Friday, October 1, 2010

Harvard Business School Has No Clothes.

I have a little epiphany for you. One that hit me as I was driving across multiple states recently, observing our world.

It's summed up in a blindingly oblivious "Op-Ed" piece, in today's New York Times. From the author's blurb:

"William D. Cohan, a former investigative reporter in Raleigh, N.C., writes on alternate Fridays about Wall Street and Main Street. He worked on Wall Street as a senior mergers and acquisitions banker for 15 years. He also worked for two years at GE Capital. He is the author of 'House of Cards: A Tale of Hubris and Wretched Excess on Wall Street' "

In his piece entitled "The Elizabeth Warren Fallacy", Mr Cohan asks (and he's serious) "Why create an expensive bureaucracy to “protect” consumers from their own stupid decisions?"


The mind boggles. Mine does, anyway, and mine is not all that easily boggled. And this is from an author who writes elsewhere about wretched behavior on Wall Street.

Literally going back to the Code of Hammurabi, the very existence of all law is justified by the fact that, yes, innocent persons need to be protected from predatory humans.

But here, a scion of the Business World, slickly suggests that sheep exist to be sheared, and that this is how the world works. This is what they teach MBAs, these days. Any means to a profit - not specifically forbidden by law or (silly) regulations- is entirely fair. Reap all you can, before the regulators catch on.

Which behavior has put our culture where it is- virtually all the "real" capital in the "real" economy has been skimmed off, via slick marketing of easy credit - e.g.;

"
Borrow $10,000 on your credit card today! Just use this EasyCheck {Same as cash!} - And for this Special Limited Time Offer, this loan will be at only 1.99% until paid off!"


(Until you sneeze, then it goes into the default rate of 30%...)


With the real capital sucked out of the Real Economy into the bizarre fantasy world of The Financial Sector (which owes itself trillions of dollars more than actually exist anywhere) - we're broke. And breaking further. All of us.

In my opinion, the best, most solid economic statistic available is the rate at which CEOs and top corporate executives buy and sell their own stock in their own companies. Through a grotesque oversight, this is public information. At the moment, those who know the most about their own futures are selling their own stocks at a rate of 1,400 to 1.

No, that's not good.

The epiphany?

Gradually, over the years, our societally accepted definition of "business" has changed.

It used to be; and we still teach our children, that "business" happens when: you have a need; I fill it; you pay me for my work; and we both benefit.

Now what we teach our MBAs is, if there is no need; create one; and if you can trick your opponent out of an extra penny, good for you. Mutual benefit, in fact, is literally no longer in the definition.

What you have there- is precisely - the definition of sociopathy.

We teach Sociopathy as "Business". We really, really, really do.

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There are multiple sites on the web that deal with definitions of sociopath, and lists of character traits. They don't all agree, but take a look; and compare the traits to those flaunted by "business" professionals.
(If you're a movie fan, take a look at Gordon Gekko this way.)

For the last many decades, the business world has very effectively insinuated huge respect for themselves into every aspect of our culture. All good things flow from business; without it, we will all perish. There you have a truth beyond examination. To question it, even, is punishable. The metaphors quickly reach to religious dogma; heresy; and excommunication.

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Maybe you already knew this. I've always known there were slimy characters here and there; but it was a new idea, hitting me with force, that we actually accept, and teach, a group of behaviors and attitudes we also recognize as incredibly destructive and dangerous. Genuinely pathological. Sick.

Try saying "Harvard School Of Sociopathy" a few times; see how it fits.

Today; it's to the point where a respected writer can suggest, in a respected forum, that stupid people deserve to be tricked, and "we" should waste no money to save them. (Never mind that the public will then, provably, pay for their prisons, hospitals and funerals, and sociopathic children.)

What happened to the idea that business should not involve traps and tricks, in the first place?

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Manifestly, The American Way Of Business now thrives - survives- on tricks and traps. The entire model is sociopathic. And is run by trained sociopaths.

Spread the word. So far, sociopath is still a label most would like to avoid. It's a very bad thing to call someone. A very hard word. Maybe it needs to be spray-painted all over Wall Street.

14 comments:

tickmeister said...

My take is a little different. A consumer making a stupid decision suggests to me the guy who picked up his lawnmower and tried to use it for a hedge trummer, but his hands, and sued the manufacturer. Or the guy who fell off his ladder while balancing on one foot on the top rung trying to paint his downspout. My opinion is that our current crop of bureaucrats have gone a mile or so past rationality in making laws and regulations to "protect" the idiots of the world and have thus driven a lot of legitimate companies out of business with lawsuits and outlandish costs for various so called safety features.

What you are objecting to is a defrauded consumer. The primary culprits here are indeed the financial and legal businesses. I favor strong laws for these people, preferably laws that allow them to have long periods of self-examination in prison, or maybe just strung up to get it over with.

I simply can't conceive that no manager from Goldman-Sachs or Bank of America is currently serving life in prison.

Sparkless said...

Oh, I like this post! Whatever happened to ethics?

Phil said...

My university hired a professor of business ethics, and that might seem from the outside to make the field of business look responsible. Right?

I had lunch with him and asked if he was just for show or having an impact. He just looked nervous and suggested I attend a lecture that he was giving to his department the next week.

So at the lecture he talked about the importance of ethics. Well, I thought they were going to mob him!

Ethics will just hamper profit-making and business is all about profit making, they argued. Ethics will make business too timid to innovate. It won't be able to do "its job" which is to provide capital and jobs.The end justifies the means. You have to break eggs to make omelettes. The reaction to his talk got really nasty. He had no defenders.

I guess my question was answered as best as was possible.

Greenpa said...

tickmeister -I think what's missing is the actual intended original purpose of a judge; and a jury.

No law will cover all circumstances; can't be done; people recognized that back to Hammurabi. So; a judge is put in. He's supposed to look at individual circumstances; and say; "In this case, ..." And the jury was added because, over time, bad judges happen, too. Same thing; the jury is supposed to TEMPER the law; and deliver - uh, what was it now? Oh, yeah.

Justice.

But- the sociopaths have slowly bludgeoned judges and jurys into the concept that they must ONLY follow "law", never vary from it. And originally, the idea was 180° the other way; they were to deliver justice, regardless of "law".

Oh, for the good old days. :-)

Stormchild said...

You left out one of the "best" parts. Most MBA programs also will cheerfully teach you how many of your customers you can afford to kill before the liability from all those deaths starts to hurt your profitability.

I speak truth.

And we lionize these creatures.

tickmeister said...

Agreed. Somebody needs to start raising a stink about the fact that jury nullification has been totally abandoned in our legal system. This is the process by which a jury is empowered to declare a law nullified in any case in which it leads to an unjust outcome. It is my understanding that a lawyer or jury member can be cited for contempt of court for even mentioning this process in a court room.

At some point the citizens of this nation are either going to stand up on their hind legs and say "enough" or we will simply sink into a totalitarian nightmare with the one percent living high and the other 99% starving through short and ugly lives. Either way will bring a load of grief.

Greenpa said...

Stormchild: ah, yes, the "science" of "Risk Management".

Another big topic for a separate post. My own serious assessment; the "field" was invented specifically to allow profits to be made on ventures which will always turn out badly, eventually. But not before you can strip money out of it. Stuff like, oh, nuclear power plants.

Bureinato said...

Actually, sociopaths are not bothered by being called sociopaths. A friend of mine's sister thinks that it makes her a unique individual, not a "bad person". The rest of us disagree.

You're probably removed enough from consumer culture to avoid most of it, but advertising is applied psychology designed to manipulate and control people into buying things they don't need or want. Most folks I tell that too assure me that some ads are "clever and amusing" or that they are not influenced by advertising. This is also a scheme devised by sociopaths and made socially acceptable.

: Joseph j7uy5 said...

I always like to remember this simple fact: no matter what you do, 50% of the population will always be below average. This goes for financial acumen. When Cohan writes of "stupid decisions," he makes a moral judgment about the persons who make those decisions. He is saying that they do not deserve protection because they are stupid.

This is morally equivalent to saying that it is OK to run over blind people who are crossing the street, because they can't see as well as everyone else.

All societies have blind people, yet we do not go around running them over.

All societies have people with below-average financial acumen. Is is OK to run them over at will?

Stoneleigh said...

Hi Greenpa,

As it happens, I wrote a monograph on the topic of nuclear power plants, prominently discussing the fallacy of risk management. We often think alike it seems :)

Nuclear Safety and International Governance: Russia and Eastern Europe (1999)

Greenpa said...

Bureinato said... "Actually, sociopaths are not bothered by being called sociopaths."

excellent point- was already going to talk about that in my next post -

"You're probably removed enough from consumer culture to avoid most of it, but advertising is applied psychology.."

:-) actually... a well kept secret of mine; I give seminars on marketing (besides other stuff) - a few years ago, I had a marketing professor come up afterwards and ask me to write a chapter for his new book. Really.

And the reason I started studying marketing is precisely that it is the only discipline in human psychology based on experimental results; this works; that doesn't; build on that... lots of insights into human behaviors to be had; relatively free of weird old preconceived nonsense.

Greenpa said...

Joseph- the blind people point makes it very lucid.

Stoneleigh- it's downright scary, sometimes, how much we think alike. :-) Thanks for the link here; I didn't know it was available on line. Note to everybody - you should read it.

Anonymous said...

The problem with "modern" economics is that so many people expect/want a greater return on their investments than say 3%. The question then is where can this kind of sustainable growth be found. It can't. Only pillaging non-renewable resources bring double digit returns.

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