First it was the Dotcom Bubble.
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?
Who was peddling IPO shares in soon-to-be-worthless Dotcoms???
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.