The New York Times ran a piece a couple days ago entitled "Academics Who Defend Wall St. Reap Reward." Two professors specifically mentioned are the economists Craig Pirrong and Scott Irwin. The piece is long on innuendo and short on substance. The writer, Kocieniewski, leaves the impression of wrongdoing by Pirrong or Irwin (and judging by the comments on the article, he got his intended effect) but the article never actually details what was so nefarious.
If their research on commodity speculation is flawed, then I would have expected some discussion of how it was flawed and some linkage of how a flow of money led to the flawed conclusion. But there is no such argument in the piece. I've read several of Irwin's papers on the issue. Most have been co-authored and they've been published in several diferent peer reviewed academic journals. Thus, Kocieniewski's critique seems to be an indictment not only of Irwin but of his co-authors, the anonymous peer-reviewers, the journal editors, and any other economist out there who could (but has not) published results showing that Irwin et al.'s research on commodity speculation is wrong. Or, could it be that Kocieniewski doesn't like the findings and resorts to ad hominem attacks?
I've known Irwin for several years. He helps run farmdocdaily, one of the most timely, unbiased sources for information on the economics of production agriculture one can find. He is a prolific researcher working on some of the most interesting (and sometimes controversial) issues in agricultural markets. He is a fellow of the Agricultural and Applied Economics Association (AAEA), and sat on that association's board just prior to my term on the board. The AAEA board recently passed a disclosure policy for its journals, and if memory serves me correct, Irwin was fully in support. Indeed, I've personally seen an Irwin presentation where he fully disclosed real or perceived conflicts of interest even when it wasn't required or expected that he do so. As with any scientific investigation, it is possible that Irwin's conclusions about the results of commodity speculation are wrong, but the New York Times article doesn't offer any substantive argument to that effect.
Here are a few other reactions on the story.
The story is most notable for what it lacks: how, exactly, are the various companies distorting markets in a way that hurts consumers and or producers? Inside Job describes the shady business of securities backed by stated-income mortgages, how Goldman Sachs was shorting the products it was selling to clients, etc. We can see that there were shady business dealings and how they probably helped to fuel the real estate bubble. So, where's the real underlying story in commodity market trading?
I don't think this story measures up to the New York Times' standard. It's sad, because there might actually be a story here, but it would require a lot more legwork by Kocieniewski That story, however, is probably a bit less salacious than what Kocieniewski was shooting for.
Felix Salmon has a long post on the subject at Reuters. Here is one snippet.
But here’s the thing: for this kind of article to carry any weight, it has to demonstrate the mendacity or venality of the academics in question — and, ideally, those academics should have a high-profile reputation which deserves to be tarnished.
Which is why David Kocieniewski’s article about Craig Pirrong and Scott Irwin this weekend is such a disappointment. It’s currently doing very well on the NYT’s most-emailed list, but it’s easy to guess who’s doing the emailing: people who love to hate Wall Street, and who will use just about any possible excuse for doing so. Because in this case Kocieniewski has missed the mark. Neither Pirrong or Irwin is mendacious or venal, and indeed it’s the NYT which seems to be stretching the facts well past their natural breaking point.
Basically, the reporter dislikes speculation (which he clearly doesn’t understand), so he assumes any expert with a different view must be a hired gun for various commodity-market firms and groups. The result is a preposterous article riddled with “jaw-on-the-floor” errors, mendaciously edited so the unfounded accusations come first, and the self-contradictions revealed only at the end of the piece. (E.g., the professors are paid consultants for these groups — oh, but they say the opposite of what these groups want, and are actually paid to work on entirely different things.)
On his blog, Pirrong responds to the NYT piece about him. Among the many details the NYT story failed to mention (such as the fact that Pirrong has testified against Wall Street on many occasions), I found this the most interesting:
First, there are no coincidences, comrades. The NY Times has been Tiger Beat effusive in its praise for Gary Gensler of the CFTC. This piece attacking two of the most prominent academic critics of Gensler’s efforts to impose a speculative position limits rule comes out days after the Commission approved a new version of the rule, and is in the midst of the comment period leading up to the formulation of a final rule. Gensler fought for this rule for 5 years, and he views it as an important part of his legacy. That is, there is a clear political agenda at work here: to kneecap those who have the audacity to oppose the regulatory agenda of Gensler and his media acolytes.