Our education was far too uni-disciplinary. Many problems, by nature, cross many academic disciplines. Accordingly, using a multi-disciplinary attack on such problems is like playing a bridge hand by counting trumps and ignoring all else. This is bonkers, sort of like the Mad Hatter’s tea party. But nonetheless, too much of that thinking remains in professional practice and, even worse, has long been encouraged in isolated departments of soft science, which I define as anything less fundamental than biology.
Charles Munger
Address to the 50th Reunion of the Harvard Law School
Class of 1949 (4 April 1999)
The Politico-University Complex
Crusoe has seen more than enough and decides to leave Academic Island. What he has observed and inferred cause him to express grave doubts about BS and Academic culture. Crusoe’s assessment is hardly unique. The costliest (in terms of time and money) of BS activities, the postgraduate business degree, per se provides neither a better career trajectory nor a higher salary. According to Jeffrey Pfeffer, a professor of business at Stanford University who has concluded an analysis of 40 years of research about the economic value of the Master of Business Administration degree (reported in The Chicago Sun-Times on 5 July 2002), this is partly because little that is taught in business schools prepares students for the realities of contemporary commerce. B-students, in effect, neither purchase nor receive education and training. Instead, they acquire a “badge” to place on their résumés and a chance to associate with like-minded people; B-Schools, in turn, enforce a cartel and featherbed their employees.
Prof Pfeffer concludes “the simplest advice is that if you don’t get into a leading business school, the economic value of the degree is really quite limited. Obviously, if you get admitted to Harvard or Stanford or another élite school, the very fact of your admission is going to increase your worth in the job market. But there is not much evidence the actual education does very much.” Pfeffer had long been sceptical of the economic value of the MBA. He became convinced after a group of consulting firms and investment banks compared the performance of B-school graduates to those trained in two- or three-week programs that teach new employees the basics of business. They found that the non-MBA benighted did no worse, and in some cases rather better, than their MBA-anointed peers. They also found that more business education did not beget higher rank or salary. The implication is startling: “you have to question what goes on in the two years it takes to get an MBA if someone can virtually be equivalent in two or three weeks. What that suggests to me is that if you take a smart person, and give them [sic] a relatively short course, a mini-MBA if you will, they basically do as well as the MBAs.”
One critical problem with B-schools and universities, to which Crusoe can attest, is that much of their present curriculum (which is quite comparable from one institution to the next) is stuffed with irrelevancies and woolly and esoteric nonsense. Another is that truly valuable ideas embodied in applied works of enduring significance have been banished from the curriculum. At the 2002 AGM of Wesco Financial Services, Charles Munger noted that “there’s a lot wrong [with American universities]. I’d remove three-quarters of the faculty – everything but the hard sciences. But nobody’s going to do that, so we’ll have to live with the defects. It’s amazing how wrongheaded [the teaching is]. There is fatal disconnectedness. You have these squirrelly people in each department who don’t see the big picture.” Generalising his point, Mr Munger continued: “this doesn’t just happen in academia. Companies can get balkanised. Look at what happened at Arthur Andersen and Enron. They weren’t all bad people, but their cultures were dysfunctional. It’s easy to create such a culture, in which you have good people but terrible results. Many areas of government are dysfunctional. Universities are complicit. They don’t feel guilty about the product they’re producing … They are strong in the hard sciences, but if you go to business, law, sociology…”
But the problem, Crusoe realises, is much more fundamental than the contemporary BS curriculum. It encompasses the very assumptions that presently underlie business and university education. As Terence Kealey notes (The Economic Laws of Scientific Research, Macmillan, 1996, ISBN: 0333560450), the arguments that Francis Bacon used in 1605 in a (fortunately unsuccessful) attempt to persuade James I that the Sovereign should subsidise science have survived unchanged – and virtually unchallenged – to the present day. Alas, today’s Politicians are much more accommodating than James I. Bacon attempted, like the Academics whom Crusoe encountered, to justify the state’s subsidisation of R&D for its own sake. “To the King … there is not any part of good government more worthy than the further endowment of the world with sound and fruitful knowledge.” Bacon wanted not just state-subsidised science but more and bigger science; and he also shamelessly played a nationalist card. Believing that pure science underpinned applied science (i.e., technology), Bacon also advanced an economic argument: “if any man think philosophy and universality to be idle studies, he doth not consider that all professions are from thence served and supplied.” Finally, Bacon believed, technology created wealth for all. “The benefits inventors confer he concluded, “extend to the whole human race.”
Bacon and his descendants over the past four hundred years, in short, advance four premises. First, governments must finance science, education R&D and the like because otherwise no one else will finance it (or enough of it). Second, the best science, R&D and so on occurs in formal or institutional settings (primarily universities). Third, university-based science and R&D begets technology. Finally, education and technology creates wealth. Hence, say Baconians, by financing and subsidising science and education governments can create wealth. From these faulty premises the vicious food chain observed by Crusoe is built: the Academics praise the Politicians; the Politicians channel a portion of what they have plundered to the Academics; the Academics perform their “REE-search” and other ceremonies – and both the Academics and Politicians flatter themselves that the increase in living standards over the decades, which in truth is caused by individuals’ savings and the success of entrepreneurs, is a consequence of the state’s finance of science, education and R&D.
