NYT vs Pirrong and Irwin: David Kocieniewski responds

By Felix Salmon
January 8, 2014
Here are my questions, along with Kocieniewski’s answer:

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At the end of December, I wrote about the non-scandal of Scott Irwin and Craig Pirrong, a response to a hit-piece in the NYT by David Kocieniewski. Later that week, Kocieniewski offered to answer questions about his article, so I provided some. Here are my questions, along with Kocieniewski’s answer:

Q: Concerning “Academics Who Defend Wall St. Reap Reward,” I would love Mr. Kocieniewski to respond to criticisms of his piece by myself, Craig Pirrong and others, including, but not limited to:

-Why does Mr. Kocieniewski believe that the money flowing to the University of Illinois business school is a reward for research by Scott Irwin, when Mr. Irwin doesn’t teach at the business school?

-Does Mr. Kocieniewski believe that Irwin has violated the A.E.A. code of ethics? If not, does he believe that the A.E.A. code of ethics doesn’t go far enough? What would he like it to say?

-Does Mr. Kocieniewski believe that Mr. Pirrong is anything other than a straight shooter when it comes to his own opinions? Does he believe that Mr. Pirrong’s opinions are shaped by the money he’s getting from consulting contracts?

-Mr. Kocieniewski says that “major financial companies have funded magazines and websites to promote academics with friendly points of view.” Which companies? Which magazines? Which websites?

-Would Mr. Kocieniewski agree with Mr. Pirrong that most of Mr. Pirrong’s consulting engagements “have been adverse to commodity traders and banks?”

-Mr. Kocieniewski says that Mr. Pirrong has written “a flurry of influential letters to federal agencies.” How many is a flurry?

More generally, does Mr. Kocieniewski believe that Mr. Irwin and Mr. Pirrong are especially worthy of being singled out in this article and in this manner? Or was this just a case of finding a couple of professors at public universities which could be FOIAed? — Felix Salmon, Reuters columnist, New York

A: Despite the disclosure requirements of the American Economic Association and the University of Houston, Mr. Pirrong did not release details of his paid consulting work with 11 different clients until The New York Times filed repeated requests under the Freedom of Information Act. Among the businesses paying him were the world’s largest commodities exchange, the Chicago Mercantile Exchange, and one of the largest commodity trading houses, Trafigura.

Mr. Pirrong was also a paid consultant of a Wall Street group, the International Swaps and Derivatives Association, which is funded by Goldman Sachs, Morgan Stanley and other major traders, at the time the association was quoting his research extensively in a lawsuit that for two years blocked attempts to regulate speculation.

Mr. Pirrong declined to answer questions about how much he was paid or the nature of some of his consulting work. The article nonetheless cited one instance in which his findings went against the interests of the Wall Street affiliated group that had funded his research.

Mr. Irwin, as the article notes, did report his financial ties in his disclosure form with the University of Illinois. In describing the Chicago Mercantile Exchange’s dealings with the University of Illinois, the article also pointed out that Mr. Irwin’s only direct request for money from the C.M.E. was denied.

Emails obtained under the Freedom of Information Act nonetheless show a close relationship between the exchange’s public relations and research departments and the university’s academics — helping Mr. Irwin get his opinion pieces placed in newspapers, trying to schedule him to testify at congressional hearings and, when that failed, using his research to shape its executives’ testimony.

The university development office was also involved in scheduling Mr. Irwin to speak at the C.M.E. at the same time its fund-raisers were soliciting donations from the exchange for the business school, the emails show. Last fall, the C.M.E. also named Mr. Irwin to its Agricultural Markets Advisory Council, the emails show. Mr. Irwin subsequently said that he, like other academics on the committee, is paid a $10,000 annual stipend.

Finally, while friends and colleagues of Mr. Pirrong and Mr. Irwin may complain that they are being singled out for scrutiny, public records show just the opposite. Since this debate began more than five years ago, there have been many media references to the financial ties of those who have argued that speculation is responsible for price increases — whether they were academics performing industry funded research or hedge fund managers whose holdings in autos and airlines would benefit from regulation that might reduce oil prices. By reporting where the financial interests of Mr. Pirrong, Mr. Irwin and the universities that employ them intersect with those of speculators, the article gives readers additional information that they may wish to consider when weighing the professors’ public statements. — David Kocieniewski

The failure of Kocieniewski to answer any of my specific questions more or less speaks for itself; I won’t belabor it, except to note the irony involved in him complaining about Pirrong doing the exact same thing.

I will push back against the “friends and colleagues” line, however: I, for one, am a friend of neither Pirrong nor Irwin. To my knowledge, I have never met either of them. And I don’t think that, say, Thomas Sowell has, either.

It’s also worth mulling over the idea that Kocieniewski’s article was merely designed to provide “additional information” for readers who might have noticed that the 21st paragraph of a Financial Times article in August 2011 drew a passing connection between an academic, Kenneth Singleton of Stanford, and the Air Transport Association of America. I’m sure that both of those readers appreciated the new light that Mr Kocieniewski shed on this issue from his platform on the front page of the NYT. Still, I can’t quite understand how public records could possibly demonstrate that Pirrong and Irwin were not being singled out for scrutiny, as Kocieniewski avers. After all, Kocieniewski himself was the person singling them out. It’s rather worrying that he now seems to deny that he was doing any such thing.

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