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Tuesday, February 08, 2005
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CATCHING ELIOT'S EYE
"The New York Stock Exchange's report on the pay package [$139.5 million, at a non-profit organization] given to its former chairman, Dick Grasso, made clear the excessiveness of the compensation and the ineffectiveness of the safety controls that failed to stop it," writes Robert J. Shiller in today's New York Times. "What the report didn't provide, however, was an answer to an obvious question: Why did nobody on the exchange's board look at that astronomical sum and feel some personal responsibility to find out what was happening?" [For background on the Grasso case, see UD, 5/25/04.] As the subhead of his opinion piece suggests ("Does the Grasso scandal have roots in the ivory tower?"), Shiller lays much of the blame on the amoral education people get in American graduate schools of business, whose courses typically "portray people as nothing more than 'maximizers' of their own 'expected utility.' This means that people are expected to be totally selfish, constantly calculating their own advantage, with no thought of others. If the premise is that everyone would steal the silverware if he knew he could get away with it, and if we spend the entire semester developing the implications of this assumption, then it is hard to know where to begin to talk about ethics." No shit. Shiller says "overspecialization" in the university has made all professors narrow-minded, including ethics professors: "Business ethics is just another academic specialty, and can seem as remote as microbiology to those studying financial theory. ...And even when business students do take an ethics course, the theoretical framework of the core courses tends to be so devoid of moral content that their discussions of ethics must seem like a side order of some overcooked vegetable." Well, UD likes the sound of this and all ... but when Shiller proposes a solution, his naivete emerges: "Ethical behavior for many business people must involve overcoming their learned biases. Perhaps these scandals would be a little less likely ... if more of us professors integrated business education into a broader historical and psychological context. Would our students really fail to understand the economic models if we treated the subject matter not as an arcane specialty, but as part of a larger liberal arts education?" Okay. In other words, MBA programs as now constituted teach you to be a selfish son of a bitch. So let's say you're about 25 years old, halfway through your MBA at Harvard. Your undergraduate degree was, say, Penn. The result of your first-rate liberal arts education plus your first-rate business education is that you are a selfish son of a bitch. Professor Shiller now proposes that at this rather late date in a person's moral development we try to transform a specialized professional program in business into something that could be seen as "part of a larger liberal arts education" which would have the effect of moralizing you so that you avoid becoming a selfish son of a bitch. Leave aside the question of why your original liberal arts experience failed to moralize you. Leave aside the question of why your parents or any other social or spiritual influence has failed to moralize you. Ain't it a bit late in the day by the time you roll through Harvard? For that matter, how does Harvard, as an institution, model the virtue of restraint that Shiller champions? Well, let's look at their endowment, and how they pay their money managers [See UD, 1/11/05]... Colleges and universities can't - and shouldn't try to - make you a good person. They exist to expose you to the best that has been thought and written. Universities assume at least minimal moral competence on your part, a competence they will be pleased, of course, to strengthen. But if, by the time you're in your twenties, you don't know the difference between profit maximalization and extortion, it is too late for you. You will do what you will do. And at some point, godwilling, Eliot Spitzer will notice. |