It's a common and well-justified complaint that political and economic commentators seem to face no consequences for being wrong. Opinion makers who advocated for invading Iraq retain their positions of power and influence, while economists were so lacking in foresight about the recent financial crisis that the few who sounded alarms before 2008 have become famous exceptions, black swans in their field.
Last week brought another example of the staying power of the pundit class, this one more comical than most: With the Dow setting new records every day, one of the authors of the most infamously wrong investment books of all time, 1999's "Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market," resurfaced to insist that he and his collaborator weren't wrong, just ahead of their time.
James K. Glassman's column, published by Bloomberg View, is called "Dow 36,000 Is Attainable Again," which you'll notice presupposes that this target was ever realistic in the first place. "We wrote in the introduction that 'it is impossible to predict how long it will take' to get to 36,000," Glassman recounts, reminding us that he and coauthor Kevin Hassett were slightly less than completely deluded. "Then, in the same paragraph, we rashly made a guess anyway: 'between three and five years.'" Glassman's candor is a welcome departure from his previous strategy of falsification: As the Columbia Journalism Review's Ryan Chittum points out, Glassman tried to cover up his book's projection after the tech bubble burst, writing in November 2001 that he and Hassett "did not predict when this blessed event [Dow 36,000] would occur."
The Glassman of 2013 displays the same mathematical and logical prowess that animated the original treatise, asserting that, if we start the clock right now, the prediction will come true this time, vindicating the initial analysis. "Today, the far edge of that time frame [three to five years] is clearly in reach. From its low of 6,547 on March 9, 2009, the Dow has risen 117 percent. Another 117 percent in four years would put it at 31,022, just 16 percentage points shy of the magic number."
(The number is magic, remember, not because of any inherent property, but because it's the figure Glassman and Hassett arrived at 14 years ago by deciding that stocks were undervalued, due to unreasonable investor perceptions of risk, and should be trading at "double, triple, or even quadruple" their prices.)
So Glassman would have us believe that the Dow, despite its unevenly-rising sawtooth trajectory, is ready to continue climbing steadily at the rate of the last four years -- one of the biggest rallies in the past eight-and-a-half decades, as Gawker's Hamilton Nolan observes. Why this should be so, at at time when real economic recovery remains elusive and markets have been juiced by a level of Federal Reserve stimulus that can't continue indefinitely, Glassman does not say. Instead he tables the issue of investor fear -- which according to "Dow 36,000" should have dissipated but has actually increased, for obvious reasons -- and calls for a vague and clichéd menu of policies intended to promote growth: tax code overhaul, immigration reform, regulation reduction, education something-or-other.
"Chime in and make your own list," Glassman invites us, starting to sound desperate, "because it's time to focus on what counts in an economy: growth." All of this hypothetical legislation in the service not of quality of life, or a sustainable civilization, but of a stock index reading foretold long ago in a dream: "How fast can the U.S. grow? Four percent is attainable, but I'd settle for 3 percent. Get there quickly, and we'll get to Dow 36,000 quickly, too."
This is of course nothing more than a pundit trying anything he can think of to justify a discredited prognostication. If Glassman had any sense, he would drop the idea, and the rest of us would move on. But what makes his persistence noteworthy is the prominence Glassman and Hassett have enjoyed since 1999.
In addition to powerful positions in media, Glassman served on the government's Advisory Board on Public Diplomacy in the Arab and Muslim World, starting in July 2003 -- a hugely consequential moment in U.S.-Arab relations, as the insurgency in Iraq was becoming an undeniable force. In 2007-2008, Glassman chaired the Broadcasting Board of Governors, which is in charge of all international civilian broadcasting funded by the U.S. government (including Voice of America, Radio Free Europe and Alhurra TV). And in the waning months of the Bush administration, he assumed the role of Undersecretary of State for Public Diplomacy and Public Affairs.
Hassett, meanwhile, is currently a senior fellow and director of economic policy studies at the American Enterprise Institute, a prominent conservative think tank, and previously served as economic advisor to the presidential campaigns of John McCain (2000, 2008), George W. Bush (2004) and and Mitt Romney (2012). It's striking to realize that an economist whose most famous argument was based on an error, according to a persuasive analysis by Paul Krugman, was giving policy advice to a major party's candidates for president during four election cycles. (And if you don't like Krugman, consider that even UPenn professor Jeremy Siegel, whose work provided what Glassman called "the basis for the theory underlying" the book, said that its authors had misunderstood him, according to The Washington Monthly.
Glassman's latest role is more ambiguous, in terms of its influence and prestige: He is the founding Executive Director of the George W. Bush Institute (as Krugman noted with delight). We could argue about exactly what this means, but in this economy (as they say), a job's a job.