Beyond Grey Pinstripes?
Critics of free enterprise have set their sights on business schools, blaming them for recent corporate scandals. If only people like home goods retailer Martha Stewart and Enron's Jeffrey Skilling were taught business ethics during graduate school, they might not have committed their alleged crimes, or so the argument goes. The implication is that business schools are aiding and abetting accounting fraud and other misdeeds by failing to teach their students not to commit crimes.The criticism of business schools plays into a common perception of capitalism as a lawless, under-regulated activity. [Full article]
Comments (6)
The basic disciplines of management are operations, finance, accounting, organizational behavior and marketing
As a CPA I am frustrated that I have yet to find, in the professional literature geared to accountancy, a blow by blow recounting of the misdeeds of Enron in terms that an accountant can understand (e.g. specific GAAP relating to the treatments of subsidiaries, the booking of hedges - the revenue on own stock was patently wrong). All I have seen are basic media treatments tossing out 'accounting irregularities' and dramatic coverage of congressional committees. Nothing intensively analyzing the issues within the trade journals. In fact, they seem to actively shy away from even discussing it.
Yet there is a cultural movement afoot to 'change' and to be abjectly apologetic, and that massive new doctrines must be put into place to fix what is 'broken'. The sense I get is a de facto guilt before a thorough discussion of the charges has been laid before the profession. It seems almost as if 'the government' is pissed, and regardless of facts, their perception is reality so we must genuflect and toe-the-line to get back in the good graces.
At the end of the day, whatever was done 'wrong' within Enron was whistle-blown by an accountant. Other accountants (i.e. outside auditors) may have been complicit in misdeeds. But all this shows is that it individually based, not professionally or educationally. But I guess a 'collectivist' response is always the answer for curbing individual misdeeds, especially if it can be done through ineffective gestures and the expelling of hot air.
Published: July 2, 2004 9:49 AM
Or why do we not blame the public schools for the bad behavior of teenagers? For a very long time they were taught to abstain, but now we give out condoms. We can't show the 10 commandments and wonder why they see stealing as a gray area. There is a lot of Politically Correct junk enforced, but that does not create citizens.
The problem is you cannot replace honor and integrity with regulation. Just as the marketplace determines a just and fair price, the more honor is valued, the more just and fair the society in general will be. Someone without honor will simply ignore or find loopholes faster than regulations can be written.
It is not the blatant lies that destroy cultures, it is the tiny compromises. Honor demands the accounting statements be accurate and conservative. Start fudging and they will appear better than they are - but where do you stop? Usually only after things have collapsed and reality is now exposed.
Business Schools, or for that matter any purely technical schooling cannot instill ethics. They may teach what they are, but cannot make anyone follow them.
As C.S. Lewis said, "We laugh at honor, and then are suprised to find traitors in our midst".
Published: July 2, 2004 11:28 AM
Most of America's most noted entrepreneurs never attended business school anyway (Eg; Microsoft's Bill Gates). They perceived what customers wanted and provided the products and the services at prices customers were willing to pay. A future generation of American CEO's who are well schooled in left-wing business ethics, will be as potent as stud breeding mules. They will be the eunuchs of the business world. Their business counterparts from India, China, Hong Kong, Singapore, Indonesia, Malaysia and Japan may leave them in the dust.
Harry Valentine
Published: July 2, 2004 2:34 PM
--We can't show the 10 commandments and wonder why they see stealing as a gray area.--
what garbage. anyone who needs a stone tablet to tell them stealing is wrong has bigger problems to deal with.
Published: July 2, 2004 7:47 PM
Woo, getting feisty in here!
I think that the Enron meltdown and all the other scandals are isolated incidents. In terms of the total size of the economy, they are drops in the bucket. There are millions of honest businessmen out there who far outnumber the dishonest.
The truth of the matter is that the market rejects dishonesty in a much more meaningful fashion than government enforcement ever could. Who wants to do business with Fastow? At this point he would probably be lucky to be hired as a manager at a McDonald's. Arthur Anderson, the account firm of Enron went totally out of business as a result of this scandal and everyone involved is now stigmatized. To me this this far greater punishment than being paraded around in handcuffs by the Justice Department.
Ethics in business will never be enforced by the government, or classes in business school. It will always be enforced by the market's self-regulatory process of shunning the dishonest and rewarding the good willed.
Published: July 3, 2004 1:03 AM
Scott: My experience contradicts what you are saying. In my experience, quite a number of people think injunctions against stealing are merely taboos. --And they think the same of all other injunctions: that they are arbitrary and artificial and that human beings could get along without them. The thought is that if everyone together decided to steal (or whatever), stealing (or whatever) would not hurt anyone.
Recently I saw a quote from Coolidge to the effect that we cannot make laws; we can only discover them. This is what I believe. But it is far from trendy.
On a different note: My Quick & Reilly statements quarterly present a PORTION of my dividend from my foreign stock as being the WHOLE dividend generated by the company. At first, Q&R said in a letter that there had been a dividend cut and that this cut accounted for the shortfall. There was no dividend cut according to the dividend-paying company (who should know!)whom I contacted via internet. By now there is absoluteley no one anywhere who refutes that Q& R is representing this net dividend as gross dividend. There are even some Q&R employees who will say ORALLY that this is so. THIS IS AN EGREGIOUS VIOLATION OF ANY PRINCIPLE OF ACCOUNTANCY THAT I KNOW OF. IT IS FAR WORSE, I BELIEVE, THAN ANYTHING ARTHUR ANDERSON HAS EVER BEEN ACCUSED OF! But the NYSE has been merely futzing around on the issue for months, telling Q&R to write to me and "explain." There is little money involved, and I am not anyone important, so I doubt anything ever will be done. The point is: If you look only at the violations and alleged violations you see in the news, you will be badly misled as to how violations are treated when they involve ordinary people. You will be mislead into believing that regulatiors are doing ANYTHING, right OR wrong, to justify their existence as regulators. In reality, and with regards to ordinary people, they do nothing whatever.
Published: July 3, 2004 9:21 AM