Market designers flipped their public stance on TARP once they lost auction contracts.

Evidence

To understand what elevates the public activities of market designers from the realm of mere puffery and self-promotion to the level of agnotology it is necessary to review how their public statements changed over the course of the crisis. Initially, market designers provided public defense of the Treasury plan in both its particulars (the decision to use reverse auctions) and its generalities (they signed a petition to congress in support of the proposition that government could act beneficially to correct for market failures). Especially important was the seeming independence of the academic support—as Swagel rightly noted, Wall Street economists were cheerleaders for the TARP as well, but no one would pay attention to them. Inevitably, market designers had to walk a tightrope in order to participate, at times stressing their ability to deliver competitive (low) market prices, at others, higher than fire-sale prices. But in the short term, the academics gave the Treasury the arguments it wanted for instrumental ends—to get the TARP passed. Market designers then persisted with their advocacy for auctions even after the Treasury insiders had themselves dismissed the plan as unrealistic; once the Treasury changed its plans, the market designers now devolved into free agents, turned on a dime, and attacked the Treasury. Their complaints, rendered loudly and often in the public sphere, resembled nothing so much as those being made by the opponents of the TARP. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 874

Categorization

• XREF: Connects to Mirowski’s broader ‘agnotology’ thesis in this book about economists manufacturing doubt and confusion. — connects to: Treasury prioritized political efficacy over economic efficiency in TARP design. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 861; Market designers and anti-TARP critics converged on shared anti-government assumptions. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 862; Auctions advocates shifted their crisis claims after the fact to fit their designs. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 863 (+2 more)
• SEED: Essay angle: academic economists’ public positions tracked their patronage contracts, not evidence — a case study in how ‘independent’ expertise is financially disciplined.

Broader Connections

• Market designers misrepresented the crisis to serve their own profit, worsening public confusion. #expands (0.82) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 849