I’ve commented on this before, but Barry Ritholtz is noticing other outlets picking up on The Big Lie – a good thing, to be sure – but what I didn’t know was that Ritholtz’s interest in the issue came from doing quite a bit the research for his book Bailout Nation. Now I’ve read several books on the Financial Crisis of ’08, but this one must have escaped my attention (too bad I didn’t catch this before Christmas). Yet this is a little besides the point. The impetus for Ritholtz’s post is the most recent pickup on his work combating The Big Lie, a column from Joe Nocera in the New York Times:
So this is how the Big Lie works.
You begin with a hypothesis that has a certain surface plausibility. You find an ally whose background suggests that he’s an “expert”; out of thin air, he devises “data.” You write articles in sympathetic publications, repeating the data endlessly; in time, some of these publications make your cause their own. Like-minded congressmen pick up your mantra and invite you to testify at hearings.
You’re chosen for an investigative panel related to your topic. When other panel members, after inspecting your evidence, reject your thesis, you claim that they did so for ideological reasons. This, too, is repeated by your allies. Soon, the echo chamber you created drowns out dissenting views; even presidential candidates begin repeating the Big Lie.
Thus has Peter Wallison, a resident scholar at the American Enterprise Institute, and a former member of the Financial Crisis Inquiry Commission, almost single-handedly created the myth that Fannie Mae and Freddie Mac caused the financial crisis. His partner in crime is another A.E.I. scholar, Edward Pinto, who a very long time ago was Fannie’s chief credit officer. [...]
I actually wasn’t aware that Peter Wallison was working for A.E.I., though it really only takes a few seconds to realize it makes perfect sense as a think-tank version of the revolving door in politics.
Yet in a way this whole Big Lie thing is fascinating as one of the few experiences in my life where I paid enough attention in the beginning to see this kind of historical revisionism unfold. But pulling it a bit back it’s easy to see how such revisionism begins. It all begins with the role of incentives – in this case, the incentives to push an alternate version of events. Ritzholtz:
The perpetrators of the big lie all have something to hide. Whether they voted for more deregulation or passed the ridiculous the CFMA or supported the repeal of Glass Steagall or cheered Alan Greenspan’s monetary policy, the Big Lie supporters all bear some resposibility.
In the case of Peter Wallison, he was the Co-director of AEI’s financial market deregulation project. That was scrubbed from his AEI bio.
It also occurs to me that something like The Big Lie is partially helped by regular folk’s need for a simple explanation that neatly correlates with their preexisting biases. Whether it’s Wall Street or the Government, everyone has a target to be their special punching bag for existing conditions. Sometimes the truth is just plain complicated, and political messaging in particular doesn’t do complicated. Thankfully Ritholtz also includes in his post the fold out graphic from Bailout Nation of all the contributors to the Financial Crisis in all it’s complicated glory. I highly recommend it.