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Economists Work for Money: Those Who Defend Wall Street Profit from It

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Saturday, 28 December 2013 09:02

The NYT had a good piece explaining how some of the financial industry's biggest defenders in academia are paid by the industry for their work.

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but they say they are independent so it's all ok!
written by Jennifer, December 28, 2013 9:47
"Professors Pirrong and Irwin say that industry backing did not color their opinions."

And you know, I am sure they really believe that. Professors who do not believe that banks and commodity speculators are inherently positive and should be free to do what ever they want are not going to work in an environment where everything is lavishly funded by the banks and commodity speculators.
Interesting, Low-rated comment [Show]
...
written by shortale, December 28, 2013 11:40
The author would do well to refer to Matthew 7:3-5. Pirrong and Irwin barely make it to the "mote" level, while he wouldn't have to leave town to find a honking "beam" like Glenn "Countrywide performed adequate due diligence" Hubbard just off the "A" train at Columbia.
what's with brad delong????
written by djb, December 29, 2013 7:20

Brad Delong on his blog is touting a book that equates the middle class tax cut ....the mortgage interest deduction.....which encourages middle class home ownership.... to "crony capitalism" and too big to fail bank bailouts........

Is he kidding me????????

Maybe he needs to to disclose

They call the mortgage interest deduction a "loophole" to shift more tax burden to middle class so they don't have go after real rich people loopholes like carried interest
subsidizing house ownership is regressive and
written by Because everyone in the U.S. has unaffordable health insurance. They did before, and they still will., December 29, 2013 1:06
Brad Delong on his blog is touting a book that equates the middle class tax cut ....the mortgage interest deduction.....which encourages middle class home ownership.... to "crony capitalism" and too big to fail bank bailouts........


Absolutely right, that is a (rare) progressive position from BdL.

It gives the biggest benefit to the biggest proprietors. Then it costs revenue that has to be made up somewhere, for example from cutting food stamps. It is much easier to cut food stamps that help desperate people who rarely vote than to cut a housing subsidy that helps generate tax-free capital gains for the affluent who usually vote and often donate to political campaigns. The "middle class" have very sharp elbows.

Then there is the political dimension: a decades old study by a right-wing UK think-tank proved conclusively that people who own houses, cars, and stocks (and in the USA, guns) vote for reactionary politics far more than people of the same income and class who rent their houses, use public transport and save in bonds.

The massive shift to right of USA (and UK and other anglo-american culture countries in the past few decades has been largely due to many more people adopting a "F*CK YOU! I got mine" attitude. As of all people Grover Norquist in my usual quote:

And that is, in 2002, on the investor class stuff … you could have said, just drop $7 trillion in stock market value with the collapse of the bubble … $7 trillion, trillions with a T … Americans had $7 trillion less than they used to have, you can expect them to be very irritated and in trouble.
[ ... ]
They were mad at having lower stock prices and 401(k)s, but they didn’t say Bush did this and that caused this. Secondly, the Democratic solution was to sic the trial lawyers on Enron and finish it off. No no no no no.

We want our market caps to go back up, not low. The 1930s rhetoric was bash business — only a handful of bankers thought that meant them.

Now if you say we’re going to smash the big corporations, 60-plus percent of voters say “That’s my retirement you’re messing with. I don’t appreciate that”. And the Democrats have spent 50 years explaining that Republicans will pollute the earth and kill baby seals to get market caps higher.

And in 2002, voters said, “We’re sorry about the seals and everything but we really got to get the stock market up.


And the same for the housing market. With the added notion that most of the stock and housing market has been a gigantic boiler room operation, a massive government-sponsored pump-and-dump scheme, where ever rising nominal valuations of stocks and houses used as collateral support ever huger issuance of debt from the financial sector and thus massive compensation rounds for their executives, traders and management.
Charles Ferguson has been running this story for a long time
written by Because everyone in the U.S. has unaffordable health insurance. They did before, and they still will., December 29, 2013 1:51
some of the financial industry's biggest defenders in academia are paid by the industry for their work.


This is a story that has been run by Charles Ferguson, a political scientist turned dotcom entrepreneur, has been running for a long while out of sheer outrage.

http://jessescrossroadscafe.blogspot.co.uk/2011/01/charles-ferguson-mit-brunel-lecture-on.html

Most right-wing economics professors make most of their money not from their academic activity, but by corporate consulting work, often as expert witnesses; plus from textbooks, which are sometime bulk-purchased by right-wing organisations; plus speaking fees, but those usually are to reward politicians.

Their academic salary often is a very small fraction of their income, which can be several millions a year.

Of course big corporations don't hire as consultants professors that question how deserving their executives are of their enormous compensation packages...

It is a free market, and professors of economics or economists like Dean Baker get their decent salaries, and those like Greg Mankiw may earn 10-50 times more in corporate fees.
Charles Ferguson interview transcript and quotes
written by Because everyone in the U.S. has unaffordable health insurance. They did before, and they still will., December 29, 2013 2:25
This is a story that has been run by Charles Ferguson


Interesting interview with him about this:

http://www.democracynow.org/2012/5/29/inside_job_director_charles_ferguson_wall

BTW he reminds us in it that Larry Summers has also been regardless of his nominal party a right wing economist when it comes to collecting lots of money from reactionary corporates:

even while serving as president of Harvard, he began making large numbers of speeches to financial organizations for very high rates of pay. And also, he began consulting for hedge funds. After he was forced out as president of Harvard, he increased his consulting activities, earning $5 million a year for one day a week of work at a hedge fund called D.E. Shaw, and making over a million dollars a year giving speeches to financial organizations.


But more in general:

And the same interest groups, companies, industries, that began contributing to political campaigns and building up lobbying organizations and engaging in revolving-door hiring in the political sphere also began doing the same thing in American academia, to the point that now there is actually an industry, an industry that’s probably a couple of billion dollars a year, of selling academic expertise for people who have public policy or legal or law enforcement problems.


I think that "academic expertise" above is a euphemism...
What impact does speculation have on commodity prices?
written by Ellis, December 30, 2013 11:30
The NY Times article looks at economists in the pay of the oil companies and banks. They may be corrupt. But Dean Baker and other liberal economists agree with their position that massive speculation by banks and other big companies don't have a big impact on the prices that consumers pay.

Ironic, no?
...........
written by djb, December 31, 2013 10:08
in response to:

"written by Because everyone in the U.S. has unaffordable health insurance. They did before, and they still will., December 29, 2013 1:06 "

its clear you have a personal agenda and apparently you dont like people owning houses and using cars

and from your "middle class have sharp elbows"

you dont even like the middle class

however the mortgage interest dedction is ABSOLUTELY a middle class tax cut

and to eliminate it would be a middle class tax increase

would decrease spending and would shrink the economy

Re: mortgage interest deduction and the middle class
written by John Wright, December 31, 2013 10:43
per djb

"however the mortgage interest dedction is ABSOLUTELY a middle class tax cut and to eliminate it would be a middle class tax increase would decrease spending and would shrink the economy".

Quite possibly the mortgage interest deduction has encouraged overconsumption of USA housing and higher housing prices at the expense of infrastructure or better uses of the money.

Other countries, Canada for one, do not have deductibility of interest on mortgages and seem to be doing ok.

And why should the housing industry be so favored, why not have deductiblity of ALL consumer interest.

Car loans could have deductible interest as cars are viewed as a necessity in some regions to get to employment.

Eliminating the mortgage deduction would CHANGE the USA economy, perhaps in better ways, as it would cause the nation to allocate limited national resources in different ways.

For if one is out of work and has no income, the mortgage interest deduction is of limited value tax wise as the full force of the entire mortgage payment comes due.

And the value of the deduction is highest in percentage (and absolute dollar) terms for the high income earners and is of little value to lower middle class workers in low income tax brackets.

It isn't clear to me that USA mortgage interest deductibility has been any net advantage to the American middle class.



.........
written by djb, December 31, 2013 11:29

in response to

written by John Wright, December 31, 2013 10:43

i am not of course going to convince you of anything since you already have your mind made up on this

but i have to comment anyway

"Quite possibly the mortgage interest deduction has encouraged overconsumption of USA housing and higher housing prices at the expense of infrastructure or better uses of the money. "

people have to live somewhere and owning your home lets you build equity and net worth

you dont have to use up resources you could buy a condo

since the mortgage interest deduction goes to middle class people it expands the economy and doesnt occur at the expense of anyone

creates jobs and tax revenue as a result

-------------------------------

however you need to know that the real reason the mortgage interest deduction is on the table is because it is a middle class tax cut

and that is what the billionaires and corporations want

tax the middle class, not them

...
written by Max, January 01, 2014 12:27
Felix Salmon actually had a good take-down of that article

http://blogs.reuters.com/felix-salmon/2013/12/29/the-non-scandal-of-scott-irwin-and-craig-pirrong-3/

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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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