While we're on the topic, we might as well mention that Ben Stein also seems to have an inflated view of the role of economists at investment banks, and perhaps in the world. Most traders and brokers we know tend to regard their economists as irrelevant at best and hazardous at worst. They are used to economists taking positions that are unhelpful to their book or to their sales efforts. But they don’t mind that much because they don’t think many people listen to—much less follow the advice of—their economists.

“These guys are talking heads for us. Part of brand promotion on a grand scale. They might as well work for the PR department. They get the firm’s name out there but, internally, no one really trades on what they say,” one equity trader with over twelve years experience tell us.

The main job of a Wall Street economist is grab and keep attention of possible clients. Their reports are essentially part of the marketing done by brokerages and banks to attract clients. In fact, this is the source of one of the traditional criticisms of Wall Street economists—that the pressure to produce reports that get noticed and bring attention to the firm drives them to make extreme predictions. One jokes we’ve heard among economists after a couple of drinks is that it doesn’t matter what you say, or whether you are right or wrong, just as long as you get quoted saying it.

Now, if you don’t give it much thought, Stein’s contention of some sort of sneaky collaboration between Goldman economist Jan Hatzius seems to jive with this. It might be tempting to corrupt the views of your economist if you don’t actually look to his predictions to tell you about the world; and it might be especially tempting for an economist to publish forecasts that are convenient for his employers if he viewed himself mostly as doing public relations for the bank.

But this falls apart when once the slightest bit of mental energy is applied to it. The gains for corrupting an investment bank’s economist—Jan Hatzuis or almost anyone else for example—would be severely limited precisely because they are largely viewed as irrelevant both inside and outside the bank. If economists really have any effect on the direction of markets, it’s unlikely that any one economist would have an effect. Rather, some investors do shape their strategies according to the consensus views of economists. (Although this effect is tempered by the fact other investors are contrarians and bet against the consensus view.)

The views of individual economists are not really on Wall Street as being influential enough to be worth corrupting. But Ben Stein—an actor who fancies himself an economist and is descended from an actual economist—claims Goldman is cooking the books by having Hatzuis turn up the heat on the credit crunch. It not only doesn’t make sense, it doesn’t even have any of the ingredients to start making sense.