American Business Schools

Not to beat a dead horse, but …

Following up on my snark concerning the obsession economists have with America, allow me to be equally skeptical about our business schools.

It think it reasonable to ask what value they add. I mean in the aggregate. Think, for instance, about the flood of newly minted MBA’s that surge each year into our businesses. All presumably armed with the latest and best knowledge about how to make, sell, and price stuff better than ever before. Imagine all those efficiency improvements. Count all those clever human resource dodges. Stand in awe at the innumerable strategy wheezes, tactical adjustments, and infrastructural alliances that have made our economy just gallop along at a pace never seen before. It is stupendous. And it surely justifies the price of an MBA, which at my alma mater is getting pretty close to the average new home price here in the US.

It’s mind boggling to think about how mucked up American business would be without all this knowledge. Or how terrible life would be for our workers, whose wages would surely not be rocketing along without all that corporate based intellectual wizardry.

After all these years – decades – of pumping business theory laden folk out into the employment market one would think we would have a business sector so well managed that it would be immune to little things like economic downturns. Indeed, when coupled with all our magnificent economic theories, our accumulated business related intellectual capital ought to have immunized us against the very possibility of downturns. The business cycle ought to be banished to ancient, pre-MBA and pre-neo-classical economic history.

I doubt much will change. The profit motive in academia demands that we mint MBA’s in droves, no matter whether they add value commensurate with the cost of their degree. Remember that academia is all about the thirst for knowledge. It ought not be amenable to a simple cost benefit analysis. It is grander than that. Even if you are an MBA steeped in the benefits of cost benefit analysis and have just paid a lot to learn to apply said knowledge to everything except the cost of your MBA.

But, of course, I am not shocked. Nor are you. After all we realize that in a world befuddled by endemic uncertainty all those theories are pretty much meaningless. What counts is the willingness to make mistakes and learn from them. And to abandon to economists silly notions about efficiency, optimization, and equilibrium. Those things only exist in the imagination.

But they are nice too think about, they are tractable to math, and they sure look good in PowerPoint.