
Professors Make More Than a Thousand Dollars an Hour Peddling Mega-Mergers - danso
https://www.propublica.org/article/these-professors-make-more-than-thousand-bucks-hour-peddling-mega-mergers
======
mikeyouse
Slightly off topic, but ProPublica does really great investigative work. They
recently took over many of the technical functions that The Sunlight
Foundation was going to shut down. They do important work on civil rights,
criminal justice reform, asset seizure, public corruption, corporate
corruption, etc.

If you have some spare cash, setting up a recurring monthly donation in any
amount really helps them operate and plan for the future. I've added a
subscription to the WaPo and recurring donations to ProPublica, ACLU, and The
Marshall Project. This work is too important to neglect.

~~~
aluminussoma
There are some stories they do that are really good. But as with all stories -
ProPublica or not - please understand there may be an implicit bias or agenda.

On a different matter involving trial lawyers and an industry group, they
reported a "scandal" where there was none. I am familiar with that issue (so I
have my own biases!). It was my opinion that they were repeating the trial
lawyer's argument and calling that an investigative journalism piece. Others
may disagree with my assessment. I do not want to link to that story here.

This is one reason why I choose not to financially support ProPublica.

EDIT: I'm getting sick of the downvotes on Hacker News. This is not reddit
where a downvote == disagree. Just don't upvote it. It's frustrating to take a
few minutes to write a comment and then watch it get nuked because it's
"controversial". But please feel free to downvote away because my off-topic
rant.

~~~
conistonwater
I downvoted you because you are repeating the tired old trope about implicit
biases and agendas. It's as if once we think we've identified someone's
agenda, we can tell whether they're telling the truth. But this is false: the
proper way is to assess the quality of reporting _first_ , and _if_ it is low-
quality, _then_ we can ask questions about how shoddy work got through, and
then the answer might be biases and agendas. If it's good reporting, then
biases and agendas are irrelevant. But in any case objective quality always
comes first.

~~~
dpc59
You can have objective high quality reporting and still be pushing an agenda.
It will show in what you choose to report and what issues you just don't talk
about.

~~~
mtgx
The alternative is neutrality, as in the old "we have to give 50-50 time to
both sides". So 50% to climate change activists and 50% to climate change
deniers, and so on. Is that really better than objective bias? I would think
it's not. NYTimes also (publicly) gave up on neutrality in 2012, I believe.

The real problem today is most media today (and I don't include ProPublica in
this) isn't even objective anymore. They're just biased, and engage in biased
activism, with little objectivity and facts in its way.

Glenn Greenwald did an interview on this issue recently, which I think is
worth watching for his perspective on this. Some may see Greenwald as
"biased", but I think he's not only less biased than most "journalists" or
pro-establishment figureheads on TV, but that more journalists should strive
to be like him:

[https://www.youtube.com/watch?v=WTC-
GvWRlQ8](https://www.youtube.com/watch?v=WTC-GvWRlQ8)

~~~
grzm
The 50/50 method is often referred to as "false balance".

[https://en.wikipedia.org/wiki/False_balance](https://en.wikipedia.org/wiki/False_balance)

I found the media bias article on Wikipedia to be a good primer on types of
bias to keep in mind while reading.

[https://en.wikipedia.org/wiki/Media_bias#Types](https://en.wikipedia.org/wiki/Media_bias#Types)

It's also been useful in identifying which types of bias people refer to when
they're talking about bias. I know I personally didn't have a system in place
to categorize these things, and generally thought of only a few of them at a
time.

------
arcanus
Most of economics is an intellectual veneer to justify politically motivated
policy actions. The 'science' is seldom predictive, nor does it even attempt
to be. It has more in common with augury.

This blurb, for instance, openly admits their expert opinions are for sale,

'Economists have an “incentive to get a reputation as someone who will make a
certain type of argument. People will hire you because they know what
testimony you will give,” said Robert Porter, an economist from Northwestern
who has never testified on behalf of a corporation in an antitrust matter.'

~~~
cheald
This theory would make a lot more sense if political tradewinds adhered a
little more closely to economic consensus.

Economists broadly want to eliminate the mortgage interest deduction,
corporate interest deductions, and reduce the corporate income tax, want
employers to stop providing health insurance as an employment benefit
([http://www.igmchicago.org/surveys/tax-
reform](http://www.igmchicago.org/surveys/tax-reform),
[http://www.igmchicago.org/surveys/healthcare](http://www.igmchicago.org/surveys/healthcare)),
and broadly disfavor rent control ([http://www.igmchicago.org/surveys/rent-
control](http://www.igmchicago.org/surveys/rent-control)). Yet before we go
off accusing economists of being right-wing shills, they also broadly want
carbon taxes over income taxes ([http://www.igmchicago.org/surveys/carbon-
taxes-ii](http://www.igmchicago.org/surveys/carbon-taxes-ii)) and favor open
immigration policies ([http://www.igmchicago.org/surveys/high-skilled-
immigrants](http://www.igmchicago.org/surveys/high-skilled-immigrants)).

None of these are particularly politically-fashionable positions to take, with
the possible exception of the CIT issue, which plays well with one half of the
electorate and is broadly viewed as liquid evil by the other half.

~~~
erostrate
Economists are in favor of carbon taxes because the alternative is
environmental regulation. They favor open immigration policies because it
brings flexibility to the job market. Leading to less job security for low
skill workers and more profits for multinational companies.

Economists are not intentionally supporting multinationals interests over
people's interests. They do so as a side effect of their belief in the
correctness and practical relevance of microeconomics and neo-classical
theories. This behaviour is in turn encouraged and rewarded by multinationals
and investment banks, leading dissenting voices to be marginalized. Of course
there are notable exceptions, Stiglitz, Krugman, Rodrik, and a few others. But
the general point is that if you want to get an economics PhD from a red brick
university you will have to support this viewpoint.

~~~
enoch_r
I would be very curious to know why this has happened to economists _alone_
\--out of all the liberal arts departments. Are sociologists, historians, and
political scientists immune to these influences? Or have the multinationals
just refrained from attempting to influence them? What explains the lack of
"multinational capture" among non-economist academics?

~~~
MaxfordAndSons
Well, the other liberal arts departments don't portend to not be liberal arts
departments. Economics sells itself as rigorous and predictive. And
"multinational capture" has occurred in myriad actual scientific fields, for
similar reasons (using the prestige of rigorous, academic work to convince
governments to do things).

There's also the matter of the "rational actor" theory of human behavior, the
a priori assumption of classical economics. It describes a being which is
basically non-existent among flesh and blood humans. But corporations can form
themselves in the image of this mythical economically rational being. And so,
if classical economics does objectively describes the world, corporations are
the uber-mensches of such a world and poised to dominate it in perpetuity - a
clear incentive to capture and control the field, lest dissident economists
succeed in espousing a revision of their core assumptions.

~~~
snrplfth
The "rational actor" is just a model, only applicable to limited situations,
and acknowledged to be so. It's a specifiable model against which to test
hypothoses. This rather shopworn critique - "humans aren't like idealized
rational actors!" \- is based on the implication that classical-type
economists think that the model is _fully congruent with reality_. They don't!
And furthermore, they wouldn't agree that "corporations" (hey, why not
unincorporated entities too?) can form themselves in this way. They recognize
the limitations of information, incomplete knowledge of preferences, and
limited foresight and prediction - and these apply no less to groups of people
as they do to individuals. If you tried to suggest in a classical-school
economics environment that corporations _can actually, in real life,_ form
themselves into idealized rational actors, you'd probably give them gut-
busting laughing fits.

------
jazzyk
The sad fact is that academics these days occupy themselves with chasing money
and power, not science (at least the ones in "elite" schools).

Check out the movie "Inside Job":

\- Glenn Hubbard (the Dean of Columbia University School of Business). His
work for Countrywide Financial for $1200/hr, attesting that the lender's loans
were no worse than a control group of mortgages and not fraudulent, was
examined by an attorney for MBIA. MBIA was suing Countrywide over its mortgage
practices.

[https://en.wikipedia.org/wiki/Glenn_Hubbard_(economist)](https://en.wikipedia.org/wiki/Glenn_Hubbard_\(economist\))

\- Frederic Mishkin, who, according to the Wall Street Journal, was paid
almost $135,000 by the Icelandic Chamber of Commerce in 2006 to author a
report that praised the stability of Iceland's economy and banking system—two
years before they collapsed.

[https://en.wikipedia.org/wiki/Frederic_Mishkin](https://en.wikipedia.org/wiki/Frederic_Mishkin)

Most of the profs in "elite" business schools sit on boards of big companies
like GE, are members of Council on Foreign Affairs, etc.

Just sad.

~~~
beambot
Genuinely curious: You think business school profs serving on the boards of
big companies is "sad"? If I wanted to get an MBA, I would prefer to learn
from people who have actual real-world experience rather than studying with
someone whose experience was purely theoretical...

~~~
lallysingh
I think there's a valid concern about academic independence from industry.
Without a reputable source of independent research, we fall into gaslighting
pretty quickly.

~~~
yuhong
This also reminds me that I really wish the restrictions can be reduced or
removed so board of directors (like @pmarca) and CEOs can tweet more on public
companies, which is part of what I mean by "Yishan-style CEOs".

~~~
matthjensen
This would be great. Lifting the restrictions that keep insiders from publicly
disclosing information would likely improve market efficiency, reduce the
value of true insider trading, reduce the spoils that go to information
thiefs, and help to motivate and educate new entrepreneurs.

------
denzil_correa
The best way to handle this seems to be accountability. There needs to be a
reasonable way to hold companies to what they say. Currently, a company says
the effect would be X in 5 years. In 5 years, these effects should be studied
and if the variance is more than a reasonable standard - the merger should be
relooked at and appropriate recommendations should be taken.

The current system looks at merger decisions as a one time policy decision. It
should take it up as an iterative exercise.

~~~
oli5679
This is really interesting. One solution would be social norms expressing
scepticism towards pundits that made bold claims without publicly placing a
large bet corresponding to the position.

------
viridian
This seems like a problem that appears everywhere in science, not just in the
case of economics. There is a known phenomena of science results agreeing with
the organizations that fund the science, and this seems to be an extension to
that.

Is there any good way to solve it that won't result in less valid science work
getting funded?

~~~
harrumph
>Is there any good way to solve it that won't result in less valid science
work getting funded?

Bona fide science has peer review and falsifiability. Also imperfect, but
nowhere nearly as commonly manipulated as is economics for hire by business
interests and their think tanks.

In fact, this seems like a good time to mention the only Senator I've ever
seen in decades of observing politics who actively attacks this problem is
Elizabeth Warren.

[https://www.washingtonpost.com/politics/how-elizabeth-
warren...](https://www.washingtonpost.com/politics/how-elizabeth-warren-
picked-a-fight-with-brookings--and-
won/2015/09/29/bfe45276-66c7-11e5-9ef3-fde182507eac_story.html)

------
matthjensen
This article is focussed on anti-trust regulation, but the problems it
addresses are much broader.

Every spending and tax law, for example, is scored by the Congressional Budget
Office/Joint Committee on Taxation to determine the budgetary impact.
Economists are hired to lobby these organizations about the "right" way to
score policy, and then the organizations might or might not adjust their
methodologies. Sometimes Congress can place pressure on the scoring
organizations, too.

This would all be fine, except that neither the economic methodologies nor the
data are publicly available. Sure, the big picture methodology is disclosed,
but not the key assumptions.

If the economic methodologies were disclosed in full, I'd be all for outsiders
suggesting ways to improve the methods. Then a scientific discussion could be
carried out in public, and I think it would be obvious to anyone observing the
process that the JCT or CBO economists are trying to do the best job that they
can.

One step towards disclosing methods is through documentation, but given the
importance of detail in the types of analyses that JCT and CBO do,
supplemental documentation is unlikely to be sufficient. Instead, the
organizations need to make their analytical code available. In other words,
CBO and JCT should make their code available to the public and take outside
suggestions for improvements. They should be open source!

Granted the data won't always be available to the public given that CBO and
JCT rely on administrative data that is highly private, but they can at least
produce dummy datasets and detailed summary statistics.

All of this same reasoning applies to the anti-trust situation. They ought to
open source their analyses as well.

[Disclaimer, I'm a contributor to a few open source models for public policy
analysis.]

------
aluminussoma
It's not just economists. I recall professors in other departments were
contacted for "consulting" work. General Electric offered one political
science professor a lucrative hourly rate (I think it was $650/hr) to consult
on a legal case for the Dabhol power plant. This was years ago, so surely the
fees have gotten larger. The professor turned it down for other reasons but
said it would have been "easy money".

~~~
jononor
Take the money, write the op. But before sending it off, offer the academic
you disagree with most fervently half, and ask her/him to write a counter-
opinion. Publish both.

~~~
delinka
And never get asked again.

~~~
JadeNB
> And never get asked again.

I understand that jononor's post
[https://news.ycombinator.com/item?id=12971712](https://news.ycombinator.com/item?id=12971712)
was describing the most intellectually honest, rather than most profitable,
approach; and in that capacity it's not clear, I think, that your objection is
really an objection.

~~~
delinka
Indeed it is not clear. ;-)

------
qwrusz
As someone who studied economics and works as an economist, I agree economics
today is full of bull$h^t and biased "experts" and politicking masquerading as
legit social science work, I see it daily. And it goes on in mainstream and
heterodox economics, in industry and in academia.

(I'd preferred to call my job something like " _statistician focused on
economics and finance_ " \- not economist, but it didn't fit on the business
card)

I just wanted to point out $1000 an hour pay is a quite common amount paid to
any/all professions when law firms needs an outside expert opinion for a case.

This $ is not unique to company merger cases nor economists.

e.g. if a lawsuit needs a medical expert or engineering expert it's likely
they are getting paid ~$1000 an hour for this time. And I don't doubt the
clients are being billed way more than that - $1000 is just the expert's cut.

Not defending anything, just pointing out this amount is what law firms
commonly pay for outside "professional expert" opinion work.

------
calcsam
One of my favorite econ professors at Stanford got an inquiry from a big oil
company.

They wanted her to do some consulting for them, relevant to mergers,
acquisitions and the result on oil prices.

She wanted to politely tell them no. So she quoted triple her normal hourly
rate, already hundreds of $ per hour.

They said "sure" \-- so she had to tell them no the old-fashioned way :)

------
tankenmate
« They debated who had the better case. Carlton conceded that AT&T and
T-Mobile would have found it hard to win at trial, according to an attendee.
But he wished it had gone to court. He was eager to try out a new and
provocative argument for mergers: That even though prices would have risen for
customers, the companies would have achieved large cost savings. The gain for
AT&T shareholders, he contended, would have justified the merger, even if cell
phone customers lost out. »

According to this, obviously hearsay, Carlton truly wanted to argue that a
merger was beneficial because shareholders won even though customers lost;
this boggles the mind because the major intent of anit-trust law is to protect
customers!

------
ada1981
Curious if there is a way to force these companies to place bets on the
predictions that they make. They say that a merger is going to do XYZ -- well,
with what degree of certainty? And are you willing to take a position tied to
the outcome? Because as it stands, they can make an argument it will help with
consumer choice -- but that isn't the driver, it's about profits. So if the
idea is to protect the consumer or benefit them, make a prediction about that
and then take a position where you will get an additional payoff if you are
right. If you are wrong, you'll be "fined" by having to cover the bet.

------
iamleppert
Dennis Carlton is as crooked as they come. Smart for sure, selfish of course.
He has a legion of poorly paid graduate students publishing his junk science
and manipulating data from flawed studies to say whatever it is he likes.

And at the end of the day, what makes you smart does not mean you're
intelligent. Just because you can master a discipline to achieve your goal of
extreme wealth accumulation is unimpressive. I feel that some day when money
does not matter, rich people who actually created very little value (and may
have even been a net negative) will be looked on as one of the great evils of
society.

------
beambot
I guarantee the lawyers are making way more than $1000 per hour... so why
vilify the professors?

~~~
notgood
Lawyers from the very first day in law school are _intended_ to serve their
clients (guilty or not); in the other hand professors -and educators in
general- are supposed to be a lighthouse for knowledge, not another source of
bad science due being paid.

~~~
beambot
In this context, calling professors "educators" is like calling lawyers
"paralegals." Professors are _academics_. They are being paid for their
professional, informed _opinions_ based on knowledge and years of study. This
is the same as lawyers sharing their _legal opinions_ based on educational
background (knowledge of the law) and real-world experience.

Also: In mergers, there is no "guilty or not". There is contract law, risk
mitigation, strategy, and negotiation. Lawyers do so much more than simply
saying what is "legal or illegal."

------
1024core
I don't understand. Why doesn't some academic analyse these professors' claims
and show that they're bunkum, as the article claims?

~~~
cerrelio
Then that academic can make a company out of it, and charge $2000/hr. :)

The issue is academics cashing in on their research. I think this is fine in
general. Having been through grad school I've worked with professors who I
felt placed their entrepreneurial endeavors ahead of their educational
requirements. This is an ugly practice. Ethical standards need to be in place
to address this. If you're primarily conducting business using your academic
credentials, then relinquish your chair to someone else, and take up some
"fluff" title and pay your grad students out of your own kitty. Also, pay the
university for the non-human resources you use, because it's like you're a
hairstylist renting a chair in a salon to obtain and service clients.

I think this is primarily the reason why there's a generation of postdocs
sitting on the sidelines waiting for a full professorship. They eventually get
bored (and hungry) and move into the private sector, robbing academia of fresh
blood and new ideas. So a de facto privatization of research emerges. We all
lose when this gets out of hand.

~~~
JadeNB
> If you're primarily conducting business using your academic credentials,
> then relinquish your chair to someone else, and take up some "fluff" title
> and pay your grad students out of your own kitty.

This may be fair to ask of the professor, but it is perhaps reasonable to
consider whether it is fair to ask of his or her graduate students (who are
probably not to be blamed for their advisors' extracurricular habits). I work
in math, where corporate sponsorship is (generally) not an issue, and so my
opinion may be skewed; but it seems to me that a graduate student of someone
with a 'fluff' title might be perceived less seriously than a graduate student
of someone with a grander academic title, and so suffer even if his or her
work is sterling. (On the other hand, perhaps driving students away from
working with corporate consultants is a desireable side effect …?)

------
mathattack
While in school I went to an event hosted at the home of an Econ professor who
worked on the Microsoft trial. It was lakefront property in a very posh
suburb. We called it "The house that Bill Gates built."

------
confounded
See also, Google's anti-competition monopoly-shill joining the Trump team

[https://theintercept.com/2016/11/15/google-gets-a-seat-on-
th...](https://theintercept.com/2016/11/15/google-gets-a-seat-on-the-trump-
transition-team/)

------
mtw
It is possible mega-mergers make sense economically. However economists do not
take into account individual ambition. A chairman or a CEO might say
satisfying words for a merger, but with real plans to increase prices due to
increased market share

------
jccalhoun
I'm an adjunct instructor. I'll do it for half that.

------
vasaulys
I never knew you could get a job writing automation scripts. That's pretty
cool.

------
gaius
The is why The People are sick of "experts".

