This page has been archived and commenting is disabled.
Fed Economist: Bloggers are Stupid
A Richmond Va. Federal Reserve Economist, Kartik Athreya wrote a paper
recently that trashes economic bloggers. Mr. Artheya has a PhD from the
University of Iowa. I’m not so sure a few years in corn land gives him
the right to take cheap shots at the new media. I am absolutely
convinced that this type of thinking should not be expressed by Fed
officials. It proves to me that the Fed is an elitist organization that
is out of touch with America in 2010. The full report from Athreya is here.
Some of the more offending comments:
Writers
who have not taken a year of PhD coursework in a decent economics
department (and passed their PhD qualifying exams), cannot meaningfully
advance the discussion on economic policy.
So we have to go
to school for two years to be able to write about the issues of the day.
That would exclude me and a lot of others. The fact that I worked on
Walls street for 30 years does not qualify me to say a word.
The
response of the untrained to the crisis has been even more startling. I
listen to Elizabeth Warren on the radio fearlessly speculating about the
nature of credit market dysfunction, and so on.
Taking on
Elizabeth Warren is a big mistake Mr. Arthreya. You will regret this
choice of words.
The real issue is that there is extremely low likelihood that the
speculations of the untrained, on a topic almost pathologically riddled
by dynamic considerations and feedback effects, will offer anything new.
Moreover, there is a substantial likelihood that it will instead offer
something incoherent or misleading.
Everything that
comes from the Federal Reserve is incoherent and misleading.
The
sophomoric musings of auto-didact or non-didact bloggers or writers is
instructive. For those who want to really know what the best that
economics has to offer is, you must look here.
The only
people you should listen to is Federal Reserve economists? I take a
different view. The last people you should trust in this matter is FRB
economists.
The
general public are simply being had by the bulk of the economic blogging
crowd.
The general public is being had. But
not by the bloggers. They are being had by the folks who make the
choices for us at the FRB.
The
views expressed are my own, and do not necessarily represent those of
the Federal Reserve Bank of Richmond, or Federal Reserve System.
Actually
the views expressed are a perfect representation of the mind set at the
FRB. Narrow minded, elitist and just plain wrong.
I would suggest that Mr. Arthreya do some additional research. He should
look up the word “hubris” (extreme haughtiness or arrogance).
After he understands that concept he should write an apology, that or
he should resign from the FRB.
»
- advertisements -
You do a disservice to decent fence posts everywhere.
I have found it is usually the insecure who feel compelled to hide behind their academic credentials.
let's face it, who was this guy writing for? not the peasantry...no. he was slowly, but very carefully and very obviously sucking up to those around him.....
and what's going on with them? are the bloggers getting under the skin of those at the Fed?
ah....maybe....as they prove -- day after day -- they have been horribly catastrophically wrong at every turn in this downward spin...
to the point that they have accelerated the death spiral......and guaranteed it...
but they all have great degrees, right? so they can't be wrong!
"he was slowly, but very carefully and very obviously sucking those around him....."
Fixed it for you.
Given how enamored the PTB is with paper, this really shouldn't be at all surprising.
My idea, as always is:
Every profession has certifications. As part of the certification for a professional economist, he should be required to manage his own retirement fund. He can use any traded instrument in the world he chooses - from silk cocoon futures to t-bills. But whenever he publishes, speaks or appears in any form of media, he must disclose his results for the past 1, 2, 5 year period plus his lifetime.
Then we'll see what happens when an economist has an actual account to manage. Eunuchs in a harem.
This is the point Hugh Hendry often makes.
It's an interesting point that I actually agree with, I think the standard defense line is that describing economic conditions and behavior is different than describing market conditions and behavior, but I've always regarded that demarcation as completely bullshit. The market is the behavior (whether it be equities, bonds, mate selection, ice cream sales trends), and if you can't figure that shit out with any degree of accuracy, then your economic research is essentially worthless.
Or, to quote Prof. Nassim Taleb (of Black Swan fame), "..the banksters have taken over."
Very good point. Ive worked with very good, intelligent people with degrees, and many douchebags with degrees, and some complete dumbasses with degrees in my capacity as a lowly military trained electronics tech.
The ones who are good at what they do, are confident in their abilities based on their track records, they get stuff wrong because they are human and the systems are complex. But they generally laugh off their screw-ups and they can do that because they have a track record that objectively supports the fact that they are correct the vast majority of the time. They walk the walk and learn from missteps rather than resort to denial mechanisms.
The douchebag types are pretty good and have more knowledge (as an engineer should) of the systems than the lowly techs, and take every opportunity to prove that fact. They never evolve to the performance level of the true expert because their knowledge is hampered by their personality defect. They approach every problem as a never ending quest to display how much they know and how dumb everyone else is on a relative basis.
When diagnosing a complex system with plenty of interactive variables, sucess comes down to knowledge of the system, and the cold hard rules of inductive and deductive reasoning. Any bias or personality factor you try to interject into the process leads to failure of the conclusion. When the douchebag is correct, they harp on it too much and neglect the roles others or just plain luck had in their sucess.
When the douchebag is wrong, suddenly others roles are important and luck, among a million other denial excuses are put forth. Hence our douchebag reaches a level good enough to keep their job, no futher, likes to talk about sucesses and blames failure on external factors. They get fighting mad at any implication they missed something.
The complete dumbass (degreed dumbass) hardly ever gets anything right, has a degree in electrical engineering but in real life you have to exercise your intelligence via inductive and deductive reasoning and a lot of folks just dont get it. They could learn, maybe but they never do. They become discouraged and stop evolving.
The complete dumbass resorts to any and all means to keep their job, because they have no track record to point to. They are the suck-ups and asswipes you have to look out for, if they think you might point out the obvious, thus threatening thier jobs. they will resort to political chicanery, deception, lies, whatever because they suck and know it. A douchebag might suck as well(just not as bad), but they dont know it so they generally think their job is secure.
Our Fed guy here would fit the complete dumbass category, with a dash of typical Fed spoiled rich kid douchebaggery thrown in for good measure. He probably owes his posistion not to any economic acumen, or abilities, rather to political connections like most of his ilk. He dosent have to be good, he only has to toe the line of his benefactors and probably submit meaningless paperwork supporting the party line from time to time. He has a nice cushy fed job, and has the time to submit these testaments to his ego from time to time.
He dosent want to debate, and he surely dosent want to talk in terms of any track record of his own or the federal reserve. He has automatically won all debates in his mind by virtue of a piece of paper on a wall. He points to the complex interaction of capital markets and equates it with brain surgery, thus winning all debates by non phds by default even if the fed gets the obvious wrong while bloggers "get it".
For all his ego, in reality he is a waste of taxpayer money, taking up space along with the rest of the fed that should be filled with people who actually have track records of sucess instead of intellectually dishonest ramblings. His own ego will actually prevent his presumed intellect from getting shit right,imo.
Its just human nature, hell if we swapped places, I would love being a worthless sub-parasite of the fed too!
Fazzie, You gave me my laugh for the day! I'm not military, but 30 years private corporate. Same, Same. You have them nailed down to the "T"!
When I was doing structural engineering, I would usually work on old/decrepit/in-need-of-repairs buildings, where you have to have more street smarts than engineering formulas. I would regularly ask the carpenters or masons or steel guys what they thought about certain problems that were not obvious to me. They were generally on site on a daily basis, whereas I, as the "suit" (who always wore beat-up jeans and work boots) would show up on an as-needed basis. Some of those guys, the age of my father, would at first defer to me (Well, I'm no engineer, but...) I would reply, "Who cares? You know more about this than me. Lets work it out together..." You should have seen the looks on their faces. They were actually being treated as the professionals they were. And you should have seen the elegant solutions to massively hard problems we came up with. Nobody went away feeling like crap. Everyone got to participate in a job well done.
That's how you solve problems. Ask the guys who actually know somethi ng, no matter how "lowly" they may seem. Sometimes, the guy on the street has a much better feel for the real world than the suits.
Economists are worthless if they have never set foot outside their ivory towers. Bloggers rule!
Yep when people lose the ego and attitude, and concentrate on the problem at hand, things get done so much better.
Some people have an innate sense of engineering principles and design without even knowing it. They can look at a system and just kinda visualize in abstact terms things like static and dynamic load, ultimate yeild etc., without even kowing what the terms are.
Consider the Viking shipbuilders. Highly advanced by any standards given the materials to work with. No CAD/CAM and as far as I know Vikings didnt have twelve years to spare at some midieval doctorate program.
One of the trickiest aspects of Engineering is to realise when your view of the system is incorrect. You're trying to fix a faulty system, you have knowledge of the system, you draw conclusions about the nature of the fault, and what to do about it.
But your conclusions don't match the reality in front of you. The "fault" doesn't make sense.
It dawns on you that the "fault" is in your assumptions. You're assuming something that is valid, and it's not. But it's hard to see because you look at the world through those assumptions, and to see those assumptions themselves takes a certain kind of awareness.
Talented engineers have that awareness and can shift mental gears when the situation calls for it. Unlike economists in the Fed.
Excellent point. Been there done that. All technical people reach the point where they are stuck. They must be right, they reason, because if a is true and b is true then c must be true and therefore the part they replaced just HAD to have been the problem, yet the same symptoms persist. We all get there phd or not and heres where the eventual true experts seperate from the guys whose expertise evolves into creative excuses.
The guys who have the big ego, they will assume therefore the new part must be bad too, or OK, maybe it wasnt the root cause but it needed replacing anyway, or the good ol shotgun excuse where replacing the part was necessary as part of the troubleshooting process due to time constraints etc.
The more humble guys who eventually become the "go-to" experts admit they just wasted time and a perfectly good part, but they will press on and later look back at their thinking to see what went wrong so as to avoid the same pitfall.
90 percent of the time, when your wrong, its not the logical premise that fails,but the execution of the process. the problem was a wasnt REALLY true or b wasnt REALLY true, often as a result of a careless simple correctable oversight. A+B =C all day long, the whole trick is making damn sure A and B were really what you concluded them to be to begin with.
You worked for 2 hours thinking something was a given or checked out to be true when it REALLY wasnt. The conclusion was doomed (except for blind luck) way back when you concluded some other part was ruled out or whatever when it really wasnt.
Thats not being dumb, your hypothesis and logical approach were great, you just failed to doublecheck check everthing twice over before proceeding to the next step.
Oftentimes the inept guys just dont get this even though they are just as intelligent as everyone else; they work for years only a minor adjustment of their thinking away from realizing their potential, but as long as they can get by with the status quo, their own ego works against them and their firm.
My experience is that techs like to think all engineers are idiots and engineers like to think techs are idiots.
The reality imo, is that the indiduals personality is 90 percent of the equation, Theres absolutely nothing wrong with degrees or training, the more the merrier, and just because a guy has a phd dosent mean he cant work with his hands or that a good tech cant solve complex equations.
Its the egomaniacs that give many brilliant Phd holders a bad name.
I dont recall Eienstien ever feeling the need to publish a paper basically underscoring how brilliant he was and how dumb the average physics professor was.
Only a lazy fed employee with nothing better to do than come up with research supporting the endless printing of money, would have the time and arrogance to remind the little people out there paying his bloated salary that they should just stick to doing whatever it is the non doctors like to do and not to criticise what they cant possibly understand.
Nevermind the fed failures, he seems to say,you wouldnt understand because its too complex. He compares what he does to a real doctor!
The Fed has the luxury of simply making a bunch of excuses with their mistakes, and keep thir jobs solely due to cronyism.
A real doctor makes life and death decisions and is held accountable.
The cant tell the jury "you cant find malpractice because the body is too complex for you to grasp"
As an electrical engineer, I couldn't agree more about everything you wrote about engineers and techs. I've seen the same thing over and over for 25 years. Techs and the system operators have saved me mountains of time and aggravation over the years and just being a decent person and giving folks credit where credit is due made a great working environment. What comes around, goes around ... always.
That would be a tough one on jabba the hut...eh...I mean Larry Summers.
+10 Good one. ;-)
Distraction Distraction Distraction!!
When Muhammad Ali used to proclaim "I am the greatest," he was stating a fact. He had proved his greatness for anyone to see
When the Fed dismisses, with condescension, warnings that a GFC is coming (Rajan and Roubini); when the Fed dismisses, with contempt and naked power plays, warnings about OTC derivatives and the need to regulate them (Brooksley Born); what is the Fed showing for anyone to see?
That they are fuck-ups, and captive to Wall Street.
Dr. Doom provided the invaluable service of plausible deniability for the federal reserve that not all their economists are corrupt propagandists for the fiat money power. Now roubini proclaims that gold is not a good investment because you can't eat it. His new found credibility is being used now as all good fed propandists must do to remain in their good graces.
I correct you, it is Dr. Muhammad Ali. He got a Phd is ass-whuppin.
Here's a parallel example:
http://acrossthestreetnet.wordpress.com/2010/06/23/how-to-stop-the-leak-magnetic-junk-shot/
Name the issue, with the exception of societal distractions (Michael Jackson, Madonna yada yada), the alternative media and in particular, the blogs offer far more information, investigative journalism and expertise by orders of magnitude than the stooges of the controlled media.
If you write otherwise, you are likely a paid stooge of the controlled media.
I have a Ph.D. in economics, and from a far better program than Iowa. I agree with the author's general premise that (macro)economics is hard, but his particular conclusions make me seethe. The tremendous breadth of perspective required is what makes macro "hard"; someone so narrow-minded as to not appreciate this fact has no business working at the Fed. I realize that the opinions expressed in his article do not represent the views of the FRB Richmond blah blah blah, but they still reflect very poorly on that institution. If anyone knows to whom I should write to get this guy canned please let me know.
As an engineer I can tell you exactly where most of the idiot sticks that couldn't hack BASIC first year engineering ended up because their mummy's and daddy's weren't there to do their homework for them like high school.
...Business/Econ...it's a degree in moron math with a dash of justification half based on the optics of a 22 year old on how the world works. My favorite thing is when magical thinking adds itself into the mix is the form of pseudo psych/soc/econ PhD's.
For 25 years I've listened to Economists state the obvious, usually around ten years too late. Could be one of the reasons I've never met a successful economist business person that has built their own business from scratch. Although they do make good middle managers in groups where you don't want anything but the norm done.
If you were serious about costs and economics you would have become an Actuarial Math Science geek. Now THOSE guys can predict the future and they make some seriously deep coin. If you are one of the few that can hack it that is. Out of all the math on the planet it is THE most difficult and the rarest because it's what holds up the basis of what you and I are allowed to do on a daily basis.
So other than extended primary school math, how's life?
"My favorite thing is when magical thinking adds itself into the mix is the form of pseudo psych/soc/econ PhD's."
Show off.
Any engineer worth their salt would have negotiated the price of the X before placing it on the broken part.
Two thumbs up and a very wide grin ;-)
Two thumbs up post.
The tremendous breadth of perspective required is what makes macro "hard"
+ very large number
I only have a master's, but I've been studying markets and economics since I was literally 8 years old. When I was younger, I would read something new, and thought "This guy's nailed it!". Then, the more I read, the more I realized, everybody is only, in Tom Wolfe's words, "hitting very large nails not exactly on the head". There's a lot to learn from everyone, even the ones who are wrong. To paraphrase Jefferson, I am "old man, but a young economist".
This FED idiot should get out in the world.
You just did. I promise you the FRB press office reads this site.
bk
This is a good post. I've been discussing this over the past two years with various people, as during that period, I have heard and read a number of interviews with present and past Fed Reserve governors who sound completely clueless and ignorant on a wide array of pertinent knowledge.
The most obvious, of course, has been Bernanke's complete lacking in knowledge of securitization and the lengthy history of securitization in the USA.
http://www.richmondfed.org/about_us/who_we_are/president_jeff_lacker/index.cfm
Does having a phD mean you can't Google?
No, smartass, it means I was shooting this off before running out the door with my two kids. And in any event, I need a direct email address, not a link to the "contact us" form to his assistants.
Where are your kids taking you? Have they discussed options in the event you get separated from them? Is it really safe to leave the house?
+100
My thought is his kids are taking him to one of those upscale retirement farms out in the country, and awaiting their inheritance.
That was one funny reply Canucklehead. Well done.
Sounds like Mr. Athreya is angling for a Fed job...
It was the bloggers that ruined the world economy, not central banks.
I resemble that comment. I blog because I want to see the world burn.
Incompetants will invariably point to their "qualifications." That's all they have.
They paid good fiat currency for them in the most expensive pile of bricks available. I honestly think buddy is a little worried that most people can do math and understand nothing from nothing still equals nothing regardless of the spin doctoring of keynesian philosophy.
I know for a fact that I would have absolutely no proble at all holding my record of anticipating booms and busts I the economic cycle over the lat ten years, and have .no problem displaying displaying said compariso publicly. That being said, I also know that I am nowhere near the brightest bulb in the pack once it comes to things economic. So, if this barely educated, lowly blogger from the wretched unwashed masses can run circles around the fed, just imagine what someone could accomplish if they really knew what they were doing.
See http://boombustblog.com/reggie-middleton/2008/10/08/the-great-global-mac...
A formal education in a subject matter does not make one an expert in the subject. Given that friedmanite theories (among other 'schools of thought' no doubt approved by the fiat fed types) started infiltrating schools of economics in the 50's, given the evidence of todays economic and monetary crisis, a logical hypothesis could be formulated that most of those educated in 'the system' may have been brainwashed with faulty theories for the past 50 to 60 years.
Problem is, some of them know what they are doing and it isn't in our interest.
RM, without a doubt, your blog has been a stopping point for many who want to analyze and hear the real news that the Fed and the Bubblevisions do not want you to know about. It's a shame that the Fed has staff members like this but it does reflect the arrogant academic mentality that our central bank is filled with. Too bad too few of the members have actually created a business or done anything with regards to contact with a bank beyond opening an account or using their ATM card.
Tks R, Can you believe this one? It is like they teed it up for us to hit.
b
Bruce K., Thanks for the post!
And Reggie, thanks for access to your analysis through this “Interesting” time.
Standard statistics applies only to random independent events. And we do know that even a learned economic light like Merton (who we haven’t heard much from lately) did not understand what he was asserting 15 years ago. Man is a communicating, herding animal with a very complex, organic, occasionally dysfunctional (literally) jelly computer for brains. We can say for sure that man is a rationalizing animal but must resort to collections of hypotheses like Freudian Theory to rationalize little bits of why he does what he does.
One of my life’s observations is that people TEND to become tools of their tools.
Dr. Kartik Athreya has, no doubt, worked very hard to excel academically, eventually getting his PhD and now, is very proud of his job with the Federal Reserve of the United States of America. Sounds like his insecurity is talking. Hopefully, he will modify his views as he gets older, but for now he belongs on “Ignore” which is where I will predict responsible members of the FED will put him.
Thanks again.
We haven't heard much from Robert Merton recently because, unless I'm utterly misinformed, he's...uh...dead.
Something tells me you are on to something here, like it's all a big distraction so we don't notice what the other hand is doing.
The Fed's economists are infallible. That's why they were so out in front of the housing bubble, and the credit bubble, and warned us all that the bottom was about to fall out whilst all the bloggers were fat, dumb, happy and oblivious. Right?