Has #Occupy opened our eyes?
Most of us have come to accept that private interests and financial kickbacks corrupt the majority of public experts and organizations.
In pharmacology, for example, it is well known that the leading child bipolarity theorist, Harvard’s Joseph Biederman, the man responsible for thousands of MDs putting millions of kids on meds, is on the payroll of Eli Lilly who specialize in psycho cocktails for preteens. Or that the Diagnostic and Statistical Manual, the ever-growing mental disease bible, is funded by the American Psychiatry Association, which uses the book to multiply business for its membership. Likewise, it’s no big surprise that leading anti-climate change scientists like Australia’s Ian Plimer or America’s Patrick J. Michaels are on the payroll of right-wing think tanks and energy companies, the former getting checks from Canada’s obscure Natural Resources Stewardship Project and the latter from energy companies in the USA. These are the devils you know. Their conflicts are public because their disciplines require disclosure of bias. Sinister though it may be, one can say that pharmacology and anti-climate change sciences play reasonably straight hands when it comes to admitting corruption. The same backhanded compliment cannot be said of economics.
US academic superstars played leading roles in the 2008 financial collapse. While CEO’s like Lloyd Blankfein and Richard Fuld are household villains, those who built the rational legitimacy of their ill-gotten gains, the supposedly objective mathematical econo-scientists behind their schemes, are sipping on the same theft-from-the-poor piña coladas as their CEO chums, unscathed. Backing every policy decision leading to Lehman Brother’s bankruptcy in 2008 and the $700 billion public bailout was a team of prestigious Harvard and Columbia economists all on the payroll of corrupt financial institutions. None of these academic offenders ever disclosed to their universities, their students, their publishers or the press the financial gains they were making promoting deregulation. These wolves in sheep’s clothing subverted the ethical base of their discipline – and their own consciences – without moral pause because economic departments don’t require professors to come clean with conflicts of interest. Unlike their university peers, they don’t share the belief that academic study, the objective pursuit of knowledge, can be subverted by money. In fact had it not been for Charles Ferguson’s 2010 Oscar-winning investigative documentary The Inside Job, most of us wouldn’t even know the real architects of the collapse – men who deserve the name doctor about as much as a 12th-century barber.
Dr. Frederic Mishkin, professor of economics at Columbia Business School, authored the widely read 2006 Financial Stability in Iceland report. In it Mishkin praised Iceland’s system of extreme leverage, predatory lending and bank privatization. His name lent huge confidence to Iceland’s policies, a model which eventually led to the 2008 crisis. Mishkin never disclosed the $124,000 paid to him by the Icelandic Chamber of Commerce for the report. He is also a former board member on the US Federal Reserve.
Dr. Martin Feldstein, professor of economics at Harvard University, was chairman of Ronald Reagan’s Council of Economic Advisers and staunch promoter of deregulation for three decades. Feldstein was on the board of AIG at the time of the collapse. He has spoken on the record that he sees no conflict of interest as a professor at Harvard with his financial gain as a salaried consultant for major financial firms. For two decades Feldstein taught one of the most popular undergraduate courses at Harvard: Principles of Economics.
Dr. Lawrence Summers, economist, businessman and former president of Harvard University, earned a reported $20,000,000 in derivatives before the crash. He was a leading advocate in the Clinton administration against derivative regulation – rules that would have made it illegal for big banks to run themselves into the ground for profit. In 2009 Obama appointed him Director of the National Economic Council, a position he held until December 31, 2010. He is now back teaching at Harvard and working as an economic adviser in the private sector.
Dr. R. Glenn Hubbard, dean of Columbia University Graduate School of Business, was chairman of George W. Bush’s Council of Economic Advisers from 2001 to 2003. Through the 2000s he was also a board member on five major USA financial institutions, most of which were implicated in 2008’s public fleecing. He remains a major proponent of deregulation and derivatives and is still a leading financial consultant and board member on Wall Street.
The inability for American policy makers to clean their financial house or prosecute those behind the veil of the collapse has had a devastating effect on the American psyche. The idea of an entrepreneurial America where hard work, diligence, honesty and personal virtue are rewarded is becoming harder and harder to stomach. The patriotic moral obligation to the American ideal, a “God is watching” type of belief that keeps millions of workers honest, is eroding. Corruption in the heart of the financial district encourages graft throughout the economy – Mobutu Sese Seko style – from top to bottom. It’s rotting the entire culture. The amnesic impunity with which the worst offenders are able to carry on with their reputations, regalia and professional lives intact only adds insult to injury. Not a single academic has been held accountable for their role in the greatest transfer of public money into private hands in human history. The cohort of professors who broke the back of the American dream, funneling ten million family homes into their lavish speaker fees, business appointments and papers for hire, haven’t even said so much as “I’m sorry” – let alone admit any wrong.
Doctors who break their codes of ethics are stripped of their standing and barred from practice. Scientists who undermine the respectability of their profession by taking corporate sponsorship are ostracized. Economists, meanwhile, continue to walk unscathed through the most glaring ethical corruption of their discipline. The time has come for doctors of economy to earn the right to their prefix.
In November 2010, economists at the Political Economy Research Institute at the University of Massachusetts Amherst released a working paper titled “Financial Economists, Financial Interests and Dark Corners of the Meltdown: It’s Time to set Ethical Standards for the Economics Profession.” They found that even in the post-crash world, the majority of “prominent academic financial economists did not disclose their private financial affiliation even when writing pieces on financial reform.”
Because economic faculties in the world operate a “don’t ask don’t tell” policy of conflict disclosure, little is ever disclosed. Professors are encouraged to reveal their personal financial interests in the subject matter they teach, though are not required to do so. This self-regulatory policy, so similar to the overall financial mantra preached in economic departments today, is clearly not working. A culture of secrecy, anathema to the academic tradition of objective and honest enquiry, pervades the discipline. So endemic has secrecy become that researchers in the Amherst study could find only one academic who revealed work on the side. That professor, as it turned out, did so because there was nothing significant to reveal.
“If those that are creating the culture around financial regulation as well as influencing policy at the government level for financial reform also have a significant, if hidden, conflict of interest, our public is not likely to be well-served.”
To tackle this continued blight, researchers at the University of Massachusetts have proposed a system of accountability in the economics profession similar to that of other fields. This, they say, is the only answer to the continued sullying of the discipline as a corporate crock of academic corruption. Ask your economics professors if they are willing to advocate for a code of ethical conduct in your school’s economics department.
[cherry_banner image=”4717″ title=”Adbusters #99″ url=”http://subscribe.adbusters.org/collections/back-issues/products/ab99″ template=”issue.tmpl”]The Big Ideas of 2012[/cherry_banner]