The New York Times has an article about academics that defend Wall Street. I find it pretty ironic that a newspaper dedicated to the destruction of capitalism and banking has what amounts to an attack piece on academics that have supported capitalism and free markets.
First, the paper correctly says the Chicago Mercantile Exchange ($CME) has donated money to the University of Illinois and University of Houston. That money went to build facilities. I am glad the CME did that. It helps their business by exposing students to the commodity business. I only had exposure to the commodity business when I was in college through a personal relationship, and from Orion Samuelson’s early morning farm report on WGN.
Private companies ought to be able to donate money to whatever they want. They have to answer to their shareholders. Unlike a lot of companies that simply use donations as a way to curry favor, CME has used them to further education about the commodities business.
Guess what? I am an alumnus of the University of Illinois College of Business. I was a speculator. I traded my own money on the floor of the CME for 25 years. Never had a customer. Matched wits with banks, hedge funds and all comers. I used to own stock in CME, but don’t anymore. I still own one trading right there. It’s leased out.
I donated money to my university too. I met my wife there. It has a special place in my life. We bought a bench, a couple of classroom chairs, and my old trading jacket hangs in the trading lab they have there. I am happy that I could donate. Any alum that is able donate some money to their college too. Illinois has a damn good business school and I am happy that I went there.
If the opportunity arises, I speak to classes. I try to help students because when I was in their shoes I would have appreciated being able to talk to an alumnus about the real world. I didn’t know too much about the real world back then.
I have never made a single dime from either the University of Illinois, or the University of Chicago. Ever. (Hyde Park Angels included-but let’s hope those investments pay off!) In fact, it costs me money out of my own pocket to participate.
Is that wrong?
I don’t think the fact that I donated money or participate clouds any research or opinions coming from any of the institutions I attended to. My donations don’t even get me special treatment! My kids weren’t automatically accepted to Illinois-and wound up attending different colleges.
I don’t know Professor Scott Irwin from the Illinois College of Agriculture, but I do know Professor Craig Pirrong from the University of Houston. I read his blog, The Streetwise Professor. We don’t always agree. But, he has a PhD in Economics from the University of Chicago. He is steeped in the markets and classical economics. I look at the world through a similar lens.
Professor Pirrong understands the futures business unlike few professors in academia do today. He worked on the floor, and really understands the ins and outs of clearinghouses. I think the New York Times has a bigger problem with his academic leanings than money donated to any university by a big business.
Craig has come out strongly against things like Dodd-Frank (Frankendodd-his word), Obamacare and other policies from the current administration. He wasn’t in favor of a lot of Bush’s policies either. The New York Times has an axe to grind against anyone that lines up against big government since they benefit from it.
The writers of the New York Times really don’t understand free markets. Based on this article, they have no clue as to what speculation really is, how it affects the marketplace, and what speculation means to markets. Instead of accurately explaining the function of speculation, they use meaningless statistics to try and make their argument. It’s clear, they have never walked in the shoes of a speculator.
The New York Times is using its bully pulpit and the cover of the news industry to attack free market capitalism. If the CME were donating money to causes like global warming, the NYT would write a puff piece about how CME was using its dollars to do good things around the world. They write favorably about professors engaged in research the paper deems “good” all the time.
Should professors disclose if they are being paid as consultants by private companies. You bet. Should professors disclose if they are being paid by the government as consultants. Yessir. What about non-government organizations, political PACs or non profits? Sure.
There are professors that exist purely to continuously stay on the dole of government grants. Think that doesn’t color their research? But, they shouldn’t have to disclose it in every piece they write for every publication. It should be on their “About Me” page. If they worked for a politician, they should disclose who and what party as well.
There are plenty of academics being funded by organizations that dislike Wall Street to publish research unfavorable to free markets and private banking. George Soros spends millions and millions on left wing causes the New York Times loves, but that fact never seems to be reported in their publication.
Does being paid by someone for research cloud their results? Good question. As long as the research is clearly delineated, with the assumptions clearly defined and open to replication, all that has to happen is for another academic to take a look and either confirm the results or point out inconsistencies. Ironically, the global warming research scientists used a closed book, and wouldn’t open the kimono to anyone that wasn’t on their side.
As long as we are being open. Why doesn’t the New York Times publish a list of all its writers, and who they voted for in the last election? Let’s publish who their writers donated money to, which academic institutions, and charities and political candidates. The NYT is hardly unbiased. It is the standard bearer for left wing politics in the United States. Do you think the NYT editors and writers are unbiased? Don’t they have hidden agendas? Aren’t they being hypocritical?
Thank goodness for bloggers like Pirrong. They help explain the world as it really is.
In the future, let’s let individuals decide what they want to believe given all the information they have about the source of the information.
The Wall Street Journal had an article about govt funded scientific research today.
Professor Pirrong responds on his blog here. It’s well written (he always writes well) and it’s a reasoned response. It is not a defense because he has nothing to defend. For those of you that don’t know, Mr. Pirrong attended the Naval Academy for a bit. Hence the reference to John Paul Jones.
Thomas Sowell weighs in convincingly.