The Hacks (Part One)

As an uncredentialed observer of the politics of macroeconomic policy, I have often wondered just how transparently cheesy the supposed smart guys will get before someone calls them on it. The answer came yesterday as I looked at this (PDF) alleged research report launched by the U.S. Chamber of Commerce on behalf of the derivative market's most influential compulsive gamblers. The report—all seven highly academic and technical pages of it—claims that the mild rules proposed by the Dodd-Frank Act will cost between 100,000 and 130,000 American jobs. It's absurd on its face, and Simon Johnson at his blog The Baseline Scenario called them out and then Andrew Ross Sorkin of the New York Times' DealBook committed journalism.  He called up the alleged "advisors" of the company—Keybridge Research—that published this laughable lobby effort masquerading as independent research. One of these supposed advisors was the Nobel laureate Joseph Stiglitz. Sorkin:

"This is the first I have heard about it," said Mr. Stiglitz, who just returned home on Sunday after a five-week trip abroad. He said he was surprised to be listed on the group's Web site. After reading the study, he said, "It's not a very good report."
Within a few hours, two more of the firm's seven advisors had disappeared from its web site, Sorkin writes:
When I called Keybridge's president, Robert F. Wescott, who during the Clinton administration was a special assistant to the president for economic policy at the National Economic Council, he seemed slightly startled. "It is true that David [Laibson] and Steve [Zeldes] asked to be removed from the Web site," he said. "These professors did not work on this project and were not aware of it, but they helped us with other projects." He asserted that none of their names were attached to the study, just to the firm.
He also contends that Mr. Laibson and Mr. Zeldes were distancing themselves as a result of "what happened with the movie "The Inside Job,'" not the study. "That's how it was presented to me," Mr. Wescott said.
Those who have seen that movie might recall that several respected economists were shown to be hacks who will say or write anything on behalf of the highest bidder. That this is still a revelation to some—two or three decades after it became standard operating procedure in the economics departments of major universities—hints at how deep the rot is. The American Economics Association reportedly is considering establishing a code of conduct. Now the amusing part: count the number of times the Keybridge report or its figures are cited by deregulatory congress members and supposedly serious commentators during the next few months. Start right now. The House Financial Services Committee is hearing testimony on derivatives today.

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