Is a Harvard MBA Bad for You?

A recent article in Inside Higher Ed argued that “We need to abolish the Harvard M.B.A degree for the good of the people who pursue that path, as well as the world at large.”

This is a nice sentiment, but the problem is bigger than the Harvard MBA, or even MBAs generally.

The underlying problem is increasingly mercenary values in society, and the rising popularity of MBA programs was more a symptom than a cause. The reason I am pretty sure the causality runs largely the other way is that it was during the 1980s that societal values moved in a big way towards valuing profits and markets over relationships and communities. This in turn was the product of a long-running, well-funded effort by then extreme right wingers to undo the New Deal and make prevailing views in the US more friendly to Corporate America. The strategy for that project was set forth in the 1971 Powell memo.

It is true that the explosion in MBA programs, and the number considered to be high quality, has exploded since I was a kid. Then, the prestigious names were Harvard, Stanford, Wharton, and Chicago, and for Wall Street jobs, you could add Columbia. Since then, a raft of programs considered second-tier (Darden, Sloan, Tuck, Yale, Kellogg) are now seen as close to on a par with the glam programs.

The resulting growth in the number of people getting MBAs who expected to earn big bucks in turn led to MBAs colonizing not for profits like hospital and higher education administration. That in turn has led to societal harm like the corporatization of medicine (see Health Care Renewal for a long-form treatment) and less and less university revenue going to teaching, and more to turning the schools into hedge funds with educational arms attached to them.

Tolerance for misconduct also rose. It would have been inconceivable in the 1960s that someone who had gone to prison, like Mike Milken, could ever recover any semblance of respectability. Admittedly, Harvard Business School did go through a bout of navel-gazing after some alumni were involved in 1980s scandals. But the school then determined that students’ moral compasses were set long before they went to grad school. HBS resolved to enroll more ethical students, but that sounded like a silly idea, since the crooked types would figure out what to say.

Similarly, just having more MBAs out there doing whatever they do is probably a bad thing because studying economics, even thinking about economics, makes people less compassionate, and MBA logic is economic logic with a little less jargon.

But as the same time, there’s corruption in fields where MBAs are scarce to non-existent. Look at scientific publication. As Dr. Marcia Angell, who had been the editor in chief of the New England Journal of Medicine, wrote in 2009:

It is simply no longer possible to believe much of the clinical research that is published, or to rely on the judgment of trusted physicians or authoritative medical guidelines. I take no pleasure in this conclusion, which I reached slowly and reluctantly over my two decades as an editor.

However, MBAs were positioned to benefit most from the rise of “Greed is good”. And the fact that economists promoted the idea that companies existed to increase shareholder value, a made-up idea with no legal foundation, led to equity-linked executive pay, which led to its explosive rise.

And the rise in MBAs is directly related to the increase in inequality. The 0.1% consists largely of hedge fund and private equity managers, fields colonized by MBAs. The 1% is the domain of CEOs and top professionals.

Now we get to the second beef about the Harvard MBA, that it makes people miserable, as confirmed by Charles Duhigg’s report on his 15 year reunion.

Again, the causality is backwards. Most people are miserable. The great world religions’ main purpose is to reconcile mortals to the inevitability of suffering. Money does not make you happier once a certain (not all that high) level of income is met.

On top of that, highly unequal societies are unhappy societies. Stress is high, even at the top, because if you fall, your decline in status is great and you are almost certain to lose all of your former supposed friends. Most MBAs live in worlds where the gradients are high.

The Victor Frankl school is that what keeps people going is having creative work they consider to be important or a strong personal relationship. MBAs, almost by definition, are not creative in the Frankl sense (as in artists, writers, scientists). They have (hopefully) average to high intelligence and decent social skills along with being sufficiently organized and responsible to be allowed to be in charge of things.

MBA programs select for ambition, and then the competitiveness of most schools plus the pressure cooker of the most sought-after recruiters further encourages graduates to invest in their careers at the expense of their personal lives. And despite the plush settings and lofty pay, the substance of many MBA jobs isn’t that great. A classic scene from Frank Partnoy’s book Fiasco has the members of the Morgan Stanley derivatives team saying to a person that they hate their work, they’d rather do anything else, even dig ditches….as long as they could make the same amount of money.

But things may have gotten even worse by virtue of younger people being over-coddled and over-praised and having even less realistic expectations for their adult life. For instance, in an essay I hope to address soon, the author wrote, “I came into my job as a McKinsey consultant hoping to change the world from the inside…” I think he sincerely meant that. I would not be surprised to learn that McKinsey made a sales pitch along those lines.

In my day, (mid 1980s), if anyone had said that, they would have been seen as a nutter. One of my friends who wound up being the first woman partner in M&A on Wall Street, said of her job, “It’s indoor work”. A job at an elite firm was understood to confer high wages, respectability, and good downside protection if it didn’t work out. If you wanted to change the world, join the Peace Corps.

So I’m not surprised to learn that most MBAs are unhappy, and I suspect that unhappiness is much more pervasive these days due to 24/7 demands on just about everyone and much greater career instability. I do know some people in my peer group who seems happy, and a couple that I think are genuinely happy. But they had the same temperament when they were young. But many people who get MBAs, particularly the sort that winds up at McKinsey, are insecure overachievers. So their dissatisfaction should come as no surprise. Those highs of meeting a goal are short-lived and the underlying anxiety resurfaces pretty quickly.

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  1. Hayek's Heelbiter

    So true, so true.

    For many years I toiled as a Wall Street drone, from the halcyon days when I was actually part of the team and received benefits, invitations to the Christmas party and even tombstones! (I know you might find that hard to believe), to the period when Ivan Denisovich received better treatment (though they took nettle soup was off the menu when they turned the employee cafeteria into a profit center).

    I worked the graveyard shift at a major investment bank at 130 Liberty. Before our building was destroyed in 9/11, my supervisor and I had a little game after we got off work in the morning. As we rode the escalator down into the atrium, whoever spotted the human being with the most miserable expression riding the up escalator would win. The loser would then buy the other a cup of coffee.

    These were mostly men (with the occasional woman) earning a seven- and eight-figure incomes, yet you would have thought their best friend had died the night before.

    The one thing they don’t teach you at the MBA factory is that no matter how much money you earn, there’s always somebody who’s going to be earning more.

    1. Off The Street

      And what those somebodies are willing to do to achieve those higher earnings. I met some scoundrels in my interactions with Wall Street, back when they talked about a win as ripping someone’s face off. That tended to overshadow the decent people. I liked the McKinsey people a lot more than the bankers. :)

  2. PlutoniumKun

    Thanks for this, great insights (non MBA here). I once worked for a very large international construction management company where the HR manager semi-jokingly told me that studying for an MBA was considered a firing offence – if any of the managers had one, they certainly kept it very quiet as they’d be openly mocked. The company had its problems, and the word ‘ethics’ was unknown, but the complete absence of management-speak in meetings was a breath of fresh air.

    Just a point about corruption in science and medicine – I can’t prove this, but I suspect that much of this can indeed be indirectly associated with the eruption of MBA’s and the related mentality. One factor I’ve found when joining organisations with lots of MBA’s and MBA wannabies is an obsession with measurable quantitative outputs. I’ve been in meetings where despite the managers agreeing that the quantitative output chosen makes no sense whatever, they still insisted on going ahead with it ‘…because we must’.

    Those in academia and medicine can confirm this or otherwise, but I strongly suspect the focus on crude published paper and citation counts has done enormous damage to the quality of submitted papers and has resulted in pressure to cut corners. And I find that whenever you trace back a quantitative output measure that doesn’t make sense to its source you always find someone with an MBA or economics degree.

    1. sinbad66

      ‘One factor I’ve found when joining organisations with lots of MBA’s and MBA wannabies is an obsession with measurable quantitative outputs.’ and ‘I find that whenever you trace back a quantitative output measure that doesn’t make sense to its source you always find someone with an MBA or economics degree.’

      This observation is spot on.

      Have a bunch of MBAers and wannabies move into upper and middle management of where I work at. They seem to want to quantify everything you do (even if most of the flow process is out of your hands; oh well, still your baby!). For instance, they want to measure and hold you accountable for the amount of work you do, even though the amount of work you receive is out of your control (can’t pull it out of my (family blog). But, oh well, still your baby….

      1. Thuto

        Yep, the tyranny of “management by metrics” is felt by many a plantation worker in the cotton field we call the corporate world.

      2. Yves Smith Post author

        The “measurable quantitative outputs” became a fad starting in the 1990s and it’s only gotten worse. I suspect it bled back from consultants and job-seekers being told they needed to present quantifiable accomplishments. It may also have to do with the PC revolution (which really only took hold in the mid 1980s; when I left McKinsey in 1987, consultants did not yet have PCs on their desks; you had to go to a computer center if you needed to do quant work).

        1. Greg

          I think it’s definitely PC-related. Give an idiot a spreadsheet and he thinks he understands the world. Even if in my experience the basic numeracy of the average MBA is pretty crap.

          Actually thinking about it, even the big four should-be-scary auditors I’ve run into have been ummm, so simplisticly minded when it comes to numbers and business flows that they were easily turned in the desired direction.

          1. zer0

            MBA’s are generic managers. You could swap any director/VP level at virtually any company with another to no benefit or detriment. These guys walk all over each other, and they LOVE taking credit for everyone else’s work (usually the analysts, engineers, pm’s, etc).

            The thing that mollifies me is that their work can now be done by software. A computer can EASILY go through a database and crosscheck the numbers to find the most optimal path of generating higher margins/profits. Which is usually the only thing these guys do.

            Of course, MBAs will continue to exist as they really represent the “I spent $XXX,000 (of my parents/companies money) to join the rich people club”. When I was in the PhD program at NU, I just recall the constant “how hard I work” stories the MBAs would tell each other, almost like an exercise in group hypnosis. Meanwhile, I would see the poor Chinese PhD’s working 20+ hours on the weekend, frantically trying to get everything done for the a**hole professor who of course took advantage of the fact that the foreign students have 0 recourse in anything.

            And while these real studious students worked weekends, the MBAs went to parties rubbing elbows with the Pritzkers, college dean, etc. (this was Chitown).

            Nothing says “demise” like having a bunch of egotistical generic managers trying to tell everyone what to do, and how to do it. America is slowly but surely becoming less and less competitive internationally. Just look at the charts of how many large US corporations are now owned by foreign entities. It’s astonishingly high, but not surprising seeing the landscape of PE corporate pillaging and ‘restructuring’ efforts, along with EBITDA crazies and asset stuffing exercises. The whole “our company is now worth X billion $! (because we bought 6 companies on credit to add to our P/L statement).

    2. David

      I agree, with the additional point that, especially in the public sector, the dangerous people are not necessarily the MBA themselvess, but rather those who have absorbed MBA-type ideas from training courses they went on, taught by people who themselves went on training courses addressed by MBAs. To a frightening extent, managers in the public sector in a number of countries have absorbed MBA-type ideas by osmosis, and are no longer capable of recognising that what they are peddling, and demanding of others, is not common sense, but a type of ideology.
      In academia the effect has been disastrous, both for the quality of work and for the way that power is distributed. If I’m an administrator, perhaps with a degree in public administration from a mediocre university, and you are a world-renowned expert in particle physics or Chinese literature, there is no way that I can even begin to understand, let alone assess, what you are doing. But if I succeed in making the basis of comparison not the excellence of the work but the number of publications and citations, I can exert power over you by criticising the quantitative aspects of your output. This has led to a huge shift in power in many countries from experts to non-experts, and from qualitative evaluation to quantitative measurement. Once you tie money to quantitative measurement you have a formula for total control. You also have a formula for disaster, especially in the subjects like the humanities where your objectives are by definition non-quantifiable anyway.
      It was rightly said that if Ludwig Wittgenstein, probably the greatest philosopher of the 20th century, were around today, he wouldn’t get a job. After the Tractatus he essentially published nothing for the rest of his life, most of which he spent teaching at Cambridge.

      1. larry

        David, re citations: nicely put. You are quite right.

        I would disagree with your contention that Wittgenstein was the greatest philosopher of the 20th C. There are others who could be said to be the best. While the Philosophical Investigations wasn’t published in his lifetime, he spent many years working on it, so he didn’t just teach. My criticism of PI is: good questions, bad answers, though I admit I haven’t looked at it for a while.

        1. David

          OK (he said, tongue in cheek). I did say “probably.” LW isn’t to everybody’s taste. But I can just imagine today’s Senior Deputy Assistant Sub-Dean for Research Output Metrics harassing him for a publication date for the Investigations.

          1. PlutoniumKun

            They certainly wouldn’t have approved of where he did his best work. In one of the glasshouses in Dublins Botanic Gardens they have put a plaque on the stone step he allegedly liked to sit on for hours, thinking about things while looking at the banana trees.
            I suspect the real attraction was the semi-tropical heat in the glasshouse, not the plants. Or maybe it just reminded him of the Glashaus in Vienna.

      2. Thuto

        In an age of credentialism run amok in academia, citations are gold dust. In fields requiring unrestrained exploration to drive truly transformational breakthroughs/discoveries, the alignment of elite publications and journals with orthodoxy guarantees that the lonely scientists working on the fringes of their fields and colouring outside the established lines will be starved of the currency (I.e. citations) needed to bring their discoveries into the mainstream (said views threatening as they do to shake the foundations of said orthodoxy), with the result that society as a whole registers a net loss and a disruption in its march towards progress.

        Much of academia has been captured by corporate interests and a not insignificant number of institutions are now paid shills openly carrying water for their corporate benefactors. Regarding the elite school MBA itself, is possessing one, even a Harvard one, still functionally equivalent to strapping a jetpack to yourself as you set off on a fast tracked climb of the corporate ladder, given the proliferation of “elite” programs on offer in the market?

        One thing I do know is that the culture of (un)officially purging the exco and c-suite of non-MBAs inculcates a type of “MBAsque group think” that ignores the inputs of non-MBAs at best, or laughs them out of the (board)room at worst.

      3. PlutoniumKun

        Thanks David, I’ve also noticed how this type of management has crept into the public sector, even in the absence of too many formally qualified ‘management’ types (MBA’s usually price themselves out of civil service jobs). In some respects the result can be worse than the private sector as they implement performance metrics without any regard whatever to what they are trying to achieve.

        My brother is an IT consultant (and also as it happens, has an MBA from a big name school, but he’s learned to keep quiet about it as the rest of our family teases him mercilessly every time he falls into management speak) and has told me that some of his meetings with Irish and UK government departments can be very frustrating as in some they request systems that are solely designed to chase output metrics without actually addressing the work needs of the organisation. As he put it ‘you can have IT systems that track everyone’s work, or you can have IT systems that facilitate more efficient work – you can’t have one that does both well’.

        The problem with well functioning public sector bodies is that nobody notices when they do their job efficiently and quietly. And often nobody notices when they degrade in quality. But they sure as hell notice when a country hits a crisis and then everyone realises the public bodies supposed to deal with it are not up to the job. I need hardly mention the ‘B’ word here.

        1. David

          Yup, and government departments often have no choice about using output metrics, because some central body, the Treasury or equivalent, is demanding that they do. Output metrics are wonderful for finance ministries, and radically increase their influence in government.
          When I get a chance to explain my point of view, I always say that good government is not about metrics, but about quality. Essentially, everything that is important in government is difficult or impossible to measure. There’s some interesting evidence, indeed, that setting targets actually reduces performance, since once people have met targets (number of cases processed, for example) they stop working. I ask people who are keen on metrics whether any of them have ever spent much time in countries where the government doesn’t actually function. Few of them have, but it’s an educational experience and much to be recommended.

          1. PlutoniumKun

            Ah yes ‘quality’. I once earned myself a permanent reputation as ‘not management material’ when after an hours talk on new management systems I put up my hand and asked ‘why in the last hour has the word ‘quality’ not been used once?’ I was informed ‘well, we assume all of us do top quality work’ and the subject was quickly closed.

            While on the subject of Wittgenstein and philosophy, I was tempted to start quoting from Persigs ‘Zen and the Art of Motorcycle Maintenance’ which deals a lot with the intangibility of ‘quality’, but I think I wisely decided to keep my mouth shut after that.

            1. paul

              Well all I can say is that I’m happy those second hand ideas passed to a third party.
              Would/will Homer Sarasohn complain about the carrier medium?

              1. Heraclitus

                Deming had a very reserved personality, not like a self promoter at all. He gave plenty of credit to Walter Shewart, the ‘father of statistical quality control’ for whom I think Deming worked. Shewart was brilliant but had trouble communicating his ideas to the public. Deming was better at explaining Shewart’s ideas.

        2. Colonel Smithers

          Thank you, PK.

          With regard to MBA types pricing themselves out of civil service jobs, that is no longer the case in the UK.

          Under New Labour, in thrall to MBA jihadists, some, mainly from McKinsey, were recruited at higher levels or future leaders were sent / encouraged to study for MBAs. Some are even posted directly into the armed forces, as opposed to being kept at the MoD, as civilian employees.

          Your final paragraph is spot on. One can say and see that about the UK bureaucracy a generation after Thatcher’s jihad. It’s a delicious irony that Brexit can’t be delivered without a proper civil service – and with Northern Ireland. Talk about the Tories being hoist decades later. That’s worth cheering, or consoling, with Pol Roger :-).

          This sort of thing is interesting. There’s an 18th century building called the Intendance in the heart of Port-Louis, Mauritius. Intendants were recruited by Colbert, often from the younger sons of aristocrats, to help Louis XIV run and centralise the hitherto fractious kingdom. The concept rolled out overseas. To this day one notices how, in comparison to other colonies, the island has benefitted from a good civil service. Mauritian civil servants are more likely to study at the grandes ecoles rather than pursue further study at UK universities.

          On another note, please read my reply to your last Brexit comment on the thread from yesterday. Interested to hear your thoughts.

      4. Swamp Yankee

        I agree very much in terms of the MBAization of academia. Even here at my 2 year, community college, emphatically not a research institution, we get our own version of MBA hell: Assessment.

        What is Assessment, you might ask? Damned if I know. We have it explained [sic] to us at the beginning of every semester, a room full of people with advanced degrees, and the only conclusion we can come to is that it is some kind of MBA jargon-cant imported into teaching.

        In theory, Assessment is trying to show that our students have learned something by taking Biology 101 or History 102. Isn’t that what grades are for, we ask? No! reply the Assessment gurus (who are being paid good money to shovel nonsense at us). It’s something else, and here are a bunch of incomprehensible buzzwords to obfuscate things further (“closing the loop”, e.g. — what does that even mean?).

        I still don’t have any clear idea what it is, nor do most of my colleagues. Here’s one critique:

        The only problem is that accreditation boards love this stuff (themselves no doubt dominated by MBA/Public Admin/Educational Bureaucrats), and so we at least have to take some time out from, you know, actually teaching people stuff, to do a largely Potemkin version of “Assessment” to keep them off our backs.

        It’s just a waste of time, I’ve concluded.

    3. vlade

      It’s a belief that if you can’t measure it, you can’t control it.

      In the IT, it has been bane of my (previous) life, as then you get meaningless metrics like Lines-of-Code.

      1. mraymondtorres

        Worse than that! It’s the belief that if you can measure it, you can control it!

        I think this backward-looking approach gives cover to the petty ineffectiveness of the meddlesome management style that reigns today as well as the incrementalism in politics.

      2. Jeffrey Fisher

        Some corollaries of ‘if you can’t measure it you can’t control it’ are ‘if you measure something wrong you will control it wrong’ and ‘it’s way easier to measure something badly than to measure it well’.

    4. Ape

      Yes – and it corrupts honesty. Everyone can see how to game the numbers and if you fail to do so, you lose. So you game… and feel dirty and undermine your honesty and the least honest win.

      And people waste time try to justify it, further destroying their ability to think critically.

      Operant conditioning doesn’t work when the mouse is as smart as the experimenter.

    5. Ford Prefect

      Having worked in the engineering field for my entire career, I can testify to the continuous re-organization that goes on. Sometimes there is a re-organization that makes sense organically due to obvious market changes, retirements etc. However, most appear to be largely random and you can pretty much always trace them back to a management consultant who came in with MBAs, pretty graphs, and binders.

      I have developed a simple BS test when the reorganization or other “transformational” event or program is trotted out. I simply look at the memo that describes it. If I can go to Forbes, Fortune, or HBR and find the management jargon terms from the memo in the past three years or so of those magazines, then it is usually an inorganic management consultant driven change because you can’t get paid big bucks to come in and say “your organization appears fine with a couple of minor tweaks”. In the inorganic cases, you can just ignore them because they are shuffling the chairs of senior executives (that you don’t know anyway) and you can expect another reshuffling in about 6 months before they have been able to issue any edicts that impact your day-to-day work.

      I think the biggest single problem that I have seen regarding data collection and quantification is the fundamental assumption that if you can collect data, it is important and meaningful, and conversely, if it is difficult to collect clear quantifiable data then that information is unimportant. So we get endless surveys, schools are constantly testing students in incredibly badly organized ways (e.g. they can’t get the annual baseline tests rolled out to the classrooms until November so the students have already been taught up to one-third of the curriculum before they get baseline testing to compare with end of year testing).

  3. larry

    Insightful and thought-provoking essay. I await your forthcoming essay related to McKinsey with great interest. One Harvard MBAer once said to me that he thought the degree was a bullshit one imbued with superficial content. I didn’t ask him if he liked his job.

    1. John Wright

      I remember seeing a different expansion of the “MBA” abbreviation carved into the back of a classroom chair.

      MBA = “Most Bullshit Available”

  4. larry

    I recommend Broad and Wade, Betrayers of the Truth: Fraud and Deceit in the Halls of Science (1983).

  5. Mark

    This hits home hard for me. Relatively recently I was in a relationship with a wonderful person, but somebody who fits the picture of personality painted here. She works for one of the big consultancies. It didn’t seem a healthy way for her to live. She knew it, but she also couldn’t resist the lure of the next achievement.

    A couple of phrases in particular:

    “I came into my job as a McKinsey consultant hoping to change the world from the inside…” I think he sincerely meant that. I would not be surprised to learn that McKinsey made a sales pitch along those lines.

    But many people who get MBAs, particularly the sort that winds up at McKinsey, are insecure overachievers. So their dissatisfaction should come as no surprise. Those highs of meeting a goal are short-lived and the underlying anxiety resurfaces pretty quickly.

  6. The Rev Kev

    A few random thoughts. Can you imagine a society without MBAs? What I mean is, a society where you could do the training for an MBA, PHD, etc but you were never given a piece of paper saying so and it would have no effect on your pay scales. Therefore you would be judged on your abilities to get things done. I once read that your usefulness in society is actually judged by your ability to complete things so that would fit in.
    Alternatively, what if an MBA was undertaken in the same way that an apprenticeship was done. You would be mostly doing on-the-job training supplemented by book/computer study. After a coupla years, you had to do a Board Examination conducted by the State to judge your abilities in business. Lots of professions used do do it this way, such as doctors, before universities jammed their way into the whole thing to make a profit.
    Trouble is we live in a society where everything is credentialed and you need the piece of paper to be allowed to do something work related. And just to complete the picture, you need more pieces of paper to define your relationships in work between people which we call a contract. Just to enforce it, no piece of paper, no insurance. A very effective system that.

    1. Mel

      But in a fluid situation, in the presence of uncertainty, how do you objectively, fairly, tell who has “got things done”? There’s a huge temptation to prove your judgment is right, cover your ass, by falling back on something measurable.

      I say “if you can’t recognize it, you can’t manage it”, but lots of people would rather bet their careers on something more solid.

    2. Jeffrey Fisher

      In the sciences a PhD basically comes when you manage to publish 1-3 pieces of peer reviewed original research, so it more or less is just an official certificate that ‘this person did some science for the world’.

      1. ChrisPacific

        I used to say that a prerequisite for finishing a PhD is coming to terms with the fact that you aren’t going to change the world. This is actually harder for the prodigies than the grifters.

    3. lyman alpha blob

      MBA short course –

      Does your product cost less to produce that you sell it for?

      If yes, pass.

      If no, fail.

      This course will be offered soon for the low low price of $9,999.99 at Alpha Blob Online Academy – much cheaper than the Harvard degree, but with exactly the same usefulness.

  7. John Siman

    “The underlying problem is increasingly mercenary values in society, and the rising popularity of MBA programs was *more a symptom than a cause*. The reason I am pretty sure the causality runs largely the other way is that it was during the 1980s that societal values moved in a big way towards valuing profits and markets over relationships and communities.”
    Well, there you have it. And four decades later — Thatcher came to power in 1979, Reagan was elected in 1980 — what will it take to effect, well, a transvaluation of valueless values?

    1. larry

      A ‘transvaluation of valueless values’. Now, this is a problem that would have interested both Wittgenstein and Popper. Is it a linguistic puzzle a la Wittgenstein or a substantive philosophical problem a la Popper?

    2. Robert McGregor

      In 1989, Francis Fukuyama’s essay, “The End of History” came out. Remember the thinking then was, “This is it, we’ve reached the optimal type of societal organization. It is Democratic capitalism.” (or what we now call “Neoliberalism.” I clearly remember talking to a friend in about 1985, who said, “Modernism rules.” People’s views bounce from pole to pole, and especially after the Soviet Union fell in 1989, the “smart view” was, “The American way has won, and the American way is Markets, and when markets prevail, it is just ‘up and up’ for most people.” The MBA paradigm was an attempt to to systematize “market thinking” and “market management.”

  8. Carolinian

    So MBAs are like dentists? They hate their jobs but are very well compensated? If it really is only about making money then that is a very sterile goal. Perhaps we should blame American society in general which worships the stuff.

    At any rate thanks for the good post.

  9. leondarrell

    Great article! I’m a non-MBA but find myself surrounded by MBAs, MHAs, other rococo credentials as well. There is a fetish with measurement, although it’s not hard to see the self-serving directions of this data garbage. I suspect some of this might be cleaned-out in the next downturn.
    The other thrust of this, though, is a rise in what I call “Mandarin-speak”, a dense, clubby argot only members understand. Various tech app’s seem to support this trend as well.

    1. Another Scott

      Ironically, one of the most important things I learned in my MBA program was how to see through the bullshit and bad data other departments presented to me. They always have agendas, and many of them don’t even understand the numbers, this is especially bad with the MBA wantabes mentioned above.

  10. antidlc

    MBA here. Not from one of the top-tier schools, though.

    I did learn a thing or two about marketing. I use that knowledge to help local community theatres that run on a shoestring.

    Support community theatre. Wonderful people telling wonderful stories. Let’s you escape for a couple of hours from the evils that the other MBAs have caused.

  11. greg kaiser

    Have the owners of our economy hired management that operates their pyramid scam or is it a Ponzi? Which end of the egg must we open to be legitimate?

  12. KLG

    One point and then I have to go. Regarding MBA-creep in science, yes. I got my first professional job in a basic research laboratory when I was 19. Gerald Ford was president, and I was paying my way through our flagship public research university (you could do that back then). I have been in the game ever since. Getting an NSF or NIH grant has never been easy, but the real problems began when review panels stopped meeting to decide which grants NOT to fund. I will chair a review panel for a national research organization today in a long conference call. Out of more than 20 proposals, not more than 3-4 will get funded. And that is high. Paylines for full size applications at the National Cancer Institute (NIH) are frequently in the single digits. Having written, submitted (some successfully!), and reviewed research grants for over 25 years, it is clear that there is no objective distinction among applications in the “top third” of the pile, but today perhaps 1 in 6 applications will get funded. That kind of pressure on scientists, who are just people, is unnatural and leads to behaviors that are counterproductive: lying, publishing LPUs (least publishable units), unfair anonymous criticisms of manuscripts and sometimes grant applications. Extend the list as you wish. Until the rule returns to this: 30% get funded, 30% will get funded upon revision, 40% will forever remain hopeless, there will be no relief. American science will continue its descent into the abyss, where “excellent” really means “How do you remember to breathe?” The number of essential discoveries that remain hidden is unimaginable.

    Next time we can talk about the pernicious effect of the quintessential neoliberal Bayh-Dole Act of 1980 on biomedical research in the United States. Happy Thursday, everyone!

  13. rc

    Couldn’t disagree more with the premise that MBA’s or greed is good is the root problem. The U.S. has failed to liberally educate its populace in the classics. The problem with expecting goodness out of any advanced professional degree is that it is by definition a trade school. A bad MBA is no different than the construction person providing poor work quality.

    Schools rarely focus on character or virtue in developing good habits that lead to excellence. Any virtuous person would know that by definition greed is not good. It is an Orwellian saying. The lack of critically thinking and acting good people has allowed the few sociopaths to crowd out the good. The good have failed to act with the necessary aggressiveness to crush the sociopaths. The rich and powerful have recruited these climbers to enact an agenda that concentrates power in the hands of the few and has eviscerated the bill of rights and our industrial economy. They have waged perpetual war in our name and built a turnkey police state. And they have created China as an adversary while internally dividing our populace.

    1. Mark Gisleson

      Early 1980s the culture of business lobbied the hell out of higher education to remove liberal arts from the Business College graduation requirements. They insisted they felt oppressed by the obligation to take a Lit class.

      I’d gone back to college and was stunned upon graduation to discover that corporations recruiting on campus had won the right to ONLY interview applicants with the right degree (NOT English). Suddenly liberal arts majors had the option of teaching or working at WalMart (I graduated with honors, but only WalMart would interview me).

      Wall Street changed all the rules they didn’t like, and apparently mandatory liberal arts classes offended the hell out of them. All else that follows speaks to the disappearance of liberal arts degrees from corporate boardrooms. Jackass MBAs could recommend looting the Widows’n’Orphans fund without anyone gasping in horror.

      This shift in degree requirements sucked all the morality out of doing business.

    2. Yves Smith Post author

      The article was implicitly about the US, given the mention of the Powell Memo and how MBAs have colonized higher education and medicine.

      I’m not surprised that things are different in France. Europeans have less reverence for commerce and markets than Anglo-Saxons.

      1. Fazal Majid

        I suspect the pre-MBA background matters. Both my co-founders had an engineering degree (in France as in China or Japan, engineering is the most prestigious discipline). Both have been in the US for 19 years, though, as I have, so they are still relevant to your article. They are from the class of 1998, and by then the curriculum had a lot of emphasis on entrepreneurship (then again it was the time of the first dot-com boom when investment banks and tier 1 consulting firms were stunned to find MBAs shunning them in favor of West Coast startups).

  14. anon y'mouse

    it sounds like you don’t agree with the article, but then again you understand that its points are sound. you also disagree with Graeber’s “bullshit jobs” frame. it’s odd because you do not agree, and then you point out all of the ways that those people are miserable. possibly they are miserable because they know, deep down, that their jobs are meaningless (yes, life is meaningless. but when your job is even meaningless to YOU while doing it, you have a problem. everything is meaningless because in the long run, we are all dead). you seem to be saying that these are the very same people who would be miserable anywhere. maybe, but maybe not. it sounds like the job lacks a lot of intrinsic motivation, and that (or a purely pragmatic, or even buddhist attitude) is what people need to keep doing things in the long run, because money definitely loses its allure(this is taught in organizational psych, hence them beating us around the head with all of that “your job is your family!” shpiel that does not even paper over the lies long enough for the worker to endure one day, and the hypocrisy of which sickens after 1 minute). you have this thing about “creativity”, as though someone might demand that these things happen from you. i bet you are very creative. heck, you created this website, and this community. i would bet that you (or any MBA) could have used those smarts and ability to organize in a HUGE number of different ways, and many a lot more fulfilling (and i am not saying your life has not been fulfilling for you). so, why did so many business schools open up and start sucking in students?

    was it the turn towards financialization? was it yet another class signifying marker for those people to get (you often meet people who have DUAL masters degrees, and took the MBA as some kind of finishing school), so as to keep the C-suite free of us poors? was it because “management” of business was to be, like the workers themselves, interchangeable like cogs in a machine–something i personally do not believe and do not understand, as we used to have a country where people had been promoted within to understand a certain business within a certain field, and they did just fine even coordinating with other fields and industries. was it because there was suddenly a dearth of anything else for these people to do at this time in history, when at other times they would have been happy to settle down and teach, or run small businesses? you discuss the Powell memo, and i get a sense that our society was turning that way (greed is good, 1980s, yuppiedom), but i just don’t even see the appeal of hiring an MBA, and why that has become some kind of “household seal of approval” for managing business.

    down here at the peon level, i must admit that any stupid thing one’s employer asks us to do, which makes no sense within the context of the demands of the business, is blamed on you guys: “something the MBAs, bored in their offices and for lack of anything better to do with their time, have dreamed up to torture us all with.” it sure seems like a lot of it is just to keep us busy, so that MBAs have another data point for their powerpoint presentation next week. a lot of that stuff is both pointless and mystifying. i think THAT is what Graeber must mean by BS jobs: the endless hoop jumping that never seems to add anything to the work but extra time, and justifies some higher-ups position and salary so they can “manage” over it.

    1. Yves Smith Post author

      The idea that a job is meaningful is a fallacy. Graeber is an intellectual snob who thinks everyone should be like him and get paid for thinking great thoughts. Keeping a society going involves doing a lot of unglamorous work. If you reject the idea of doing “bullshit,” you are basically asking for others to be your slave.

      Most people before Americans got conditioned to work outrageous hours and be on call, accepted the idea that you worked 9 to 5, did what you were asked to do, and got paid well enough to raise a family, which was most people’s real focus. The job was a means to an end, and not an end in and of itself outside the professions. The fact that way too many people aren’t adequately paid and have bosses make it difficult for them to have a separation of work and private time is a big factor in resentment over job content.

      Cleaning toilets and collecting garbage is an important job but you would dismiss it as “bullshit”. What about being a receptionist? Processing insurance claims (as in back in the day when insurers actually paid out on them; I’m old enough to remember that and my mother’s long term care insure is not only paying out like a champ but chasing her to submit older claims she missed). I could go on about modest administrative jobs that are nevertheless important, like being a call center rep (and I did various sorts of summer jobs that had me doing full-time phone work, so I have an idea of what this entails).

      A classic story in New Age circles goes,

      Before I was enlightened, I hauled water and chopped wood.

      After I was enlightened, I hauled water and chopped wood.

      And I don’t understand your beef about MBAs. Peter Drucker wrote long before MBAs became common about the rise of a managerial class, so your gripe is really about that and not the MBA per se. Larger companies and more global commerce means there is more to manage. That is the big reason corporations and their executives wield more power and status than evah; the rise of the MBA is a symptom of that. The truth is that a lot of the value added of an MBA degree is getting admitted; the schools serve as filters.

      I’m stunned that you don’t object to the worst thing modern managers have taken up, which is squeezing labor wages via outsourcing and offshoring, which increases the complexity and risk of a business. The direct labor savings plus the greater complexity serve as justifications for increasing executive pay. So these trends are much more about transferring income from ordinary workers to the top brass than about improving the health and competitiveness of the business (it is also about goosing the stock; Wall Street often rewards companies that announce outsourcing plans).

      By contrast, the idea that people who got MBAs would otherwise start jobs is another fantasy. First, starting a business is a terrible idea. 90% fail in 3 years. The most common quality among people who have started businesses is that they’ve been fired twice, as in they aren’t good employment material.

      The ones that have the best odds of succeeding are started by people who saw an un/underserved market opportunity as a result of working in an industry and decided to pursue that. By definition, those are not wet behind the ears kids. Our society unduly romanticizes entrepreneurship and incorrectly generalizes from Steve Jobs (computer revolution) and Jeff Bezos (internet revolution).

      And teaching is still a feminized and lower status profession. 77% of public school teachers are women. Even with MBA programs now up to 37% women, business, particularly the top levels of business, is dominated by men.

      1. ook

        A minor cavil, Graeber defined bullshit jobs as being jobs that the job-holders themselves judged to be contributing nothing to society. In my experience, most garbage collectors, toilet cleaners, receptionists and claims processors would not see themselves in that category.

        1. Yves Smith Post author

          I have trouble with this claim because businesses are so fixated on eliminating lower and middle level jobs, and they’ve been on this campaign for 15+ years. People now have to do what used to be 1.5 or 2 jobs. Per the insurance example above, there are jobs that are valuable to the company (denying/delaying claims payment) that are societally negative to the extent the insurer is jerking around customers that have valid claims.

          IMHO our Clive had a much better frame: that corruption is so widespread that it is hard to have an honest job, particularly in fields like finance.

          1. mucho

            What kind of ‘meaningful’ are we talking about here? I think what’s get conflated a bit is 1)your job = you identity, and your meaning/purpose in life is identified by what you do for a living; and 2) your job is a meaningful in the sense that is is a contribution to society. Of course, being a garbage-collector or a callcenter-agent isn’t meaningful (for most people, at least) in the sense of 1), but it is in the sense of 2).

  15. Trent

    My older brother received his MBA from the University of Chicago. I asked him a few years what was the most important thing he learned from it. His answer was networking………

  16. Mark Gisleson

    I appreciate your take but I still tweeted this article in support of banning MBA degrees.

    Your understanding of the havoc wreaked is impressive, and your grasp of that world is better than mine.

    But I’ve dealt with the consequences of decisions made by people with a Master of Bonus Acquisition degree, and a time out would be good until we elect a new Congress to re-regulate our out of control ecoonomy.

  17. diptherio

    A quibble:

    The great world religions’ main purpose is to reconcile mortals to the inevitability of suffering. Money does not make you happier once a certain (not all that high) level of income is met.

    I would say rather that a purpose of the major religions was to reconcile people to the inevitability of material (as well as emotional, social, etc.) hardship, and to provide a psychological alternative that allows people to experience the hardship without experiencing the suffering. The Fourth Noble Truth of Buddhism is that there is a way out of dukkha (suffering). The hardship, material or otherwise, is inevitable, but our experience of it is much more malleable than we might think.

    Really, one might say that the point of the major religions has been simply to convince people that “money does not make you happier,” and to offer something instead that actually will. Although, “happiness” isn’t quite right…more like contentment or maybe non-suffering… It is deeply related to the phenomenon Frankl noted in the concentration camps — that those with larger purpose to their lives were able to survive, while those without anything other than their own life to live for generally perished. The religions provide a larger purpose to anyone who cares to take them seriously.

    I’ll note too that I’ve read that in the Native American traditional healing ceremonies, it is necessary that the one seeking healing have some reason, apart from themselves, that they need to be healed. Once that external purpose has been realized, stated, and committed to, the healing is guaranteed…at least, according to Dr. Lewis Mehl-Medrona.

  18. L

    , “I came into my job as a McKinsey consultant hoping to change the world from the inside…” I think he sincerely meant that. I would not be surprised to learn that McKinsey made a sales pitch along those lines.

    Speaking as someone who watches people get recruited I can say yes they definitely made a pitch along these lines. In my experience every recruiter tries to make a pitch about improving the world whether by advancing the company’s mission or, as in a number of tech companies, “having time for your own projects”. That those projects often advance the company’s business model or pus their services is merely incidental. In many ways Amazon is the loner in that they appeal first and foremost to the bottom line.

  19. Fazal Majid

    I founded two startups with Harvard MBAs and this characterization rings false. Perhaps it’s the difference between entrepreneurs and consultants or financiers or corporate apparatchiks, or perhaps it’s because both were French and thus not as influenced by the 80s greed-is-good zeitgeist, which does seem like a primarily US-UK phenomenon.

    That said, if you ask either, they will freely admit the chief benefit of their business education is the networking.

  20. flora

    Thanks for this post. Everything you write about the MBA admin run universities is true at my uni. Your description tracks so closely you could have written this about my uni. MBA admins know the price of everything and the value of nothing, as the saying goes.

    In addition to the love of metrics and publish-or-perish, there’s a new wrinkle at universities: the demand that each of the university’s separate schools’ Deans , department chairs, and tenured faculty bring in an expected amount of grant dollars (billable hours for faculty?); that each school’s alumni pool donate or are capable of donating a certain amount of funds. (“Remember us, your alma mater, in your estate planning.” etc.)

    Then, compare and rank each Dean of all schools, and each faculty member, and each school’s alumni group with in the university. Base this ranking on the extra funding they bring in. You can imagine how the Humanities, Classics, History, Music, Philosophy, etc departments – the Liberal Arts school – compares to the Engineering, Medicine, Pharmacy, Business schools in grant and alumni dollar generation. I think this is very much the real reason behind cutting the humanities and the arts. Compared to the STEM schools the Liberal Arts school – the humanities – generates fewer grant dollars and has a less rich alumni pool to tap for donations. I’ve seen Deans fail their 5 year review solely because the grant fund generation in their school didn’t match admin’s expectation. I’ve seen schools entirely eliminated in large part because the alumni pool wasn’t donating enough to match admin’s expectation of external funding generation, and looked to be a poor prospect for future donations.

    Once upon a time uni and colleges saw education as more than training for a lucrative career. Some basic grounding in the liberal arts and humanities, even if only 2 or 3 required courses, was considered an important part of education. That was before the “knows the price of everything and the value of nothing” MBA crowd took control.

  21. David

    Following on from diptherio, and since we’ve touched on philosophy a bit, let me venture the wild assertion that yes, we seek meaning and happiness in life, and that historically there have been four ways in which people have tried to do it. With MBAs we are in the last phase.
    The first and oldest is the pursuit of happiness and wisdom directly, through the cultivation of inner freedom irrespective of outward circumstances. This is where the Buddhist concept of dukha comes in, as well as Classical philosophy with its emphasis on living well (the French philosopher Pierre Hadot wrote about this in Philosophy as a Way of Life). You might have a job or some other source of income but the main focus of your life was elsewhere.
    The second was the cultivation of excellence in what you did, thus receiving the appreciation of your peers and contemporaries. This might be as an intellectual or artist, but also as a craftsman or artisan. You would make a decent living, but the main benefit was the recognition of others: in Japan an outstanding craftsman or acknowledged expert is often given the honorific title of “teacher” (sensei) and passes their accumulated wisdom on to others.
    Then there is the pursuit of skills and qualifications to get you into a profession (law, medicine, accountancy) where the work might not be that interesting, but you have social status, a decent standard of living and the chance of becoming wealthy. You might comfort yourself with the idea of doing your best for your client, but most of your satisfaction will come from your private life.
    So the MBAs and equivalents represent the last type, the pursuit of money alone, on the specific assumption that happiness will follow. Rather like studying a bit of theology and entering a religious order in the Middle Ages, such people have a way to riches and power not actually based on any personal abilities or qualities, but just having a piece of paper.
    It’s natural that such people should be very unhappy, the more so as they live in a society that no longer has meta-narratives to give it meaning. The decline of religion has meant that there are no more transcendent structures to give meaning to life. Communism took up the baton for a while, but that way of understanding history has now gone as well. You can almost feel sorry for the poor little rich MBA, hated by their rivals, jeered at by society as a whole, and with no inner resources or shared norms to fall back on. Almost.

  22. PlutoniumKun

    The story of Gary Santry is always a worthy one to bring up when discussing MBA’s. He managed, on the basis of bluff alone, to teach a top MBA course for four years before he was discovered.

    In Ireland, in 2001, a high-flying hoaxer was allowed to quietly leave this country rather than face the full rigour of the law. There were red faces at UCD when it emerged that a senior lecturer with its Business School had been teaching there for four years on bogus qualifications. To make matters worse, shortly before he was rumbled, American Gary Santry had been presented by UCD with an award for outstanding service. He’d contributed to the Business School being ranked the seventh best in Europe by the Financial Times.

    Santry had landed the top post by claiming to hold a Masters in Business Administration from Notre Dame and a PhD from the Southern Methodist University in Texas.

  23. Brent

    I saw this quote in the intro to a collection of short stories last night:

    For thirty years I had lived among them, and yet I seemed to have never noted before how drawn and anxious were their faces, of the rich as of the poor,…

    … Do your work never so well, rise early and toil till late, rob cunningly or serve faithfully, you shall never know security. Rich you may be now and still come to poverty at last. Leave never so much wealth to your children, you cannot buy the assurance that your son may not be the servant of your servant, or that your daughter will not have to sell herself for bread.

    Edward Bellamy

  24. Savita

    This book may be of interest. I have not read it. It’s really highly acclaimed by some authors I admire

    The Personal MBA by Josh Kaufman

    I believe the idea is to allow access to the
    useful, core practical components of the MBA without the exclusivity of the price

    Derek Sivers maintains a list of books he has read and rates them. It’s a great list! He also provides all the notes he collected whilst reading. A summary of everything worth revisiting. He basically summarises the whole book in his notes, although if you like it don’t consider it a substitute for the book.

    1. TimR

      Thanks, this Sabine Hossenfelder looks interesting since I like to ponder the sociology of science.
      I note that commenters ask her if her critique applies to climate science… Answer: No! Climate science is an exception! The rest of the fields are shoddy, but CC you can believe in… Then she tells them to go away, she hasn’t time to talk about it.

      1. Edward

        I like Sabine’s blog. She gave some reasons why she thinks climate science escapes the hype problem present in other fields, but wasn’t interested in a discussion. Her argument is that the structure of the scientific enterprise is flawed and leads to problems but climate science has a different structure that ameliorates these problems. Another commenter asked her if she thought there were fields that were operating well. She said she hadn’t thought about this and might post something about it later.

        1. TimR

          Yes and she argued that climate science is under greater scrutiny, so she thinks the scientists are more careful to make only defensible claims. It might be so… But still hard to believe that just that one field is exempt from her rather sweeping and structural critique of modern science. I’m definitely glad to learn about her though, will read more, thanks.

          1. Edward

            Hossenfelder can be a heavy-handed moderator. She is somewhat strict. I am an agnostic about it because I don’t know what it is like to run a blog; I need to know more to judge.

            I don’t think climate science is facing the crisis particle theory is. Hossenfelder is a specialist on quantum gravity, and to a large extent she is reacting to problems she experienced in her field.

  25. everydayjoe

    We need to blame the shift to finance from manufacturing as one of the reasons for glorification of the B school programmes. I dont think MBA education is to be blamed but rather what these grads are increasingly been asked to do since the 80s.

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