OK, the movie isn’t very good. (The Wolf of Wall Street is basically Goodfellas goes to Wall Street, with more cocaine and less violence, in which Scorcese focuses on the low-hanging fruit of penny-stock huckstering rather than on the real, much-more-powerful culprits behind the financial crisis.) But that doesn’t mean there aren’t wolves that need to be exposed: the academics who are bought and paid for by Wall Street.
Charles Ferguson, in the Inside Job, did a fine job shining light on some of the the better-known economists—R. Glenn Hubbard, Larry Summers, Frederic Mishkin, and so on—who have been willing to be paid to play in the debates surrounding financial deregulation.**
Around the same time, Reuters [pdf] conducted a study of academics who present themselves as disinterested experts at U.S. Congressional hearings but who have industry ties they don’t reveal. Thus, for example, roughly a third of the 82 academics who gave testimony to the Senate Banking Committee and the House Financial Services Committee between late 2008 and early 2010 (as lawmakers debated the biggest overhaul of financial regulation since the 1930s) did not reveal their financial affiliations in their testimony.
More recently, both The Nation and the New York Times have carried out similar studies—of academics who reap the rewards of defending one or another practice developed by Wall Street firms to manipulate financial markets for enormous gains.
As it turns out, it was Elizabeth Warner, the modern-day Leonard Horner, who sounded the alarm back in 2002 about the emerging market for scholarly data, “as journalists, lobbyists and legislators search for facts to pepper their public statements and better influence public opinion.” In her own area of bankruptcy law, she cites the example of the Credit Research Center located at Georgetown University that was taking money from the consumer credit industry to produce studies supporting the credit industry’s political positions. What happens is that the kind of studies issued by such centers acquire an academic legitimacy but the data they report are considered “proprietary,” belonging exclusively to the industry funders who decide what data are released and what data are held private.
The market for data threatens the role that social science research can play in policymaking. When data become a commodity—purchased, packaged, and sold to a willing public under a university imprimatur by those who profit from its distribution—then empirical work becomes little more than cheap ad copy. When that happens, the value of every kind of research academics do declines sharply. Like it or not, our collective worth is on the line.
When that happens, all of us—inside and outside the academy—fall prey to the wolves of Wall Street.
*I reserve the right to change the title of this post, since I’m going to see David O. Russell’s American Hustle later today. If I do, I’ll disclose the fact that I knew Russell back when he was in college.
**Partly as a result of that negative exposure, the American Economics Association was forced to consider developing a code of conduct it has never had. Instead, it adopted a very limited disclosure policy [pdf], according to which the only rule is that “Every submitted article should state the sources of financial support for the particular research it describes.”
Follow-up. . .
As it turns out, I did go to see American Hustle, which is terrific—superior (in my humble opinion) to Scorcese’s film. Russell has managed to capture a nation of small-time con artists (not unlike the characters in such TV series as The Sopranos and The Wire), who both deserve our affection (in the earnest manner in which they reinvent themselves and try to “do the right thing”) and represent a distraction from the real culprits (the big-time con artists whose activities have actually put people out of work and driven them into poverty and have deprived them of much-needed social benefits, like food stamps and unemployment compensation).