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Archive for December, 2009

Third most significant b-school story this year!

According to Business Week, attacks on business schools for their role in the economic crisis – mine among them – were the third most significant business school story of 2009. Good to know we made some sort of splash.

Rise of business in undergraduate education

This piece in the American Scholar offers a great analysis of why fewer and fewer undergraduates study the humanities. Business studies, by contrast, have been surging. Between 1970/71 and 2003/4, the percentage of US undergraduates studying business went from 13.7% to 21.9%.

Meanwhile for the humanities, it was a grimmer picture: English, from 7.6 percent of the majors to 3.9 percent; foreign languages and literatures, from 2.5 percent to 1.3 percent; philosophy and religious studies, from 0.9 percent to 0.7 percent; history from 18.5 percent to 10.7 percent.

There are many reasons for all this: the ineffectiveness of humanities teaching; the way in which children are forced to choose their careers at an ever younger age; the competitiveness of the economy; the explosive growth in often worthless higher education.

But if one in five American undergraduates are now spending three or four years studying business, what exactly are they being taught that contributes to the economic, social or cultural betterment of this country? Or are they spending their time and money studying subjects which would be better taught by companies in a few day/night courses to those who need to know them?

Goldman sold CDO assets to short them…

If true, this piece in today’s NY Times is both staggering and depressing. It seems that ex-Goldman employees are starting to talk about all that went on from 2006-2008 in the selling of collateralized debt obligations – and Goldman’s subsequent profits from shorting the very products it sold. Whether or not it turns out to have been illegal, it smells very bad.

The piece suggests Goldman created securities knowing they were going to plummet in value. Sold them aggressively. And then bet against them, leaving the holders of these collateralized bonds to suffer. This then contributed to the freezing of the credit markets and everything else we’ve seen since 2007.

Of course, it’s not all Goldman’s fault. Morgan Stanley, Deutsche Bank et al. were all doing the same thing. But if I were an executive at any of these firms today, I’d be seriously worried about men with handcuffs and arrest warrants walking onto my trading floor in the coming months.

Seeds of growth

I just wrote this piece for Nikkei Business Online in Japan:

In my local newspaper this month, there was a profile of a local fence builder, Don Banks. He has been building fences all over Connecticut for thirty years, from small garden fences to horse rings to long, winding fences around enormous farms.

Over the past year, he said, he had received more orders than ever for vegetable garden fences. In this part of the world, that means a fence tall enough to deter deer and buried deep enough into the ground to guard against moles and woodchucks.

Though Banks did not say it, there are a few forces driving this sudden demand for vegetable gardens in America, all of which are shafts of sunlight in what remain gloomy skies for America and the world.

The first is a growing disgust with our system of food production. Over the past few years, a torrent of books and films has come out attacking the system of mass agriculture. Read or watch them and once you know what goes on in breeding farms and slaughter houses it’s unlikely you’ll ever want to eat an American chicken or steak again.

This has coincided with a growing environmental consciousness. People want to eat food produced locally, not shipped thousands of miles on carbon spewing planes, trains and trucks. And they want it to be healthy and clean, not pumped full of preservatives and pesticides.

Another force behind the vegetable garden movement has been a desire among Americans to bring everything closer to home. If these last two years have proved anything, it has been the cost of being over-exposed to others, whether it is banks who lend you money, supply chains which encircle the world, employers who slash jobs or a government which is plunging ever further into debt.

Self-sufficiency is what everyone covets: a solar array on the roof providing electricity, a well providing clean water; gold in your portfolio in case the currency goes pop; and vegetables growing in your own soil.

All of which is wonderful news. These are lessons we might have learned from our grandparents, or the famously healthy, long-lived, hard-working fishermen of Okinawa. Don’t rely on others. Provide for yourself. And instead of spending your weekends shopping or playing golf, dig those hands in the dirt and produce something.

At a moment when the government is stretched on every front, individuals are re-learning the art of fending for themselves.

A generation has learned the true cost of cheap toys from China and cheap oil from the Middle East. It’s not just the price you pay in a store or at the pump. There are global, economic and strategic consequences to depending on the labor and resources of others. You become vulnerable in ways you might never have imagined, not all of them pleasant.

The business equivalent of the novice vegetable gardener is the entrepreneur. And now the world is looking at America and wondering. What next? What great business is going to surge out of the ground in Silicon Valley or New York to propel the next phase of economic growth?

I was recently in Kansas City visiting the Kauffman Foundation, a center for thinkers, writers and business people devoted to the promotion of entrepreneurship. The view there is that America’s economic salvation lies at is always has in the minds and hands of entrepreneurs. Nearly all net job creation in the United States since 1980 has been generated by firms operating less than five years. New companies drive this economy. Entrepreneurs drive it.

There is a sense at Kauffman that the people who have spent the past two years struggling to meet payroll, fighting off creditors and suppliers are perhaps now, finally, starting to breathe a little more easily. It has been an extreme trial, but it will have forged a new class of super-fit, super-entrepreneurs who will thrive as the economy improves. The opportunities for them will be vast.

Japan too, it seems, is retreating into itself, pulling back from its great global alliances and fierce economic competition to focus on its own needs. It is what anyone does after a period of trauma. You go home, you push the world away and you rebuild your strength.

The noisy advocates of globalization and flat markets will say this is a terrible mistake, and that the only path to growth lies in throwing open one’s doors and racing against the world. That may be true. But any act of self-healing should be applauded not criticized. We all need moments to pause and take breath, to dig in the soil, to take care of ourselves and build a fence against predators. It is how individuals, entrepreneurs, businesses and countries can recover their health and spirits and grow.

To build a vegetable garden is an act of great optimism and faith in oneself. That Americans are doing so in ever increasing numbers bodes well for 2010.

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