Inside Job and b-school disclosure

Finally got to see Inside Job, Charles Ferguson’s documentary about the financial crisis. It’s terrific and should be on the curriculum at every business school.

The final 20 minutes or so are devoted to the failures of academic economists to predict the crisis, or even come down on the banks afterwards. Ferguson, rightly I believe, attributes this to the economists’ eagerness to receive consulting gigs with banks. His interview with Glenn Hubbard, Dean of Columbia Business School is devastating. Here’s where Hubbard goes from Jekyll to Hyde.

It seems so obvious that economists and business school professors should have to disclose their consulting arrangements. I cannot see a single, reasonable argument for them not to. If our economic health really does depend on their ideas, and much of it does, then we deserve to know what goes into shaping them. If they wish management to be treated as a profession, then they should abide by the codes of doctors and lawyers in disclosing any potential conflicts of interest.

Which brings me to Michael Porter and Libya. I’m a great fan of Porter’s work generally  – though his most recent HBR cover wasn’t so hot – and his history advising Libya doesn’t change that. I’m sure part of him wishes he had never taken up the invitation from Gadaffi and his son. But his work is in helping countries which could use his advice. These tend to be places with serious problems of every kind. As long as he’s open about this, which he was, then I see no problem.


Grave dancers and Optimists

Niall Ferguson on Start the Week yesterday grave dancing about the demise of the US and Western Europe and the rise of Asia. All familiar stuff. I guess a historian’s job is to interpret rather than suggest solutions. But is Ferguson so popular with hedge funds and banks –  he’s a consultant at GLG – because he appeals to those whose lives and capital are completely mobile? They can easily modify their behavior based on what Ferguson and the other prophets of Western decline say. What is anyone else to do with this endless doom-mongering?

Fortunately I also read this wonderful piece in the NY Times about the rise of local manufacturing in certain American cities. It offers an interesting challenge to the obsession with scale growth companies and the rise of new mass markets in Asia. Could a very different force also be at work – a return to small companies which offer mass customization? We see great scale opportunities for pure tech plays, Twitter, Facebook etc. but also the rise of many more niche businesses which can take advantage of plummeting technology, manufacturing and marketing costs.