Clifford Winston: “Academic Toadies Impair Government Performance”

From The Regulatory Review, Clifford Winston:

The Trump Administration’s hiring of academics who compromise disciplinary standards threatens effective governance.

The impending appointments by President Donald J. Trump of a new chair of the Board of Governors of the Federal Reserve System and commissioner of the Bureau of Labor Statistics threaten government performance by academic toadyism. In the interest of being close to power, either by taking a formal position in government or by advocating on behalf of an administration, academic toadies eschew the process of carefully applying the findings of precisely formulated and tested hypotheses to recommend policies that improve people’s lives. Instead, they provide unfailing support for the President’s policies even if they are harmful.

Many academics aligned with both political parties have distinguished their discipline by serving in government and providing policymakers with valuable advice. The potential harm to the public caused by academic toadies, however, has recently grown because President Trump hires only people who agree with him unconditionally and will fire anyone who he discovers disagrees with him. Thus, it is possible that President Trump’s choice of Federal Reserve chair will act on the President’s uninformed and impulsive views of the U.S. and global economy without questioning their veracity. E.J. Antoni, who holds a PhD from Northern Illinois University, is currently the chief economist at The Heritage Foundation and has just been nominated by President Trump to head the Bureau of Labor Statistics. Antoni’s unsubstantiated criticism of the Bureau as needing to “rebuild the trust that has been lost over the last several years” confirms that he checks the right boxes.

Academic departments must alert their students to this potential problem and encourage them not to become academic toadies. I am not advocating that academics who work for the Trump Administration should be automatically cancelled. I am advocating that academic departments urge their students who eventually engage with government policymakers to understand that they have a responsibility to maintain the scientific values and standards of their academic discipline.

Because law is intertwined with public policy, the nation’s law schools are a natural home from which academics go into or serve as advocates for a presidential administration. Consider toadyism by Alan Dershowitz, an emeritus professor at Harvard Law School. Dershowitz was an advocate for President Trump at his impeachment trial where the President was charged by the U.S. House of Representatives for abuse of power based on offering inappropriate quid pro quos to a foreign nation to improve his re-election chances. Dershowitz justified President Trump’s behavior because President Trump believed that his re-election was in the public interest; thus, because President Trump did something that he believed would help him get elected in the public interest, the quid pro quo was not an impeachable offense.

Dershowitz assumes that the public has revealed a preference to re-elect President Trump, and he then works backward to conclude that President Trump’s behavior must have been in the public interest. As an academic, Dershowitz knows that he should state and justify this and all of his assumptions explicitly. If Dershowitz did so, it would be clear that this assumption was false because preferences, especially those by the public in the voting booth, only are revealed ex-post, and not necessarily known ex-ante. Indeed, as an empirical matter, Dershowitz’s assumption was false because the public rejected Trump’s reelection in 2020.

Dershowitz might respond that he was defending a client in the interest of defending the U.S. Constitution. However, he was not paid for his representation and could not claim that he had a lawyer’s ethical obligation to advance the best argument for his paying client, unimpaired by academic considerations. Thus, he should not have ignored academic considerations and made a more credible scholarly argument. Dershowitz, however, was paid for his role in representing some of his clients who were seeking a grant of clemency from President Trump.

Following her support for overturning Roe v. Wade, U.S. Supreme Court Justice Amy Coney Barrett, a former professor at Notre Dame Law Schoolsaid at an event at the University of Louisville’s McConnell Center that her goal was to convince the audience that the court is not “comprised of a bunch of partisan hacks.” Justice Barrett was unconvincing because she avoided a legal academic’s responsibility to come to terms with the powerful indictment by Richard Posner, a prominent former appellate judge, that because justices do not share a commitment to a logical premise for making decisions—for example, cost–benefit analysis—they must be ideological because they cannot be anything else. In addition, she ignored the scholarly empirical evidence showing that justices have repeatedly made ideologically based rulings that reflect significant polarity within the court.

Justice Barrett’s defense against toadyism is that she adheres to an originalist interpretation of the Constitution, which again is unconvincing because there is no original constitutional meaning to discover in many cases. Using an originalist approach in other cases would lead to abhorrent results, such as not providing constitutional protection against race-based and sexual discrimination.

Of course, Justice Barrett is now a judge—no longer an academic—and was an originalist as an academic. In other words, she is now parlaying her weak academic arguments to often support President Trump in vital matters before the Court. She has become an academic toady because she has little commitment to distinguishing the legal profession’s excellence.

Academic economists who have previously served on the Council of Economic Advisers (CEA) have identified helping to weed out atrocious policies proffered by an administration as one of their most important and most successful responsibilities. Implementing a set of tariffs on goods from countries across the globe is one of those atrocious policies that serious academic economists do not support. Any economist who attempts to do so would find it difficult to draw on sound theoretical and empirical arguments to justify their support.

President Trump, however, has succeeded in attracting academic toadies who are willing to support his global tariff policy despite its weak theoretical and empirical justification. Peter Navarro, a former professor of economics and public policy at the University of California, Irvine, who has served in trade-related positions in both Trump Administrations, has zealously supported President Trump’s tariffs, going as far as saying that tariffs are tax cuts when the consensus among economists is that tariffs are a tax on imported goods, which is largely passed on to consumers in higher prices.

Both Kevin Hassett, a former Columbia Business School professor who is the current director of the National Economic Council, and Stephen Miran, a Harvard University PhD who was nominated to join the Federal Reserve, also support tariffs. Former CEA Chairmen Greg Mankiw and Jason Furman have soundly rebutted Hassett’s and Miran’s intellectual basis for their support.

Engaging with government policymakers is not like engaging with academic colleagues at the frontiers of knowledge. Because policymakers are far from the frontiers, basic economic concepts, such as opportunity cost, cost-benefit analysis, and externalities, can go a long way toward improving public policy if given serious consideration. Other academic disciplines also contribute valuable concepts to guide policy improvements.

Government performance in President Trump’s second term will be harmed by toadyism that ignores academic expertise because it conflicts with the President’s instincts. Academic departments should enlighten their students about this disturbing development, so they make it more difficult for future presidential administrations to find academic toadies.

 

 

5 thoughts on “Clifford Winston: “Academic Toadies Impair Government Performance”

  1. Macroduck

    Calling toadies toadies – not what we generally see these days. Good for Winston.

    Off topic – Japanese PM Ishiba is stepping down. Elections likely in about a month.

    1. Macroduck

      Both Japan and France are facing near-term elections because of public disapproval of the current government. Neither announcement is a surprise. Both countries are close allies to the U.S. in its post-WWII geopolitical stance. With the felon and the drunkard changing that stance, both France and Japan need to reorient their defense and foreign policy strategies while domestic politics are shakey. Starmer and Scholz are slightly better off, but also face a divided public and a less secure world. The U.S. defense umbrella is a foundational assumption in the politics and policies of all of our allies – and adversaries. We are living through a global regime change, and some of the people driving that change don’t know, or much care, what they’re doing. It’s “transactional”, dontcha know.

  2. B.A Badger

    know about Dr. Winston from his book, “First Thing We do, Let’s Deregulate All the Lawyers.” As an old lawyer, I liked the proposition. However, the economic analysis started from a false premises. He claimed the legal profession was a monopoly. It is not. It is an oligopoly. I learned at the UW that the analysis of the effects, although similar are very different (especially with a large number of suppliers). His analysis for the legal profession could equally apply to the medical profession. I think Sec. Kennedy is doing that now. Folks on this blog do not seem happy about letting the least common denominator people ruin human lives.

    In this piece, Dr. Winston displays his ignorance in claiming Dershowitz cannot justify his defense of Trump due to his duty to zealously advocate for his client. He basis that statement on the fact that Trump did not pay Dershowitz. The duties arising from the attorney-client relationship exist regardless of payment. Dershowitz is renowned for his Constitutional scholarship. I may not agree with all his legal conclusions, but he is a recognized scholar. And, as an advocate Dershowitz was under no duty to state his assumptions and justify his assumptions explicitly (as he asserts an academic must.) In 37 years of practice, I have never told a jury (nor a deciding judge) what my assumptions were nor justify them. That is not how advocates practice. It is not even advocacy

    Dr. Winston failed to follow his own rule (stating and defending his assumptions) in attacking Justice Barrett. I do not agree with originalism, but it is an accepted school of thought among legal academics. Impeaching her with Judge Posner is ludicrous. Richard Posner’s article was derided by judges and professors alike as espousing an unethical method of reaching a judicial decision. He did not believe that the actual laws, rather than his normative opinions, mattered much. (Nietzche’s Ubemensch comes to mind)

    I am well aware that my BA in Economics does not qualify me to argue with empirical economists. I believe that having a Ph.D. in microeconomics and studying the market for legal services does not qualify Dr. Winston to critique the jurisprudence of those who studied the topic. Every citizen is entitled to opine on whether they like what public figure has said or done. But, calling these folks “TOADIES” is worthy of the felon-in-chief, but not someone who claims the academic highground. When I teach law students, or lawyers, I will ignore Dr. Winston’s well meaning but misinformed advice.

  3. Macroduck

    Way off topic, and a little obscure – lending to nonbank financial institutions:

    We know that bad lending practices, inadequate regulation and morally hazardous behavior created the conditions for the Great Recession. We know that financial-market denizens routinely circumvent regulation, with the result that financial activity has migrated away from banks to nonbank financial institutions.

    Back in May, Fitch took note:

    https://www.fitchratings.com/research/non-bank-financial-institutions/us-bank-lending-to-non-banks-continues-to-outpace-all-other-types-15-05-2025

    Fitch is focused on bank lending to nonbank financial institutions. Here’s a picture comparing total bank loans and leases to loans to nonbank financial institutions:

    https://fred.stlouisfed.org/graph/?g=1MaRD

    Loans to NBFIs amount to 10% of all commercial bank loans and leases as of Q2 of this year,  up from 6% in Q1 2020 and 4.5% in 2015. Prior to 2015, no reporting was required.

    There is another older source of credit to nonbank financial institutions that is much larger – money market funds. Money market assets were equal to about 46% of bank loans and leases in Q1 of 1990 and 2000, 47% in Q1 of 2020, vs 58% in Q1 of this year. Here’s the picture:

    https://fred.stlouisfed.org/graph/?g=1MaR0

    Taken together, bank and money fund lending to NBFIs is equal to about 68% of commercial bank lending.

    About 40% of money market fund lending is to broker-dealers, lightly regulated and not federally insured. Smaller, but still significant amounts go to private equity and private credit. That’s credit from finance to finance, much as bank lending to NBFIs is credit to finance rather than directly to productive activity.

    Why bother thinking about this? Because we’re on recession watch. Lending from government-insured and more-regulated financial institutions to uninsured and less regulated financial institutions represents a rise in systemic financial risk just as payment and risk-off shocks to the financial system seem likely. As the FT puts it:


    Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour.
    https://www.ft.com/content/8da75eba-bf80-4d31-ba49-1a4133e390c0

    Borrowers that source funding from private credit funds and direct lenders are typically riskier and more levered. As some of these loans are made with money borrowed from banks, there are concerns that bad credit could bleed through to the broader financial system.”

    https://www.ft.com/content/8da75eba-bf80-4d31-ba49-1a4133e390c0

    By the way, C&I loans, the kind of lending that funds real economic production, were most recently up slightly less than 4% y/y; that’s slower than the rate of nominal GDP growth, at 4.6% y/y. Bank lending might be a drag on growth, were it not for the fact that nonbank credit is so widely available.  Meanwhile, bank lending to nonbank financial institutions is up 20% y/y.

    By the way, increased reporting on bank lending to NBFIs was being implemented in the last half of the Biden administration. I can’t find any mention of it since then.

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