). The joke is that academics preen themselves over their "reputation" for open-mindedness and diversity of opinion. But reality is something else. The academic career is a treadmill with a pecking order and you have to pay your dues as a grad student and even when you get your credentials you still must maintain party line. Of course this kind of careerism is worse in some fields than others. From my perspective the two worst fields right now are economics and climatology and the reason is that both have been politicized and politics controls the flow of funds.