On Friday I was forward an article praising a Florida based economist by the name of Henry Fishkind.  Mr. Fishkind has established a successful practice consulting to companies and the government in the Sunshine State.

An excerpt from the Gulf Coast Business Review is included below:

“Florida’s pre-eminent economist offers his prescriptions for Florida tax policy. Given the economy, state and local politicians may want to listen and take heed. 

He is Florida’s E.F. Hutton. Better than having the Good Housekeeping Seal of Approval.

Indeed, every large-scale developer in Florida knows a sure-fire way to have a project taken seriously is to turn in a feasibility study with the words “prepared by Fishkind & Associates.”

And every county administrator and city manager knows a sure-fire way to sell sewer bonds or road bonds to institutional investors is to circulate a prospectus with the words “prepared by Fishkind & Associates.”

Over the past 32 years, Henry “Hank” Fishkind - make that Dr. Hank Fishkind, Ph.D. - has earned the position of Florida’s pre-eminent economist. His word is a “10” on the credibility scale. Since his arrival in the state in 1975, he has been economic adviser to Govs. Bob Graham and Jeb Bush; to Florida House speakers and Senate presidents; to the biggest corporate clients in Florida…” “The list is too long to print.”

The article was sent to me by someone familiar with my revulsion for Mr. Fishkind’s cult of personality and his record as an analyst.  Possibly no economist in the country has been more consistently and dramatically wrong about his economic prognostications over the past 4 years than Hank Fishkind.  He has impressive political connections and is well established but he has also failed miserably in predicting or correctly interpreting the current economic downturn.

In fairness to Mr. Fishkind he is a fabulously successful businessman.  He is far more credible and successful than I.  He is obviously smart and affable.  I am sure he is a nice person.  He has built a powerful brand, leveraged that asset into a self-perpetuating business and is (almost) universally admired by the Floridians who aware of him.  He is a “somebody” and I am a “nobody”.

The problem is that his success appears to have little to do with his competency as an economist.

Background

In January of 2008 I was approached by an associate who had access to Mr. Fishkind’s research.  He was appalled by the shoddy quality of the analysis and marveled at how out of touch with reality Mr. Fishkind appeared to be.  He proposed establishing an economic consulting group to compete directly with Fishkind. 

After analyzing the business opportunity our conclusions were twofold.  We believed that it would be relatively easy to produce more insightful research than that for which Fishkind was being compensated.  The real challenge was becoming established, credible and employable.  Mr. Fishkind has a successful brand, a laundry list of personal contacts and has networked his way to becoming an institution in Florida.  In order for us to compete, regardless of the quality of our research, we would have had to hire a token PHD to bring credibility to our service.  Even then, we might not have successfully competed with Mr. Fishkind’s political clout and network

Being devotees of meritocracy and philosophical purists we decided not to pursue the opportunity.

I have avoided commenting publicly on Mr. Fishkind because he is a Florida-specific phenomenon and I am generally not interested in focusing my attention on individuals outside the realm of policy making.  But Mr. Fishkind’s insistence on distributing his institutional analysis to the public through the Florida media for his own greater glory merits a response.

What bothers me, particularly about this article and others I have reviewed, is how the media coverage of Mr. Fishkind is so disjointed.  The reporting is all style, no substance with an absolute disregard for his actual record.  Florida based reporters appear to be thrilled by the prospect of interviewing Mr. Fishkind and shamelessly compete to heap flowery praise on him.  On occasion I have written the authors of such stories to plead with them to provide a more balanced perspective.

The horror of such articles is that some individual, company or government employee is going to read it and hire Mr. Fishkind based on the media’s coverage of his popularity, not based on his record.  I don’t worry about companies wasting their money on such research, but when Mr. Fishkind perpetually urges inexperienced investors to buy Florida houses during the greatest real estate collapse in history, it is a problem.  Some poor bastard bought a house after Mr. Fishkind famously predicted in October 2007 that the housing markets had bottomed out. 

October 18th 2007

“Southwest Florida has reached the bottom of its housing slump, but a significant turnaround may take some time.”

That’s the message economist Henry Fishkind delivered at the Southwest Florida Regional Economic Outlook Conference in Fort Myers on Thursday afternoon.

Fishkind, of Fishkind and Associates, told attendees the volume of housing transactions has stopped going down, and appears to be bouncing along the bottom.

“We’re at the bottom of the housing cycle”

In fact, housing prices had only begun to fall when Fishkind made his ill-informed prediction, and the declines have been accelerating ever since. 

Mr. Fishkind’s baseless assertion proved to be an embarrassing mistake.  People make mistakes.  But Fishkind chose to fabricate an excuse for his incompetence, lack of vision and understanding.  He contends, without merit, that his prognostication proved incorrect only because no one could have foreseen Lehman’s bankruptcy or the corresponding stock market collapse of September 2008.

Ignoring that many people predicted both the collapse of Lehman and a broader stock market decline, myself included, Mr. Fishkind’s defense still makes no sense. 

Florida’s real estate collapse continued on a linear, downward trend following Fishkind’s prediction and in fact the pace of decline accelerated in January 2008.  We can use Tampa and Miami as a proxy for the Florida market to examine Mr. Fishkind’s narrative.  In these markets housing prices fell approximately 17% and 27% respectively in the 11 months immediately following his prediction, but preceding Lehman’s bankruptcy.  I would genuinely enjoy hearing Mr. Fishkind’s explanation for this observation. 

In fact, the October 2008 crisis had no discernable impact on the downward collapse of Miami housing prices, further discrediting Fishkind’s purported defense.

Without reasonable cause, Mr. Fishkind bizarrely asserted that the housing bust was over.  He was tragically wrong.  Yet Henry now refuses to accept responsibility for his asinine prediction and baselessly blames unrelated events for his failure in defiance of the facts.

The perpetually positive media coverage of Mr. Fishkind, despite his established track record, is unconscionable.  “The Fishkind Phenomenon” is a classic example of the institutionalized incompetence which perpetuated the Housing Bubble and contributed to the Affordable Mortgage Depression.  If people had actually questioned shoddy work being performed or held individuals responsible for their intellectually lazy analysis, the world today would be a better place.

For example:

• Moody’s and S&P were the unquestioned authority on credit ratings.  When they handed out investment grade ratings to subprime securitized debt obligations, no one questioned the ratings or held them responsible for their analysis
• For decades, despite the fact it made no logical sense, people blindly believed Bernie Madoff to be one of the era’s great investors despite his performance being a fraud
• No one questioned AIG, the largest and most established U.S. insurer, when they wrote huge sums of uncollateralized credit default swaps
• Home buyers deferred to the supposed expertise of real estate brokers who blithely relied on comparable sales data to justify unsustainable valuations
• Banks shirked their fiduciary duties by relying on real estate appraisers to objectively value homes, ignoring the pressures on those individuals to deliver expedient appraisals

Mr. Fishkind is afforded credibility despite his Housing Bubble record not being much better than that of “Prosticonomists” Lawrence Yun and David Lereah with the National Association of Realtors.  The difference being that those two were contractually obligated to lie.  Mr. Fishkind’s excuse appears to be his skill as an economist.  Then again, maybe it is because his clients pay him to be a cheerleader for their projects.  It is certainly easier to obtain financing that way.

If that is Mr. Fishkind’s business model, then so be it.  But we as a society need to stop affording credibility to individuals and institutions that, through their own actions, have demonstrated that they are undeserving of such stature.   In Florida, the media needs to stop lending credibility to Mr. Fishkind’s predictions, not only because his record doesn’t merit it, but because potential home buyers rely on this “legitimized” expertise for guidance in making home buying decisions. 

For the benefit of the Florida media; Mr. Fishkind is not an insightful economist nor is he an objective one.  He sells his credibility, born out of longevity and political contacts, to clients who pay him for the service.  It is inappropriate for the media to portray his skewed perspective as objective analysis to the general public.