Money Management and the Economy

Tuesday, January 6, 2009

Is Lawrence Yun Really an Economist?

You aren't smarter than the market. It really is that simple.

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Update:

Here is an article about Yun's predecessor essentially admitting his job was "spin".
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Is Lawrence Yun, the Chief Economist for the National Association of Realtors, really an economist? No, I don't mean does he have a degree and training in economics. I assume that he does. The question is what services of an economist does the National Association of Realtors provide.

In case you haven't noticed Yun before, it seems every time there is an article about the housing market in the New York Times, Associated Press and other media, Yun appears with his usually rosy prognosis of the future of real estate. That is not surprising, given who he works for, but it is not really the job of an economist. Its the role of a PR flak who is delivering the message that suits his employers. I suspect the job title of "economist" is also a part of that message. Afterall, identifying himself as a "spokesperson" for the Realtors would alert people to the self-serving nature of the opinion he is providing.

Unfortunately, this is the nature of much of the economic information we get from the mainstream media. Economists are generally employed by institutions with an interest in certain economic behavior. Even those in the academic world work in departments whose success depends on contributions and grants from institutions with an interest in their work. Its not that economists or economic departments conciously slant their analysis to serve particular outcomes, but that those whose natural bias supports the wealthy are the ones that are successful.

In addition, like Mr. Yun, the people who seek out reporters tend to be the ones that have seeking out reporters as part of their job description. When you look at real estate, the average person who is facing foreclosure does not have many "economists" working for them. On the other hand there are literally thousands of people with economics and business degrees working for the other players in the mortgage meltdown. This is why Bear Stearns is a national problem requitring immediate intervention, but the thousands of people losing their homes is just the workings of the market place. This is why regulators step in immediately to help Bear Stearns with almost unanimous approval from economists, while congress will dither for months over finding the right political solution to the problems created by foreclosures for both individuals and communities.

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