Leading Economists Experience Panic Attack In Chicago Over Lost Credibility

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Over the weekend, America’s leading economists gathered in Chicago for their annual AEA conference. The mood perfectly encapsulates the current state of affairs of a profession that is more to blame for our current predicament than any other.

The Wall Street Journal reports:

CHICAGO—The nation’s leading economists are suffering an identity crisis as many of the institutions they helped build and causes they advanced have come in for public scorn and rejection at the ballot box.

The angst was on display this weekend at the annual conference of the American Economic Association, the profession’s largest gathering. The conference is a showcase for agenda-setting research, a giant job fair for the nation’s most promising young economists and, this year, the site of endless discussion about how to rebuild trust in the discipline.

Many academic economists have been champions of free trade and globalization, ideas under assault among rising populist movements in advanced economies around the world. The rise of President-elect Donald Trump, with his fierce rhetoric against elites, in particular, left many at this conference questioning their place in the world.

“The economic elite did many things to undermine their credibility while people’s economic fortunes were taking a turn for the worse,” said Steven Davis, an economist at the University of Chicago. But a road map for regaining trust is elusive…

A separate survey from Marketplace-Edison Research, conducted in October, asked U.S. adults how much they trusted data about the economy that is reported by the federal government. A quarter of respondents said they “do not trust it at all” while another 19% said they somewhat distrust it.

That is difficult to comprehend at a conference like this, where 13,000 attendees assembled for more than 500 presentations, many of which are built around findings that heavily use that government data.

This year, academics are out in the cold. During the election The Wall Street Journal contacted every former member of the CEA, including those going back to President Richard Nixon. None had been tapped as an adviser to Mr. Trump’s campaign, nor did any publicly endorse him.

The president-elect is “not particularly interested in hearing from the academic economist club,” Mr. Davis said.

That’s the best thing Trump’s got going for him.

That could leave him missing needed advice. Still, the profession may have brought this on itself, said Joseph Stiglitz, a Columbia professor and Nobel winner. Anger among voters was to be expected, because globalization in particular was sold in part with broken promises.

“In many ways, economic science was more honest,” he said, referring to the fact that some would win but others could lose from free trade. “It only said that under certain conditions winners could compensate losers, not that they would.”

Naturally, they didn’t.

Moving along, it’s not just economists who are struggling with the post-November 8th environment. As Politico reports, Hillary campaign operatives are even hiding the work they did with her campaign in a attempt to get jobs:

The job market is about to get even more crowded for Washington Democrats, as thousands of Obama appointees join the hundreds of Clinton campaign staffers looking for employment.

There’s rarely been less demand for their services. 

The Trump tornado is tearing up post-election planning around the Beltway. It’s not just that those 4,000 administration jobs are no longer available to Hillary for America alumni, or that failed Senate candidates like Russ Feingold and Katie McGinty won’t be able to hire their staff on the Hill. There are also the lobbying firms, trade associations and corporate government affairs offices that are pitching senior Obama aides’ resumes into the round file while scrambling to hire operatives with Republican connections.

It’s insult to injury for a generation of young operatives who are still managing their shock and grief from Hillary Clinton’s loss. And for those who want to fight to keep President Barack Obama’s legacy from being erased, there aren’t a lot of places ready to pay them to do it.

“It feels like there are just thousands of us trying to find a job, and there are no jobs,” said Mira Patel, a longtime Clinton aide who went from her Senate office to the State Department and, starting last summer, her presidential campaign.

“I have two sets of resumes,” said Kessler-Dellaccio. One highlights all her work fundraising and recruiting volunteers for Clinton. But after repeatedly seeing job postings looking for Republican connections, Kessler-Dellaccio says she “quite literally stripped out all of the Hillary stuff” out of her alternate C.V.

She added, “I have friends who even on LinkedIn have removed any Democratic Party alignment because they’re afraid if employers see too much Hillary stuff they’re not going to get a job.”

More seasoned Clinton aides had tried to warn the younger generations who’d spent their whole adulthoods under President Obama that Democratic dominance wasn’t necessarily permanent.

“Never count on a Democratic administration,” Patel recalled being told. “I was like, ‘Oh, come on, this is gonna be great.’”

Kinda sums it up, doesn’t it.

Before getting too demoralized, Clinton campaign staff can always look to the kind folks at Google to help them get back on their feet. As The Daily Caller noted:

A Google executive organized an online resume bank for outgoing White House staff and campaign staffers from the Clinton, Obama and other Democratic campaigns in order to help them find work, according to the Wall Street Journal. Laslo Bock, Google’s outgoing Chief of Human Resources is leading an effort to help Hillary For America staff and others find work after the devastating losses. 

Not that this should come as a surprise when it comes to Google. The company’s executives were always unabashedly “with her.”

Recall: Meet “Groundwork” – Google Chairman Eric Schmidt’s Stealth Startup Working to Make Hillary Clinton President

*  *  *

Chris Arnade summed it all up rather well in a series of tweets...

1. There are experts who study complex systems: pilots, surgeons, civil engineers

Then there experts who often blown smoke: like economists

— Chris Arnade (@Chris_arnade) January 9, 2017

1. There are experts who study complex systems: pilots, surgeons, civil engineers... Then there experts who often blown smoke: like economists

2. It is not that economics is not a science -- it is. It is that it is a science with high incentives (power and money), to do it badly.

3. Wall Street pays big bucks for bad Econ. Think tanks pay big bucks for bad Econ.  And politicians listen way too much to bad Econ.

4. My bumper sticker for 2017: listen to economists less, sociologist more... Oh. And pay real experts: pilots, & engineers etc more

5. There is good economics being done. But it not often stuff getting money or attention... "Stocks will drop if Trump wins!" gets attention

6. Hallmark of good Eco is same as most good science-- knowing the limitations and assumptions of the field.

7. The end

Six Steps Trump Can Take Toward Better Monetary Policy

Step One: Audit the Fed

From Ron Paul to Bernie Sanders and many people in between, there has been plenty of support for “Audit the Fed” legislation. Politicians and constituents alike agree that the Federal Reserve lacks even the most basic oversight a government-sponsored institution should have — particularly when its officials can make decisions which can bring the American economy to its knees.

Step Two: Audit the Gold

The last time there was a reasonably credible audit of America’s gold reserves was in the 1950s. Since then, there has been little more than peek-a-boo glances at the gold. The most recent status report done by the Department of the Treasury, claims that Fort Knox holds 147,341,858.382 fine troy ounces of gold.

However, many question the accuracy of that report and whether it tells the whole story. There is evidence the US Treasury has engaged in gold leasing and other financial alchemy. Even if all the gold is still held in US vaults, it may have been leased, sold, pledged as collateral, or could be encumbered in other ways.

Step Three: Remove Federal Taxation on Precious Metals

Another necessary step in freeing gold and silver to be used once again as money is to eliminate capital gains taxation on monetary metals. At the federal level, IRS bureaucrats insist that gold and silver be taxed when exchanged for Federal Reserve Notes — or when used in barter transactions.

When the federal government’s inflationary policies lower the purchasing power of the Federal Reserve Note, precious metals’ nominal dollar value generally rises, triggering a “gain.” The gain may be purely fictional in real terms. But these “gains” are still taxed — thus unfairly punishing people for owning precious metals as money.

Step Four, Five, and Six: Appoint Proponents of Sound Money to the Fed, CEA, and CFTC

President-elect Trump’s rhetoric is loaded with claims about getting people back to work. He’ll play a hand in that directly when he makes appointments throughout his presidency. Among the most impactful will be his appointments to the Federal Reserve.

The Federal Reserve, the privately held central bank of the United States, has an unrivaled ability to manipulate the economy. For much of the past 30 years, starting with Alan Greenspan, the Fed has loosened the money supply with low interest rates and quantitative easing. And it’s created moral hazards by bailing out irresponsible market players. Trump can appoint 4 of the 7 leading officials of the US central bank.

The Council of Economic Advisors (CEA) advises the president on economic policy and prepares the Economic Report of the President. The council is comprised of 3 members nominated by the president and approved by the Senate, and its members are typically professors on a leave of absence from their universities.

Trump has the opportunity to appoint new members to this advisory body. He should look to economists with a firm understanding of the benefits of sound money than selecting yet more Keynesian school economists who have been cheerleaders for central government planning and an inflationary monetary policy for decades.

The people Trump appoints to the US Commodity Futures Trading Commission (CFTC) will also have substantial impact on the markets. In the recent past, the CFTC received complaints about concentrated short selling done intentionally to push gold and silver prices down. For example, there is strong evidence that unscrupulous banks and traders often attack during periods of low liquidity in the markets such as the middle of the night.

The largest contributor to inflation and financial turmoil is dishonest money - enabling bureaucrats to run perpetual government deficits and pile up the federal debt. If Trump takes the steps outlined above, he can repair some of the damage.