Academics tend to be respected because of their reputations for having expert knowledge and some level of objectivity. As a result they are often sought as endorsers for various positions. I have written many times before of the danger that exists when that esteem is abused. This danger seems to be most present in the field of economics and medicine, not coincidentally because there is a lot of money at stake there.
Charles Ferguson, Academy Award winning producer of the excellent 2010 documentary Inside Job, said in an interview:
What you find is that very prominent professors of economics, often people who have also held high government posts, are paid to testify in Congress. They are paid to be expert witnesses in both civil and criminal trials. They’re often paid to write papers that praise the financial services industry and argue on behalf of deregulation of the industry. They make millions, in some cases tens of millions, of dollars doing this. And this is usually not disclosed. And in fact, university regulations do not require disclosure of these payments.
Glenn Hubbard is the dean of the business school at Columbia University and was a Mitt Romney advisor. He gained some notoriety when he bristled at having to answer questions about his role in the financial collapse when he was interviewed for the Ferguson documentary and displayed all the arrogance of the entitled class at being questioned by peons as to whether they might bear any responsibility for the shoddy dealings that led to so much hardship for so many. He sneered at the interviewer that he did not have to answer his questions because it was not a deposition. (You can see the clip and my review of the film here and an interview with Ferguson.)
Via Matt Taibbi, I learn that Hubbard actually was later deposed as part of legal proceedings centering on the failing of Countrywide Bank and the reasons for his earlier anger became quite clear. He was reluctant to admit that he pocketed huge fees for certifying that things were fine without actually checking very carefully. But in a legal deposition he had no choice but to answer the questions and he comes across as a hired gun for the ruling class.
In other words, the Dean of the Columbia University business school testified that the fact that Countrywide claimed to have conducted thorough due diligence when in fact it was pressuring underwriters to approve 60 to 70 mortgage applications a day and failing to verify any income levels or other key information (to say nothing of the outright falsification of such data, which also went on on a mass scale) – he testified that these issues were irrelevant.
So how did Hubbard manage to analyze Countrywide and conclude that mass fraud in its underwriting procedures wasn’t problematic? Easy: He didn’t look at the underwriting! All Hubbard did was take a group of Countrywide loans and compare them to a group of other loans from the same time period.
When that comparison revealed that Countrywide’s loans failed at about the same rate as the non-Countrywide loans, he smartly concluded that fraud wasn’t the problem and that macroeconomic factors must have been the cause.
Except for one thing: He left out the fact that about half of the loans in the “non-Countrywide” pool he selected for his analysis were originated by companies that were also being sued for underwriting fraud and other irregularities. What Hubbard did is compare a bunch of bad loans to a bunch of bad loans.
The reason this kind of behavior by prominent figures is bad in general is that it gives ammunition to those who would seek to discredit academic expert opinion on other important issues such as health and climate change. Even Taibbi is disillusioned, and rightly so.
Given the great masses of information that was out there about Countrywide, Hubbard in other words had to perform a labor of Hercules to avoid letting the truth about the company slip through a crack in his skull. Naturally, this awesome ability to non-absorb information makes him qualified to be one of America’s leading academics. Way to go, American learning!
For another example, take the decision by the American Psychiatric Association to change the way it diagnosed depression. For a long time, doctors were told in the authoritative handbook put out by the association to not diagnose depression if the patient had recently suffered a bereavement, since it seemed reasonable that symptoms in such cases were caused by that fact and would be transient, with time and nature acting as healers. But not any longer.
In what some prominent critics have called a bonanza for the drug companies, the American Psychiatric Association this month voted to drop the old warning against diagnosing depression in the bereaved, opening the way for more of them to be diagnosed with major depression — and thus, treated with antidepressants.
What was the problem with this change in recommendation?
The change in the handbook, which could have significant financial implications for the $10 billion U.S. antidepressant market, was developed in large part by people affiliated with the pharmaceutical industry, an examination of financial disclosures shows.
The association itself depends in part on industry funding, and the majority of experts on the committee that drafted the new diagnostic guideline have either received research grants from the drug companies, held stock in them, or served them as speakers or consultants.
People in academia have a good life. The salaries, benefits, and working conditions are good and those who have tenure have enviable job security. This is meant to allow them to speak the truth and give unbiased opinions without fear of repercussions. But this carries with it a great responsibility to actually do so. The more academics start to look like paid shills, the less deserving they become of those privileges.
If academics do not do a better job of policing themselves and acting in ways that are transparently ethical, they will deserve the opprobrium that will be heaped on them.