It’s not often that a scathing academic study about business schools and front-page news about a Wall Street scandal are published simultaneously. But such was the case when three Harvard Graduate Business School scholars released “Rethinking the M.B.A.: Business Education at a Crossroads,” and the New York Times reported that the SEC had filed a civil complaint against Goldman Sachs for securities fraud. The confluence of the two events warrants a closer look because of its relevance to the debate over reforming K-12 schools.
The professors charged that business schools contributed to the economic meltdown of 2008 by turning out geniuses who never learned the importance of social responsibility. They wrote that students were spending fewer hours in their studies and more hours networking, attending recruiting events and pursuing lucrative jobs. What was lacking was deep questioning of values. After the Enron scandal, many business schools vowed to remedy this deficiency, but they either didn’t follow through or were unsuccessful. In either case, the nation is paying a terrible price for their failure.
The SEC’s action against Goldman Sachs alleged that the bank had failed to disclose conflicts of interest in subprime mortgage securities it sold to investors. Wall Street was not always a criminal casino, as my mini memoir of Lehman Brothers that was published in USA Today explained (“Lehman and my dad would have been appalled”). Lehman Brothers was a paragon of ethics when Robert Lehman was at the helm during an earlier era. The demise of the storied firm is still like a death in the family.
There’s an irony here that is lost on reformers. The mantra is that the greatest threat to the future of the U.S. is the failure of public schools to graduate students who possess the skills and knowledge to compete against students from other countries in the new global economy. Yet the graduates who created the worst catastrophe since the Great Depression were not deficient in literacy and numeracy. On the contrary, so many of them were graduates of tony prep schools and marquee-name colleges. But they were woefully devoid of ethics. As Paul Krugman wrote in the New York Times: “For the fact is that much of the financial industry has become a racket - a game in which a handful of people are lavishly paid to mislead and exploit customers and investors” (“Looters in Loafers”).
The evidence serves as a warning that scapegoating K-12 public schools is a transparent attempt to divert attention away from the real problem. In a democracy, schools exist not only to teach subject matter, but also to prepare students to become responsible citizens. Because this outcome is not measured on standardized tests, it is virtually ignored. Yet in the long run, it may well be the most important, as the Wall Street mess attests.