Romney's Confused and Crony Economist

Charles Ferguson writes:

[Top Romney economic adviser Glenn] Hubbard also co-authored an article with [current New York Federal Reserve president] William Dudley, then the chief economist of Goldman Sachs, entitled "How Capital Markets Enhance Economic Performance and Job Creation." It was published by the Goldman Sachs Global Markets Institute in 2004, just as the housing bubble was getting seriously crazy. In my filmed interview, here's how Hubbard described the article:

INTERVIEWER: In 2004 you co-wrote a paper with William Dudley, who was then the chief economist of Goldman Sachs. What do you think about the arguments you made in that paper?

GLENN HUBBARD: As I recall that paper, the arguments were basically to the effect that healthy capital markets are important for the economy, views that I held before and certainly hold after.

Well, here's what that paper really said. Hubbard wrote that "The ascendancy of the U.S. capital markets" had yielded "enhanced stability of the U.S. banking system... more jobs and higher wages... less frequent and milder [recessions}... a revolution in housing finance." Later in the article: "The capital markets have helped make the housing market less volatile... " Next, "Credit crunches... are a thing of the past... " and my personal favorite, "The revolution in housing finance has also... been important in making the economy less cyclical." ...

 Hubbard refused to tell me whether he was paid to write that article; no payment is disclosed in the document itself, nor on Hubbard's CV. Which brings us to Mr. Hubbard's many, many disclosure problems and conflicts of interest. After the release of my film Inside Job, Columbia University was forced to establish disclosure requirements for the first time for its professors. At the time, Hubbard stated that he welcomed them. Well, it wasn't quite that way in our interview. Here are some selections, verbatim and unedited:

INTERVIEWER: Let me go back to your own personal business involvements. I'm looking at your résumé now, and I guess it looks to me as if the majority of your outside activities are consulting and directorship arrangements with the financial services industry. Would you not agree with that characterization?

GLENN HUBBARD: Not to my knowledge. I don't think my consulting clients are even on my C.V.

INTERVIEWER: Who are your consulting clients?

GLENN HUBBARD: I don't believe I have to discuss that with you. You have a few more minutes and the interview's over.

Slightly later:

INTERVIEWER: Okay. Who are you a director of?

GLENN HUBBARD: I don't believe I have to answer that question.

Well, actually, now that Columbia had adopted disclosure regulations, we now know at least something about Hubbard's income sources, and the overwhelming majority of them are in the financial sector. The HTML version his CV (which you can read here) does not fully disclose his activities, but if you click on the PDF version, you see more. And what you see is that at least two thirds of his literally dozens of consulting, advisory, and directorship arrangements over the last decade are with the financial sector -- MetLife, KKR, Goldman Sachs, Freddie Mac, JPMorgan Chase, Citigroup, the list goes on and on.

(Note: As regular readers of EPJ know, it was only Keynesians who failed to recognize the coming housing bubble. Austrian economists saw it coming quite clearly.-RW)