Ben Stein Watch: now The Times is Free (of him)

Ben Stein has been fired from The New York Times. Perhaps "fired" is not exactly the right word, since Stein was never on the payroll in the first place. His formal relationship was that of a regularly featured free-lancer. That relationship, at any rate, has come to a close.

On Thursday, August 6, the Times released a statement that said: "Ben Stein's fine work for us as a columnist for Sunday Business had to end, we told him, after we learned that he had become a commercial spokesman for FreeScore, a financial services company. Ben didn't understand when he signed on with FreeScore that this might pose a potential conflict for him as a contributing columnist for the Times, because he hadn't written about credit scores or this company. But, we decided that being a commercial spokesman for FreeScore while writing his column wouldn't be appropriate.

"We are sorry to lose him as a columnist, and appreciate his work for the Times over the years."

He was never doing "fine work" for them as a columnist, and they're probably clever enough to be happy he's gone, not "sorry to lose him." So let's get the FreeScore stuff out of the way.

FreeScore tells people that it will get them their credit SCORE for free. And that is true. But the credit score is just a number, and for most people is not very useful. If you have a low credit number and you suspect it is based on faulty information in your credit reports, you want the credit report, not the number. And FreeScore is in the business of selling you the report (which you could get elsewhere for free). It is in short a bait-and-switch operation to get money from suckers.

Ben Stein is entitled to shill for a bait-and-switch operation if he wants. Likewise, the Times is entitled to stop running his columns for that reason or other reason. "Good reason, bad reason, or no reason at all" will suffice to terminate a free-lance column. The subject doesn't especially interest me.

The relationship ought rightly to have been terminated long before, and on weightier grounds. For The New York Times found itself with a business columnist who doesn't appear to have known diddly about business. Perhaps (to interpret the matter charitably) they realized this and thought the situation awkward. Perhaps they used the "credit report" thing as an elegant way out of the awkward situation. It is good to think so. At least, he has lost that platform.

Why was he so bad? Well, let's go back to January 2008, when Ben Stein invented the label "trader realism" in an effort to make himself seem profound. Wow, a new theory of finance. Trader realism! There just was no there there. Even in the 21st century, when dead-tree newspapers increasingly seem anachronistic anyway, trees should not die for this little!

The gist of that silly column (which began with discussion of the meatloaf that Stein used to eat at the kitchen table with his economist father Herb), is that professional traders, (like judges in the "legal realism" model) start from their desired conclusion, and work backward to rig up the necessary premises.

"Traders can see masses of data any minute of any day. They can find data to support hitting the 'buy' button or the 'sell' button. They don’t act on the basis of what seems to them the real economic situation, but on what’s in it for them."

Of course, classical economists would say, traders act on what's in it for them! So does everybody in the system, at least according to the classical model Stein may think he's refuting here. The difference may be this: Stein thinks the decision whether a "sell" or a "buy" has more "in it for them" has a non-rational, even an irrational, element based on, say, the corporate politics of the broker-dealer, quirks of bonus policies, idiosyncratic personalities.

A classicist who doesn't wish to conform to stereotype too tightly can of course acknowledge that traders sometimes act in ways hard to model. Still, those who consistently act on irrational factors will lose money. They won't stay in business for long. And if there are a lot of traders, and a lot of trading going on, then the irrational aspects are factored out within the whole system, the noise is filtered out and the market conveys information efficiently.

Stein's reason for believing this model is wrong and his "trader realism" has pierced a veil? An uncheckable anecdote. A "close friend of mine, now deceased," who used to be a trader in London for a major financial house, told him a story about shorting IBM on a dare from the boss, and then geting on the phone to spread rumors, talking down the price of IBM so his short position would pay off.

That's it. After the household meatloaf, the law school memories, the trader/judge analogy, we get around to a theory based on a single recollected story from one unnamed person who has shuffled off the mortal coil. Wow! On such evidence, many people seem to believe that Elvis continues to walk about and order Slurpees at various Quickie Marts.

He should have been fired after that. His performance as a "business columnist" got worse, not better, thereafter. He went from a zero into the deep negative numbers.

Sorry, Ben. Glad you're gone.