Then it was the Housing Bubble.
And now it is the Education or "MBA" Bubble.
I predicted the previous two and I'm sure as I am typing here I will have reliably predicted the third.
The reason why is that in addition to my awesome economic mind and insight I also moonlight as a tutor on the side. Business is a-BOOMIN' because as the recession hits, the talking heads tell everybody "education is a recession-proof asset" and since the US is awash with liberal arts undergrads the natural next step is to get your MBA. Combine that with an incredibly efficient private sector and there is no limit to the fly-by-night, online, MBA schools sprouting up all over the internet and BAM!!! I got a small little clientele of MBA students that need tutoring.
Now for those of us who went to business school, this will be no surprise. But for those of you who never went to business school or are some how "impressed" somebody has an "MBA" let me explain to you right now that MBA's are worthless.
Matter of fact, they're worse than worthless. They're damaging. One only needs to ask who was at the helm of all the banks during the housing bubble and subsequent crash?
MBA's.
Who was peddling IPO shares in soon-to-be-worthless Dotcoms???
MBA's.
YOu look at pretty much every major economic catastrophe and the leaders that drove the economy there, you will see them honeycombed with MBA's.
Now, maybe back in the day, say, the 1950's, and MBA would have carried some weight. The individual went beyond his or her degree in accounting and decided to study business at a higher level. The insights gained from this would give you TANGIBLE SKILLS that would give you an edge over your competitors. The problem though is that over time and as more and more MBA's flooded the market, the MBA lost its potency. Additionally since business is common sense (no matter WHAT "they" tell you) you have to constantly re-create the MBA to somehow seem that it is on the "cutting edge" of "business science" when in reality common sense can only be sliced, diced and re-taught in so many ways.
The result was that the MBA didn't morph into this super degree where you learn tangible skills that will make you a more productive employee and turn you into a leader. It rather turned into a "stamp of approval" that simply showed employers you were a conformist. You would jump through hoops. You were perfectly fine going through the mendacity of a 2 year degree in common sense while acting like it was some kind of "professional venture." It is the fact you could tolerate such an inane and stupid process that made MBA's sought after - they were non-thinking automotons and THIS is what employers of today really want. They don't want leaders or innovators, they want conformists.
Alas, I get enraged when I sit there with my students and see just what tripe and utter garbage these schools are teaching. Chapter upon chapter is written on simple concepts that only need a paragraph to be explained, only for the sole purpose to make the "LEadership and Management" book look like an authoritative 559 page tome instead of the 3 page pamphlet it could easily be condensed into. The forcing of students to take what is essentially the same class 3 times (leadership in education, educational leadership, theories on managing leadership in education) to fill an MBA program and generate more tuition while teaching them nothing new. And do not get me started about how they teach obsolete, worthless, economic theories that NO ONE IN THEIR RIGHT MINDS WOULD EVER USE. DCF, EVA, "Porter's Five Forces Model."
But today, one took the cake. Abso-freaking-lutely took the cake.
I was going over an essay one of my students wrote for flow, content, etc., on account that in addition to being an excellent salsa dancer and fossil hunter extraordinaire, I am an outstanding author. I made some changes, reworded some sentences, but nothing dramatic. I gave it back to him, pointed out a couple things and he said,
"Oh, I can't have contractions in my papers."
Confused, originally because I thought he was talking about pregnancy-related "contractions," I said, "What do you mean you can't have contractions?"
He said, "Well this sentence here. You changed it to read, "the company shouldn't invest in this project because the NPV is negative."
I said, "yeah, so?"
"Well, "shouldn't" is a contraction. You combined "should" with "not." And they told us in our professional writing course to NEVER use contractions."
I sat dumbfounded and my blood pressure increased even further.
The MBA industry, has become SO VOID OF NEW IDEAS, REAL, TANGIBLE SKILLS TO TEACH THAT THE BEST, THE ABSOLUTE BEST THING THEY CAN COME UP WITH IS TO ELIMINATE THE BLEEPING USE OF CONTRACTIONS????
But then, I calm down, I chant my Galt-Buddha chant, I tell myself,
"Let go of the caring
Let go of the caring
Go Galt Go Galt
Society is collapsing
You cannot stop it
Your life is finite
Relax and enjoy the decline
Let go of the caring
Let go of the caring."
My new-found-econ-Buddha-Galt-philosophy set aside, it still amazed me. This school charges $27,000 for an MBA. My alma-mater, the Carlson School of Management charges last I heard $78,000. And I can only imagine what the Ivy League is charging for their progressively worthless MBA programs. All for what?
To learn not to use contractions?
The ramifications of this are of course going to be severe on several levels.
One, the simple fact MBA students are flooding the market. GMAT test takers (the pre-MBA qualification test) broke a record in 2009 at 263,000 test takers, no doubt to be dwarfed by 2010 numbers.
With this many MBA's and the simply law of supply (which these MBA's should know about) the value of an MBA is going to drop. Furthermore, since employers don't hire MBA's because of their uniqueness or innovation, but rather their conformance, MBA's are nothing more than a commodity in that "conformity" is simply that - a commodity. Any yes-man will do. So even though idealistic MBA students are thinking a job is just right around the corner upon graduation, unless the employment situation in the economic picks up (which my super awesome economic powers know it won't) they're still going to face a flooded market and nowhere near the salary-commanding ability they thought they'd have.
This will only worsen hundreds of thousands of people's personal finances. As they fork over money for what is progressively becoming a worthless degree, they will end up in debt with no better or at best, marginally better income earning potential.
Certainly this will hurt the individuals pursuing their MBA's, but don't think there isn't a cost to employers. Pursuing conformance over performance, ass-kissers over ass-kickers, employers will feel really good about themselves because their underlings have been programmed to be yesmen, but will experience no real tangible benefits from employing them. No real leadership or innovation will come out of this latest generation of MBA's. No real ground-breaking products or ideas will come from them. Worse still, knowing it is more important to be nice than right, these MBA's will simply shut up if there's any trouble at the firm knowing not to rock the boat. This yes-man disease will essentially corrupt the private sector forcing the private sector to become more like Goldman Sachs where bribing government officials and rent seeking replace innovation and ass-kicking.
The natural consequence to hiring people who tell you what you want to hear and not the truth or what you need to hear is that these firms will inevitably diverge so much from reality they will go out of business. We saw it with the Dotcoms, we saw it with the housing bubble, and we saw it with the auto industry. Firms that play nice instead of right, will pay the consequence (until the government bails you out). They will not be in business. They will not be able to employ people. They will not be able to produce a profit ever again. And they certainly won't be hiring any MBA's.
But hey, at least nobody used any contractions.
24 comments:
Last line: "conjunctions" should be "contractions"?
Duly noted and changed, though I still to this day don't know (nor really care) about the difference.
Well said! I remember hearing from the management of a grocery chain. They had just gone through a painful/costly diversification phase.
They had bought into other non-grocery retail stores, and later sold them off for a loss. They were now back to their core business of groceries, and doing quite well. The CEO stated that "we no longer hire MBAs. We want guys that can sell groceries".
It seems that bureaucratic companies love MBAs. Expanding businesses, want people that can get the job done.
As always, well said, and nearly 100% correct.
I will have to disagree in one way.
MBAs will, as you explain, be essentially a useless group of letters following your name on a business card that no one will actually read, but I think it goes further then that.
The Obama administration is all about education. Not in any specific field, just education. He is overly educated, and look at how far he got! Education, education, education, ad infinitum.
My prediction is that college degrees across the board will start to lose their value. Yes, even engineering and science degrees to a certain extent.
The American public has been brainwashed into believing that "education is recession proof" when hard work and experience trumps education almost every time. Today it is MBA that is on the cusp of being totally worthless. Tomorrow it may very well be computer science, or environmental engineering, or any other number of fields.
Only time will tell.
Cap,
Did you put a few errors in on purpose? I found some.
"..graduation, unless the employment situation in the economic picks up (which..."
economic should be economy
"...in the day, say, the 1950's, and MBA would have carried..."
and should be an
Also, imo, the ban on contractions has more to do with the type of people they're helping to employ. English majors have since forever been the ones leading the charge against contractions. They're probably the ones responsible here. Just show the school how much money the time it takes to rewrite all those contractions as 2 words...and they might take you seriously...IF they were any sort of business school with common sense.
The MBA bubble has existed for a long time already ...
I’m told that back in the early 1990s (and before), when evening and weekend courses through university were a rarity and people needed to actually take time off from work to get a MBA, only a select few would get MBAs; and these were typically people who were in a position to gain the most benefit from the MBA, and use the education soon after graduating. Upon completing their MBA many of these individuals accomplished a lot for their companies and were rapidly promoted.
As schools began promoting programs that could be completed while you were working, more and more people started getting an MBA as a way to get out of their dead-end career; and (for the most part) it worked because there were so many successful MBAs that people assumed that the MBA was a magical ticket to business know-how. As time went on, more and more mediocre (or worse) managers with MBAs started to run their companies into the ground; and now having an MBA is seen as being fairly unimpressive except to other MBAs.
The bubble is about to burst on MBAs, and the individuals who are spending their evenings and weekends developing their own companies will probably be the next wave of truly successful people.
Back in the early 1990s when I graduated from college, I considered going for an MBA. My professor suggested against it and I wisely followed his advice.
Having an MBA was a necessary condition for getting a good business job but it wasn't a sufficient condition. In other words, the MBA was a dime-a-dozen. Having it got your application through HR but you were likely still outgunned by people who went to higher-ranked schools, had higher GPAs, more work experience, or better connections.
My boss decided to get an M.S. in Business simply to distinguish herself from the crowd.
Not all MBAs are created equal. An MBA in Finance or Accounting is still highly valued. Operations and IT is valuable.
Marketing MBAs place well, but I still don't know why. I think the attrition rate among them is pretty high when they don't produce.
The programs also have specializations in Corporate Social Responsibility, Energy/Green Tech, and NonProfit Administration (think Jackie Mroz). I'm sure politically correct companies are hiring these bozos, but how many of them can the market possibly absorb? How much value do they add?
I taught MBA classes for two years. I learned immediately that few of them were particularly gifted and very few of them could have earned admission into a PhD program. For most of them, it's a means to elevate an otherwise worthless undergraduate degree. That would be fine if it weren't done on the public dime.
Also during the early 1990s, I considered getting an Engineering degree, but there was a glut of engineers. STEM degrees were virtually worthless back then. I also considered law school, but a lawyer at my company was working as a paralegal because of a glut of lawyers.
All those highly educated, highly skilled, intelligent people couldn't find jobs. Markets actually responded to oversupply by reducing hiring and wages. Imagine that!
A computer science degree is already useless. Most degrees are simply status symbols and have no real connection to day-to-day anything.
I agree entirely - MBAs are now pretty much useless. They are ubiquitous and usually a pointer to self-absorbed cluelessness.
I figured out that business at the MBA level, was just a bunch of university hacks with little true industry experience selling their unproven theories as the "cutting edge" with near zero scientific basis.
I figured this out about 20 years ago, when I regularly read business books which seemed to contradict each other and never provided any tangible measure of effectiveness of what they preach.
That's when I figured out an MBA wasn't worth the time or money to get.
I'm convinced that "business science" is an oxymoron - there's no scientific rigor behind it at all. Read a typical business/leadership/management and there's rarely any scientific proof - oh if your lucky there might be a cherry-picked case study.
And a hearty YES! regarding the comment that they want conformists (and bureuacrats) not leaders or innovators.
Let me also state that most MBA types I've run into are arrogant, have no practical experience in doing things and are generally clueless - a lot like the current occupant of the Oval Office.
They are "white space" - overhead that serves no purpose, produces nothing of measurable value, just get in the way, act as yes-men and are very quick to take credit.
I'd have to agree with the textbooks too - it seems every pseudoscience has the tendency to use as many useless large words as possible to attempt to appear scholarly in communicating ideas. You read a 30 to 40 page chapter attempting to explain some principle, which can be summarized in a very short paragraph. It's as if they got paid by the word. As a technical person who does some writing, we write things tightly and unambiguously - this pseudo-science style of writing just drives my crazy.
Unfortunately, my company is dominated by MBAs and Finance people, most of which haven't a clue how to run a business, but a majority of which have sold their souls to the wills of high level executives. Here they are drilled that your ethics become solely based upon doing what the corporation execs want. If you don't, you are dropped executive candidate list. As long you choose to do the immoral and unethical things that higher up execs denmand, you'll go far.
Do they teach this in business school?
in case anyone missed it, here's a priceless video of a young (skinny!) Michael Moore getting schooled on economics by Milton Friedman.
http://www.youtube.com/watch?v=cD0dmRJ0oWg&feature=player_embedded#!
Notice how one argues with facts and reason, the other sounds like he's ready MBA school.
For more on business education, see here...
http://www.maxbarry.com/2009/11/24/news.html
Well said. For decades I have felt MBA's were worthless and oddly I am not enjoying being correct. I agree with the previous poster that all degrees will soon be taking a hit as few are worth the debt students take on to obtain them. My fear is Obama will bailout higher education at which point the degree becomes completely worthless.
My company divested itself of a bunch of MBAs in the marketing department because the VP went down there and asked them who could tell him what the marketing scheme was for a specific product. No one knew. Too many MBAs and not enough people doing the real work. They are now looking for work :)
It's not just MBA's. Law degrees are over-priced, advanced degrees in education are becoming too common. Some specialists, like audiologists, are leaning heavy towards PhDs (even though it is unnecessary).
The glut of MBA programs is because they are (relatively) cheap to produce. This provides a steady of revenue to keep administrative staff at colleges employed (and how have the admin staff at colleges expanded? Faster than inflation).
Ack, and here I was feeling good about getting a more "serious" degree (computer science & math).
I mean, I'm familiar with the fact that "1 year of experience trumps 20 of education"... but am I really that out of luck even with a technical degree?
On a somewhat off-topic sidenote: Most, if not all, of the student body presidents here at Westminster have either been economics majors or minors. Granted, I suspect most of the economics department here are flaming liberals...still, makes ya wonder...
Uhm, Captain, you didn't adjust for employment growth. GMAT tests relative to employment numbers probably peaked in 1981.
Nick Rowe,
If there really was an oversupply of college degrees, why did the wage premium of those degrees increase during the last 40 years?
As someone finishing up their AACSB accredited MBA curriculum, I can honestly tell you that it's worthless. What I have learned is to slack off till the last minute, then put together a PowerPoint (with no citations), stand in front of the group, and present my ideas as the one and only way while making anyone who disagrees look stupid. I have seen really good ideas, far superior ideas, be shot down for fear that admitting you don't always have the right answer will result in a failed grade. Its a worthless degree, with the only redeeming value being the social connections that may be established along the way.
I got my MBA from the University of San Francisco, which is nowhere near the top rankings for MBA programs. It has never opened any doors for me or made me eligible for anything except entry-level jobs. Fellow alumni have even shut me out of their networks because they consider my military background to be worthless. Prospective MBA students should only bother applying to the top MBA schools; othwerwise, forget the MBA and just keep working.
I got my MBA from the University of San Francisco, which is nowhere near the top rankings for MBA programs. It has never opened any doors for me or made me eligible for anything except entry-level jobs. Fellow alumni have even shut me out of their networks because they consider my military background to be worthless. Prospective MBA students should only bother applying to the top MBA schools; othwerwise, forget the MBA and just keep working.
As the holder of an MBA myself, I couldn't agree more. I would go even further to say that universities deliberately mislead and lie to current and prospective students. I was lured in by the program director telling me that she had an extensive network of business contacts. Found out the hard way she was full of shit. When I confronted her about it, she told me I was expected to line up my own job leads, and to stop being so critical. One of the professors at my university was supposedly a resume expert (another lie), and when I asked for advice he told me to make him a list of every occupation I had ever held. I did so. He rejected it and threw a fit because the job descriptions were not in complete sentences. What a load of bunk. All the theory about labor economics and the free market has no relation to reality. Economics professors tried to argue with me that if minimum wage were eliminated, wages would be higher because the "invisible hand" would push wages to a fair equilibrium. Bullshit! If minimum wage gets eliminated, a lot of people will be working for $2 an hour, because unlike what the econ textbook says people will work for that wage if that is all that firms are willing to pay. Employees and job-seekers have no control over wages whatsoever; the employers hold all the cards, have all the bargaining power. This is but one of many examples of where MBA course material conflicts with common sense. The only situation where an MBA is helpful is where you already have a job, want to advance, and happen to be getting your MBA from Harvard or Wharton. All other MBAs, while teaching the same exact material as Harvard, are worthless. WORTHLESS.
And don't even get me started on those online programs....
It is not education, but the commodification of education that has rendered degrees worthless.
"Higher education" has become more about "earning power" than learning power. It is mass marketed and the secret to successful mass marketing is to appeal to the lowest common denominator.
Becoming degree'd is no longer synonymous with becoming educated.
In my university days, I couldn't understand why an MBA even existed. For the first part of my academic career I concentrated on physiology and neurophysiology, did some research for a while and then decided that it would be nice to have economic independence. That's when I went into medicine and now I practice in an under-doctored area in Canada where my primary problem is not a lack of work but restricting how much I work so I don't get burned out.
Most of what I've learned was on my own and I've noticed more and more of a tendency to credentialism where my 40+ years of programming and digital hardware experience is denigrated by utterly moronic CompSci grads because I don't have a degree in that area. I do admit that I took a night FORTRAN course in 1968 and then taught myself after that creating a few major data acquisition systems for electrophysiologic data as well as some medical software. The credentialed "experts" usually haven't a clue what I'm talking about as they are totally ignorant of hardware basics and even low level software. That's why the hospital I currently work at is stuck with a medical records system which is far inferior to the one it replaced and the "experts" I've tried to explain such simple concepts as scalability usually result in blank looks. The other tactic that the IT "experts" use is generating endless regulations which seem to be designed to ensure that "unqualified" people such as myself are prevented from fixing their kludgy systems.
What I found during my early days of programming is that CompSci graduates were useless unless one wanted very nicely formatted code listings. Most of the people I dealt with were also self-taught and had a productivity which was orders of magnitude greater than the students graduating with CompSci degrees. I once, out of curiousity, helped a student with a program and, even though the program worked perfectly, it got a failing mark as it didn't conform to the Procrustian program structure that students were expected to employ in that class.
The value of a university education is vastly over-rated with individuals who I think shouldn't have graduated from high school going on to fluff university courses. Starting with a desire to have an academic research position in neurophysiology in the 1970's, I now stay as far away from universities as possible and look for people who have the ability to think outside the box and are self-taught when I want to learn something in a new area. Unfortunately I think it's going to take a complete collapse of the education bubble for there to again be free inquiry in various areas as universities now seem to be more about forcibly imprinting various statist ideologies in people rather than the unfettered advancement of knowledge.
Loki
An MBA is worthless even if it was from Harvard or any other school.
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