Who is wise? He who learns from all men, as it is written (Psalm 119:99) “I have gained understanding from all my teachers.” Chapter 3 (Ethics of the Fathers)
Kartik Athreya, an economist with a PhD from the University of Iowa, published a paper on the Richmond Virginia Federal Reserve’s website: Economics is Hard. Don’t Let Bloggers Tell You Otherwise. The gist of the paper is that bloggers with little formal economics training are performing a disservice to the public with their uneducated commentaries. I will let some of Dr. Athreya’s comments speak for themselves (thanks to zerohedge.com, Fed Economist: Bloggers are Stupid):
The general public are (sic) simply being had by the bulk of the economic blogging crowd. In this essay, I argue that neither non-economist bloggers, nor economists who portray economics — especially macroeconomic policy — as a simple enterprise with clear conclusions, are likely to contribute (sic) any insight to discussion of economics….
Writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy.
The response of the untrained to the crisis has been even more startling. I listen to Elizabeth Warren on the radio fearlessly speculating about the nature of credit market dysfunction, and so on.
The general public are (sic) simply being had by the bulk of the economic blogging crowd.
There has been much excellent commentary on this clearly offensive piece. I would like to make some additional observations.
Credentials are the Last Bastion of the Incompetent and Insecure
Dr. Athreya invokes his University of Iowa PhD to squelch economic criticism from the uncredentialed. The credential game is always dangerous. What is an Iowa PhD compared to other economic faculty powerhouses like MIT, Harvard, Chicago, Stanford or Princeton? Comparing one’s credentials is an endless and fruitless game. Why not focus on competence, judgment, creativity and insight?
Competent professionals do not have to wave around credentials. A moment of non-traditional wisdom from the movie Cool Runnings: “…a gold medal is a wonderful thing. But if you’re not enough without one, you’ll never be enough with one.” If you are not confident in your own opinions and views, no fancy credential or set of professional initials, e.g. MD, JD, or PhD, is going to impress a patient or client.
My experience has always been that when attorneys start with their law school bona fides, law review membership or fancy clerkship, the legal advice that follows will be less than stellar. Just as “patriotism is the last refuge of the scoundrel,” fancy credentials are the last bastion of the incompetent and the insecure.
PhD’s Got Us Into This Mess
Two of the most prominent PhD economists, Alan Greenspan and Ben Bernanke, never predicted the current great financial crisis. They never warned us about the low interest rate policies, easy money, ill-conceived tax cuts, loose fiscal policy and dangerous lending practices that led us to this economic quagmire. Dr. Bernanke assured Congress and the American public that the subprime crisis was well contained. See Bernanke: I was Wrong About Subprime Crisis. Dr. Greenspan encouraged Americans to avoid fixed rate mortgages and take out adjustable rate mortgages (“ARMs”). And lo and behold, ARMs were a major culprit in the slide toward too much unaffordable homeowner debt. When these ARMs reset from their initial low “teaser rates” to higher market rates these unsuspecting homeowners simply lost their homes. See Don’t Take Mortgage Advice from Alan Greenspan.
The Pseudoscience of Economics
Economics is as much art as science. In the Organic Economy, I wrote about the fallacy of econometric mathematical modeling. The use of mathematics disguises the fact that economies are often too complex for modeling, as money collides with unpredictable human behavior. It is pure hubris to believe that professionally trained economists have a monopoly on economic forecasting.
The Decline of the Free Press
The First Amendment ethos to support a vigorous press is integral to a well functioning American society. Starting with Ben Franklin’s musings on independence to the (originally anonymous) Federalist Papers, and continuing with today’s investigative journalism, an adversarial and aggressive press keeps government and other powerful interests in check.
But now great newspapers have either gone out of business or have pared their staffs. A recent report detailed the dearth and dying gasps of investigative journalism:
Thirty-seven percent of newspapers had no full-time investigative or projects reporter on their staffs. The majority had two or fewer, and only 10 newspapers had four or more investigative or projects reporters working for them.
In addition, 61 percent of the newspapers had no investigative or projects team. Of those, 16 percent had teams in the past, but they have been disbanded. Sixty-two percent of the newspapers surveyed did not have a single editor specifically charged with working on investigations. See Today’s Investigative Reporters Lack Resources.
Television news is now more “infotainment” than hard-hitting reporting. We are left with a neutered corporate media, and a compromised press. Rather than independence, they are more interested in not offending their sponsors. They eschew the expensive, risky and controversial path of investigative journalism and criticism, whether it be print, visual or virtual.
Bloggers and alternative media like Rolling Stone (see e.g. Wall Street’s Bailout Hustle) have filled this investigative void. Often for free or very little compensation, bloggers have taken on the powers that be. Bloggers expose and criticize dangerous and often wrong economic policies.
Trust Me; I am a PhD Economist
The economics profession has a long way to go to earn the trust of the American public. Attacking bloggers reveals a “weak hand.” Instead of spending public money writing a paper with a ridiculous premise (note the paper has been removed from the Richmond Fed’s website), perhaps some of the bloggers have it right.
And so, to Dr. Athreya (and other Fed academicians) from a non-PhD blogger: it is time to step down from that academic pedestal, display some humility and learn from all men and women (even the blogging ones).
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