From Prof. Niall Ferguson, Krugtron the Invincible, Part III“:
On both Europe and the approach of the financial crisis, I would say that – unlike Paul Krugman – I was right more often than I was wrong. But so what? When investors and fund managers are right more often than they are wrong, they are rewarded – handsomely. When they are wrong more often than they are right, they lose money or clients, usually both. The world of public intellectuals is different. Using their academic credibility to pontificate about the future, professor-pundits can be wrong again and again without losing money or their tenured jobs. Many distinguished and lucrative careers have been based on just such a pattern of unpunished error. By the same token, the returns on being right are surprisingly low. A book sells because its prediction fits the mood of the moment. The author may get a bonus – in the form of additional sales – if he turns out to be right. But he doesn’t have to return the royalty checks if he turns out to be dead wrong.
This reminds me of Coase’s article around 1974 on the market for ideas. If a business is wrong, it loses money and customers—usually (dietary supplements are an exception). I should perhaps say, “if a business is obviously wrong.” Not so with we intellectuals.