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Ostensibly Respectable Academic Is In Fact A Hack: it's a hardy perennial, and an enjoyable one at that. The best example is Inside Job, where big names like Ric Mishkin and Glenn Hubbard got their well-deserved comeuppance. And it's a genre I've indulged in myself: last year, for instance, I spent 4,500 words on a paper by Bob Litan, showing how he lies with numbers to arrive at his paymasters' predetermined conclusion.

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.

Let's start, for instance, with the one part of the article almost everybody will read: the big picture at the top of the article, showing the gleaming and extremely expensive University of Illinois business school. "The Chicago Mercantile Exchange has given more than $1.4 million to the University of Illinois since 2008," says the caption, "with most of the money going to the business school."

That number - a very big sum, which is more than enough to buy research from for-sale economists - gets repeated further down the article:

One of the most widely quoted defenders of speculation in agricultural markets, Mr. Irwin of the University of Illinois, Champaign-Urbana, consults for a business that serves hedge funds, investment banks and other commodities speculators, according to information received by The Times under the Freedom of Information Act. The business school at the University of Illinois has received more than a million dollars in donations from the Chicago Mercantile Exchange and several major commodities traders, to pay for scholarships and classes and to build a laboratory that resembles a trading floor at the commodities market.

Mr. Irwin, the University of Illinois and the Chicago exchange all say that his research is not related to the financial support.

This is carefully written to be as damning as possible. Yes, it makes perfect sense that the CME would fund a major business school right in its own backyard - and that it would fund activities related to its own business of commodities trading. But surely Kocieniewski is about to show us how the grants are linked in some way to Irwin's research: no NYT reporter would write such a thing unless he had reason to believe that there was some kind of quid pro quo, or that the grants to the business school were written in gratitude to Irwin.

Except, if you keep on reading to the point at which you're 2,500 words into the piece - and pretty much nobody reads that far - you'll find this:

While the C.M.E. has given more than $1.4 million to the University of Illinois since 2008, most has gone to the business school and none to the School of Agriculture and Consumer Economics, where Mr. Irwin teaches. And when Mr. Irwin asked the exchange's foundation for $25,000 several years ago to sponsor a website he runs to inform farmers about agricultural conditions and regulations, his request was denied.

This is real jaw-on-the-floor stuff. The NYT has published an article about how academics who write nice things about Wall Street "reap rewards", in the words of the headline - and its main illustration is donations to a business school where the academic in question doesn't even work! Anybody trying to hold academics to standards of intellectual honesty has to be intellectually honest themselves. And the fact is that there's zero reason to believe that there's any connection between the business-school donations and Irwin's research.

Or maybe Kocieniewski thinks that consulting contract is enough to demonstrate that all money in the general vicinity of Irwin is tainted by venality. Except, if you get to the very end of the article, you'll find out a bit more about what this consulting contract comprises:

Mr. Irwin also works for a business called Yieldcast that caters to agricultural producers, investments banks and other speculators, selling them predictions of corn and soybean yields. Mr. Irwin has said he does not consider it a conflict because he works only with the mathematical forecasting models and never consults with clients.

This is pretty blameless stuff. If you're a professor who puts together models of commodities prices, it's fine to consult for a company which puts together models of commodities prices. Shouldn't we be encouraging professors to work on real-world applications of their research, rather than implying that any such work is a dastardly conflict of interest?

Once you realize how much of an axe Kocieniewski is grinding, then the rest of his article rapidly starts to crumble. For starters, as Evan Soltas says, both of these men are "super-freshwater" academic economists, working at freshwater schools. (In econojargon, "freshwater" economics happens far from the coasts, and is generally laissez-faire and pretty right-wing; "saltwater" economics takes place in coastal universities and tends to be more Keynesian, interventionist, and leftist.) Neither is inclined to write anything which deviates from freshwater orthodoxy. Kocieniewski takes issue with these professors' defense of financial speculation - but that's a central tenet of freshwater economics, and "orthodox economist is orthodox" is never going to be much of a story.

What's more, there's clear evidence that Pirrong, in particular, does not simply churn out whatever his paymasters want him to write:

Commodity trading houses are not "too big to fail", says a report commissioned by the banking industry's top lobby group, which had hoped it would conclude the opposite.

That report was written by Pirrong, who is on the record as saying that the report was never officially published precisely because he refused to change its conclusions. (Kocieniewski quotes from Pirrong's post, but doesn't link to it.)

Indeed, you don't need to spend very much time reading Pirrong's excellent blog before you realize that he's one of those economists who will always speak his mind. Pirrong is not a grandee who can be counted on to deliver a certain conclusion if you pay him enough money: there are many economists out there who I consider to be in the "bought and paid for" camp, but Pirrong is absolutely not one of them.

So, what's going on here? Three things.

First, Kocieniewski has a bee in his bonnet about the effect of commodities speculation on commodities prices. He has not only convinced himself that speculative flows caused substantial increases in commodity prices; he has also seemingly convinced himself that anybody who disagrees with that position must be lying. So he's taken aim at Pirrong and Irwin, not because they have made a lot of money from the financial-services industry, and not because they're particularly conflicted, but just because they hold a position Kocieniewski doesn't like. As Peter Klein acerbically puts it, "if you oppose the Times's editorial position on regulation (or any other issue), you are compromised by financial or other ties. If you support the Times's position, you are a scholar or public figure of great integrity."

Secondly, Kocieniewski has picked on these two professors in particular because they both work at public universities, which can be FOIA'ed. Kocieniewski put in freedom-of-information requests for the two professors - requests that private universities like Harvard or Yale could happily ignore - and used the results as the basis for his story. Thanks, David - you've just made it even more difficult for public universities to attract top economic talent.

And finally, Kocieniewski seems to have bought into a much bigger conspiracy theory which he's looking to illustrate - a theory summed up in the NYT's "Professors as Pitchmen" subhed. It's a theme which runs through Kocieniewski's piece:

Underwriting researchers and academic institutions is one part of Wall Street's efforts to fend off regulation…

Major financial companies have also funded magazines and websites to promote academics with friendly points of view…

Financial firms have been able to use the resources and credibility of academia to shape the political debate.

The Chicago Mercantile Exchange and the University of Illinois at Champaign-Urbana, for example, at times blur the line between research and public relations.

The exchange's public relations staff has helped Mr. Irwin shop his pro-speculation essays to newspaper op-ed pages, according to emails reviewed by The Times. His studies, writings, videotaped speeches and interviews have been displayed on the exchange's website and its online magazine.

Kocieniewski's most explosive allegation, here - that major financial companies have paid magazines and websites to promote certain academics - is in desperate need of backing up: he needs to name the companies and the magazines in question, and explain exactly what he's talking about. Is he just referring to advertorial content, or sites like the Financialist which are clearly sponsored by financial institutions? Or is he saying that financial-services companies have found a way to pay for certain content to find its way into the editorial pages of certain magazines? That's certainly what he's implying.

Then again, when Kocieniewski starts babbling about "the line between research and public relations", the simplest explanation starts becoming clear: that he's just gone a little bit off the reservation. There is no "line between research and public relations"; rather, as every financial journalist knows, there is research, and then there is a small army of PR people who try to get journalists to write about that research. Those PR people might work for sell-side banks, or for the Federal Reserve system, or for private universities, or for public universities, or for non-profit think-tanks, or for-profit corporations - but in any event, their job is just to get certain pieces of research noticed. If the CME finds a piece of research that it likes, it makes perfect sense that it will feature that research on its website and tell journalists about it. No line is being crossed there.

There's no doubt that PR people can be infuriating at times, but Kocieniewski is taking this idea one step further: he's saying that if an academic agrees with a certain corporate point of view, and allows the company in question to promulgate that view, then the academic has thereby basically become that company's PR person.

Once you understand that deep assumption, then the rest of the article starts to make more sense. Kocieniewski sees Pirrong and Irwin as PR people for financial speculators, and feels that no PR people should ever receive the kind of respect that these two economists get, especially in Washington. If Kocieniewski presented that view in a blog post, maybe at Daily Kos or Zero Hedge, few people would bat an eyelid. It's a little on the overheated side, but I know a lot of people who would basically agree with it.

The problem is that Kocieniewski isn't presenting this view as opinion: instead, he's presenting it as a fact, unearthed by his diligent use of freedom-of-information requests. Even though those requests revealed nothing surprising whatsoever. What Kocieniewski calls Pirrong's "financial dealings with speculators", for instance, Pirrong himself has another term for: "litigation consulting". It makes sense that Pirrong would frequently be used as an expert witness: he explains things clearly, he's well respected, and he's entirely consistent in where he comes down on certain well-known questions. The causality here is abundantly clear: Pirrong's views caused the commodities firms to hire him as a witness, not the other way around.

In presenting Pirrong and Irwin as doing something deeply unethical, Kocieniewski is actually making sensible ethics reform much more difficult. The AEA code of ethics is an important document, which goes a long way towards addressing the conflicts in the financial-economics industry. But Irwin, for one, was clearly entirely in line with the code all along. (Pirrong, I think, should have been more forthcoming about the identity of the companies paying him substantial expert-witness fees.) If Kocieniewski can take a blameless professor and turn him into a poster child for graft, then it's easy to see how the rest of the academy might come to the conclusion that they were better off when everything was secret.

Source: The Non-Scandal Of Scott Irwin And Craig Pirrong