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.