Ben Stein is a charming, successful actor and writer who graduated at the top of his class from Yale Law School. Based on two of his recent columns in the New York Times, he’s also an idiot.
Back in early December, you’ll recall, Ben lit up the blogosphere by smearing bearish Goldman Sachs economist Jan Hatzius, saying Hatzius was only bearish because he was shilling for the firm’s traders. (It couldn’t have been that both Hatzius and Goldman’s traders were just bearish and right.) As might have been predicted, the column was wildly popular with readers, who love to hear that Wall Street bigwigs are just puppeteers yanking on everyone else’s strings.
And this weekend, Ben continued his popular conspiracy series, saying, in effect, that the market’s only going down because “traders” and “short-sellers” are selling fear. Ben’s right that Wall Street pros love to “talk up their books”–see the parade of folks on CNBC every day–but the idea that the global market collapse of recent weeks is the result of a few big-mouthed short-sellers is ludicrous.
One of many problems with the thesis is that traders and investors who want the market to go up greatly outnumber traders who want it to go down, and traders who want the market to go up talk up their books all day long, too. rumours, spin, and sentiment can affect prices temporarily, but the idea that a few evil trading desks are responsible for the recent 20% decline in global equity prices is the worst kind of market conspiracy theory.
But this doesn’t mean people don’t want to hear it. On the contrary…if there’s any story more popular than “Wall Street is just a den of thieves” it’s that market declines are caused by short-sellers and market manipulators. After every crash, the shorts are vilified as anti-American and anti-capitalist. The story Ben’s selling here is a perennial favourite.
Which leads us to take a stab at what’s really going on.
Ben Stein is obviously not an idiot. On the contrary, he’s shrewd! Shrewd enough to know that people don’t want to read dry columns about how markets are cyclical, what goes up usually comes down, we’re just paying the price for gorging on debt, etc. Ben is shrewd enough to know that if you want to sell columns and books, there’s nothing better than conspiracy theories.
So, no, Ben Stein is not an idiot. Unless he actually believes that the global market declines have been caused by a few self-interested windbags–in which case he’s delusional.