Home > rant > Hubbard the economic whore

Hubbard the economic whore

November 2, 2012

As a loudmouthed data scientist/blogger/activist, I go on record regularly complaining about quants and data scientists who sacrifice their integrity to put out crappy or misleading or exploitative or destructive models because they want to make their bosses happy, or rake in big bonuses, or because they’re afraid to speak up and get fired, or because they don’t bother to think through the consequences of their actions.

Recently I’ve even started asking the mathematical community to come together and start some kind of modeling panel which studies and writes up analyses of current high-impact, far-reaching models that affect public workers or the general public, to make sure those models are using the authority of mathematics in a reasonable and credible way. I think that could really help.

Note: I’m not asking mathematicians to come down on one side or another on political issues. I’m instead asking for people to use mathematics appropriately. It’s akin to asking people to wear a mask when they’re in a lab with bunsen burners. I think we can do this in mathematics, and I think mathematicians care enough about this to make it happen.

But here’s the thing, I’m not sure what anyone can do about economists.

Not every economist is bought, of course, and there are large swaths of economics and econometrics that seems to be genuinely trying to understand how the world works and how they can, say, make healthcare genuinely more affordable or at least create better forecasts.

But then you have people like Glen Hubbard who give economics such a terrible name, it makes you want to cry.

I have been intending to research Hubbard’s record ever since the New York Times published a rather frustrating piece on him a few weeks ago, insinuating that Columbia’s president Bollinger wanted him fired but not explaining why. But then I reread the article, and I was struck by two passages. Here’s the first:

As Mr. Hubbard has moved seamlessly through the Republican upper echelons of Washington, he has also cultivated relationships in corporate suites. He serves on three corporate boards, which collectively paid him $785,000 last year. One of those is the board of KKR Financial, a finance firm affiliated with Kohlberg Kravis Roberts, the private equity firm of which Henry R. Kravis was a co-founder. In 2010, Mr. Kravis pledged $100 million to the Columbia Business School, his alma mater, for the construction of a new building. It was the largest gift in the school’s history.

That gift seems to have quieted down Bollinger on his quest to get rid of Hubbard. Next, the article says:

Mr. Hubbard has helped to draft many of Mr. Romney’s economic and tax policies, and, at least implicitly, lent his imprimatur to others he did not conceive. The benefits are potentially mutual. If Mr. Romney is elected, Mr. Hubbard is considered a strong candidate for the job of Treasury secretary and even, after Ben S. Bernanke’s term expires, chairman of the Federal Reserve. (Robert Zoellick, former president of the World Bank, is another possible contender for the Treasury job.)

Taking this all in, we have a picture of someone who has enough power to pull $100 million dollar strings to get out of trouble (whatever that trouble was) and, moreover, someone who can use the authority of economics, and implicitly of mathematical modeling, to assign himself a job running our country (in the economic sense, but then again what else is there and has there been recently?). Readers, I’d like to ask you this:

Why are we not outraged by this?

How have we become so used to this kind of behavior from elite economists and businessmen?

Charles Ferguson, who absolutely skewered Hubbard in his documentary Inside Job, has recently written more about Hubbard and how much of a shill he is for industry and Republican politics in this Huffington Post article. From the article:

Let’s start with tax cuts, since Romney claims that he can cut tax rates sharply without increasing the deficit, and without benefiting the rich. Mr. Romney claims that tax cuts will be fully paid for by closing loopholes and deductions, and will not add to the deficit; Hubbard has publicly supported Romney’s claims. Interestingly, Mr. Hubbard has quite a record on this very issue. Shortly after becoming chairman of the Council of Economic Advisors in 2001, he spearheaded the Bush administration’s tax cuts, and he said lots about them.

How did that work out? First, we now know that over half of the benefits of the Bush-Hubbard tax cuts went to the top 1% of the population. In part to benefit the wealthy, the tax cuts were also structured to reward investment in financial assets, rather than either consumer spending or real capital investment. As a result, the tax cuts caused huge budget deficits, yet did little to stimulate growth or job creation: There were basically no new jobs created during the Bush administration, despite adding trillions to the national debt.

That is not, however, what Hubbard said would happen. On August 22, 2001, he published an article in the Wall Street Journal entitled “Tax Cuts Won’t Hurt the Surplus.” Oops. In the article, Hubbard also predicts that his tax cuts would preserve the Clinton budget surpluses by causing GNP to grow 0.3% per year faster.

 Now, there’s nothing wrong with being wrong. We’re all wrong sometimes. I’m wrong sometimes too.

But here’s the thing about economists like Hubbard. They don’t give errorbars with their opinions. There’s no acknowledged error in titles like “Tax Cuts Won’t Hurt the Surplus.”

And while that was in 2001, Hubbard more recently came out with a paper with three other “esteemed” economists which is called “The Romney Program for Economic Recovery, Growth, and Jobs” and, after describing what a useless windbag Obama has been, contains plenty of tasty tidbits like this one:

Governor Romney’s economic plan will completely change the direction of economic policy. It will emphasize the long-term changes that will increase GDP and job creation, both going forward and now. It will put growth and recovery first.

Here’s what really gets me, as a mathematician and a citizen of this country who wants the public to be informed with clear and unbiased information: Hubbard not only has no errorbars, but he makes full use of the imprimatur of economic theory and mathematics with every sentence in this paper – it’s the equivalent of the line “you wouldn’t understand it, it’s math”. It gives economics a bad name.

But wait a minute! Perhaps I’m being too harsh. After all, there are copious references to academic papers which support their projected growth estimates of Romney’s suggested policies (which are never actually spelled out, and there are no models, and there are no admitted assumptions).

What do the authors of those papers say about being cited in Hubbard’s whore-rag of an academic paper?

Ezra Klein wrote a fantastic response blog post in the Washington Post called “Economists to Romney campaign: That’s not what our research says”. From Klein’s blog:

Each of these sections include supporting documents from independent economists. And so I contacted some of the named economists to ask what they thought of the Romney campaign’s interpretation of their research. In every case, they responded with a polite version of Marshall McLuhan’s famous riposte. The Romney campaign, they said, knows little of their work. Or of their policy proposals.

I mean, the least Hubbard could have done when he sacrificed the integrity of economic research for Tim Geithner’s job is to refer to his own work rather than other people’s.

People! Can we think of a way to demand more than this from our thought leaders?

Or, barring that, can Bollinger grow some balls and kick this guy out of his job of leading Columbia’s Business School for being so shamelessly willing to sell the remaining authority of economics to the Romney campaign for a job?

Or, for whatever other dirt Bollinger has on Hubbard (readers: please speculate what said dirt could be)?

Categories: rant
  1. November 2, 2012 at 2:30 pm

    Excellent piece on Hubbard and the corrupt state of academic economics (which can have no more claim to being a science than can the numerology known as technical investing). Howsomever, to insult the world’s oldest (and the last to disappear) profession with the filthy name of a lying, deceptive, anti-scientific elitist crony-capitalist pig like Hubbard is not necessary nor representative. (Oops, I’ve defamed pigs).

    There has got to be some supreme fire-worthy dirt on Hubbard somewhere – perhaps the highly talented Anonymous hackers could be inspired to find some salacious emails or internal memos or phone records that could shine the light of truth and justice?

  2. Deborah gieringer
    November 3, 2012 at 12:22 pm

    Well ranted!

  3. johny bama
    November 4, 2012 at 1:07 am

    great piece; this hubbard guy sounds like a real partisan after reading it! i want to make hubbard and these 1%ers pay for being so greeding!

  4. OMF
    November 7, 2012 at 9:22 pm

    Economists are not academics and never were. Economists are intellectual PR men for banks and monopolists. This goes back to Adam Smith and his writing for the Tobbaconists and continues to this day.

    So, Hubbard is doing an exemplary job at being an economist. It’s everyone’s unrealistic expectations that are the problem.

  5. Thomas
    November 10, 2012 at 12:35 pm

    Given your criticism of model abuse and mismanagement, I’m a bit surprised it’s taken you this long to single out perhaps the worst offenders! What’s more troublesome about economists is the purported rigor and robustness of their models, b/c they have inundated their field with mathematics. (Obviously using mathematics is not the problem, however they are abusing its function.) While most researchers is the real sciences, (think the real Nobels) role their eyes at the sorts of models and conclusions economists come up with, nothing much is done to denigrate them publicly and challenge their dogmas–which eventually permeate our public policies, all based on their supposed mathematical rigor. Like you suggest, I think it’s precisely mathematicians who should be evaluating, criticizing, and commenting on the metaphorical wool that economists have pulled over politicians and the public’s eyes.

    I nominate you to lead the way!

  6. November 16, 2012 at 11:08 am

    Hmm, I thought this was well-known. I looked into Hubbard back when GWB appointed him (and I believe The Economist had something iffy or negative to say back then http://www.economist.com/topics/glenn-hubbard). It was pretty obvious he was “bad”. I suppose it depends if you have a nose for that kind of thing or not.

    Think up a random university and look at its economics faculty. Here’s an arbitrary faculty member’s webpage from an arbitrary university: http://www-personal.umich.edu/~alandear/writings/ Like political scientists, most academic economists are not weighing in on current politics.

    Judging “economists” as a class based on GH or some other contentious figures seems like judging any group you’re unfamiliar with based on a small sample.

  1. November 14, 2012 at 2:40 am
  2. April 9, 2013 at 5:07 am
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