“How do you like the gall of your fellow alums who have driven this economy into the ground with their greed? How about Rick Wagoner riding in on his corporate jet while his company goes bankrupt! How about Valleywag’s study that Harvard MBAs are the most toxic investment on Wall Street?
Where are the ethics in the Harvard School of Business and its students?”
The Harvard MBA says:
You forgot to mention the Harvard MBA who occupies the White House, who oversaw the whole mess. It may be centuries before the American people elect another Harvard MBA to the presidency.
There’s no way for Harvard MBAs to duck their individual responsibility. All the Wall Street executives who failed to rein in their use of easy credit, all the hedge fund managers who tempted fate with outlandishly extravagant parties, and all the venture capitalists who backed companies with no chance of success other than selling to a greater fool–all of them have to shoulder some part of the blame.
But there’s plenty of blame to go around. No one forced people to borrow too much money, spend too much money, and ignore the writing on the wall that even a blind man could see.
(I’ll pause for a minute to gloat…I did see the writing on the wall, and starting in the summer of 2007, I moved aggressively into cash and fixed-return investments. Ah, the joys of capital preservation!)
Harvard MBAs, because they hold so much power in this country and around the world, are more responsible for this mess, if only because the buck should stop with whomever’s sitting in the corner office.
But the answer to the current financial crisis is not to turn away from free markets or repudiate the Harvard MBA, anymore than our reaction to the dot bomb crash should have been to turn away from the Internet and entrepreneurship.
The vast majority of Harvard MBAs have done their best given the circumstances (love him or hate him, I doubt you’re working harder than Hank Paulson is right now) just like everyone else. And free markets didn’t cause this crisis–a universal willingness to pretend that risk no longer existed did.
During the 70s, interventionists like Nixon and Carter dug our economy into a deeper hole; only Paul Volcker’s return to orthodox monetary policy saved us. I hope that Barack Obama, Hank Paulson, and Ben Bernake keep those lessons in mind.
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7 Comments
All I see as a group is the lack of contrition or personal responsibility in these so-called “Stars”. Never an admission of failure by any of them, including the CEO of GM, for what 7 years now?
I have spent 20+ years consulting with Fortune 500 companies and have worked in Silicon Valley as an executive and manager. What I have seen is 1) a lack of business judgment and real experience in these graduates, 2) mastery of politics and the “graduate network”, and 3) Extreme arrogance.
For those planning to pursue and MBA and reading these comments, Personally, I have been much more impressed with the folks at MIT (and no, I didn’t go there), Michigan, and UCLA. Much more grounded and willing to work hard to achieve a goal in a team environment.
Corporate Responsibility and Ethics are dead today. The top Business School grads don’t deserve the opportunities this country offers, because they don’t hold up their end of the bargain. Greed has been extreme. Regulation is what will result. And our “higher” educational institutions remain silent to the Ethics and Morality issues.
Jim,
1) The folks who refused to accept responsibility are moral pygmies. But the fact is that they are not disproportionately from HBS; the problem is that the ranks of top management are disproportionately from HBS.
Statistically, I’m pretty sure that HBS grads are no worse than any top-tier b-school.
2) I’m pretty sure it’s true that HBS grads are more arrogant than Sloan or Anderson grads. But they don’t hold a candle to the Stanford CS Department, and I don’t hear a lot of complaining on that front.
I disagree about the lack of business judgment and experience…if it was true that HBS grads rose to power simply because of politicking, nepotism, and backstabbery, why would so many of us still be in power?
Logic dictates that companies that refused to hire Harvard MBAs would do better than those that succumbed to our deadly charms, and over time, only loser companies would hire Harvard MBAs.
Much as I wish that I had magical powers of deception and influence, I’m afraid that you’re giving us far too much credit.
3) The business schools have all beefed up their ethics programs considerably. But I don’t think that’s an effective course of action.
Business schools don’t shape ethics; childhoods shape ethics. Bad character isn’t handed out at the door like an orientation booklet, it’s built over many years.
The distribution of greed and smarts and ethics is probably defined by a normal distribution. Every industry, every profession, every community.
It’s about innovation, unanticipated consequences and proximate rewards. Financial innovation lead to easy ways to make money. People always do what’s easiest. If you’re making proximate rewards, where are the incentives for long term thinking.
Maybe this will get uniformed people to stop betting on stock prices and focus on dividends instead…and then the hard part. Getting the C level to pay dividends, instead of hyping the stock price.
Maybe exec comp should be tied to dividends? Or maybe it should just be dividends, like all the other owners?
How does one, “aggressively move into cash?” Do you strike the keys hard or just swear at your broker?
Michael J,
The best solution for aligning incentives is to get executives to purchase stock. Unlike stock options, which offer only upside, execs who own actual stock suffer with the rest of the investors.
FN,
The easiest way to move aggressively into cash is to approach silently, then break into a all-out sprint when you’re within 10 yards. A fierce shout at the moment of impact is also recommended.
I love this question and the answer. I think in such horrible times where so many people are in dire need it feels good to point the finger at someone or an institution and blame them for the whole mess. In every accredited MBA school you are taught ethics. Unfortunately, we are humans and inherently there are people are evil people. Greed can change a catholic to a devil worshiper in no time.
Many M.B.A.’s, and dare I say the holiest of Gods the CFA’s, brought down the economy but these people will pay eventually it’s the law of the universe. Great answer and great site!
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