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The following article appeared in Left Business Observer #94, May 2000. It retains its copyright and may not be reprinted or redistributed in any form - print, electronic, facsimile, anything - without the permission of LBO.
V., obviously, is a pen name.
The year began with what we later called the Nuremberg Rally. Five hundred of us sat in an auditorium at Columbia University and watched in horror as a student official led us in a cheer. "What is the best business school in the world?" "C-B-S" came the reply. "Where do we most want to be?" "C-B-S" the audience chanted back weakly.
It was the start of orientation at Columbia Business School, one of the top ranking B-schools in the country. Some 400 incoming students were gearing up for the chance to become very, very rich. Not me, though. In my real life, I'm a business journalist, and I was there because I'd been awarded a Fellowship by the University's school of journalism. The idea was for 10 of us financial scribblers to study business formally so that we would be better trained to go back to do our jobs. For one year I was to live among the business students, take classes with them - and, if I were smart enough, learn how to discount a cash flow.
In my years overseas as a correspondent, I often wondered why American businessmen were so much more smug then everyone else. I met an entrepreneur who'd only just arrived in Prague but was already telling the locals they should not let the elderly live in rent-controlled apartments because they needed to apply free market principles to the housing sector. In Asia I'd seen Japanese and Korean businessmen quietly make money while Americans constantly berated the government for not opening up markets to foreigners and for not devaluing their currency further so as to cut costs for foreign employers (a devaluation that would have the effect of raising import prices for the easily overlooked locals). In Europe, there was a noticeable difference between the relatively low-key local execs and their swaggering American counterparts, who took every opportunity to lecture the world on how great capitalism is, especially the American kind. Now, after only one semester at B-school, I think I know the answer: smugness and an unquestioning belief in the American Way are crucial parts of the curriculum.
The first thing that struck me about CBS (the business school, not the TV network) is how posh and comfy it is. The classrooms are gorgeous; many were paid for by the major investment banks so they have names like "Merrill 309" or "Lehman Lounge." We're given free pizza and t-shirts at every turn. Happy Hour on Thursdays comes with free food and beer - often sponsored, like the classrooms, by Wall Street firms. Teachers take notes for us and hand them out at the beginning of each lecture. Homework assignments are downloaded off the Web, while the younger professors use Power Point presentation software to give lectures. The faculty are generally warm and helpful and the Deans and student activities office seem to be there purely to make our lives easier. Even the toilets flush automatically. In short, CBS feels like a cross between a summer camp for rich kids and a luxury hotel.
The amount of hand-holding is extraordinary: we started off with a week of intensive math classes and computer training to bring us up to speed for the grueling work that lay ahead. Free tutoring is available during the term, office hours and review sessions abound. It's clear that having charged students $26,000 for a year of tuition, there is no way the school is about to let us fail.
I was amazed by all the high-tech whiz-bangery. The library is a zoo, with everyone working on group projects and taking calls on their cell phones. Cell phones aren't allowed in class but are OK in review sessions. And when lectures get boring, the students log onto the Web (all students have to own a laptop in order to attend) and trade stocks or send email to their classmates. Anyone who wants to study in quiet leaves the B-school library. The empty Southeast Asian studies building and the 19th century architectural library are the preferred spots for peaceful reading.
There is a veneer of complete friendliness - especially during the first few weeks when everyone wants to make friends - that belies the competition lurking beneath the surface. That emerges in full fury after the first month as students break into cliques, many of them organized along ethnic lines (Chinese, Latin Americans, Jews). In some ways it's like being back in high school again but without the druggy rebel element.
CBS prides itself on its ethnic diversity: 28% of the students come from overseas, and domestic "minorities" make up about 20%, but there are limits - lots of the white guys look like ex-football players and the white women like ex-cheerleaders. There's a small group of "nonprofit" types - journalists or refugees from arts organizations - but they're practically invisible, avoiding the library and the B-school buildings.
The classes are taught according to the Party Line of our time. Unfettered free market capitalism is the only way to run a society, job losses are an inevitable byproduct of mergers whose inevitable consequence is to boost investment banker (I-banker, in the CBS argot) fees, and the whole damn world better get used to free trade. Our corporate finance professor taught us how to value companies in order to determine whether to continue running a "value-destroying" company or whether to shut it down (since maximizing "efficiency" is the only appropriate metric). Unusually, the professor stopped class to point out that firing people is not pleasant and usually involves denying your real plans - that is, lying - during the takeover process. But when I asked whether it might not be better to keep the company running instead of seeking the short-term share price rise that results from such liquidations the professor replied by telling me "Capitalism is not perfect but it is the best system there is." A profession of faith beats a serious counter-argument anytime!
In international business class I learned how to use transfer pricing to reduce my company's overall tax burden and we did math problems to calculate how much profit to shift to low tax countries before returns would start to diminish. Our textbook (written by celebrity economist and newly minted New York Times columnist Paul Krugman) even had math problems and a whole section devoted to explaining why it's not exploitation to pay $20 a month to workers in developing countries. Currency devaluations were explained as a good thing but no one bothered to tell the students that IMF structural adjustment policies sometimes lead to mass impoverishment and food riots.
Putting aside the ethics of what we were taught I began to worry about the disservice being done to the students. How can they do labor negotiations in Mexico if the case studies don't explain that the unions are government-run? What will they do the next time there are mass protests in Jakarta because of a recent IMF agreement? It seemed to me the students were only getting half the story.
In the B-school world personal integrity and volunteerism are enough to make the world a better place. The system is fine as it is, completely undeserving of fundamental scrutiny. As one of my colleagues put it: "They teach us that we are doing everybody a favor by making money off them - that this is how developing countries will end poverty."
One of my professors told us she would turn us into free traders, but she hadn't reckoned on the Asians in the class who tried to explain that Korea built up its car industry by protecting the domestic market from foreign imports. Indeed most of the students had trouble coming up with answers the day the Professor asked us to explain the advantages of free trade. In my Pacific Basin Economies class the Professor has been similarly stymied. Asian students in the class keep mentioning the problem of the growing gap between rich and poor countries. Each week the professor trots out a "Pareto-optimality" graph designed to show that even if the gap is widening, those on the bottom are still gaining so there is really nothing to worry about. (Vilfredo Pareto was an Italian economist and sociologist of antiegalitarian and protofascist sympathies who was an early theorist of income distribution, meaning apologist for inequality.)
I wish I could say that the students were progressive, but for the most part they're not - though a number call themselves Democrats. Hallway conversations are usually about how much money students expect to earn and what interviews the industrious B-school job service has arranged. All the major companies recruit on campus, invite interested students to expensive dinners, and ferry them home afterwards aboard limos. The B-school provides extensive résumé coaching, watermarked stationery, and a mandatory house style. Most students want to do something dot.com-ish or go into consulting, with a few old-fashioned stalwarts eyeing careers in investment banking or on the trading floor. As the school newspaper, The Bottom Line - whose slogan in a recent issue was "we will work for food" - put it in a recent editorial, "We are on the path to employment excellence and it feels awesome." The prose is as fresh as the thinking.
One of the administrators told me Columbia discontinued its ethics classes because they want to incorporate ethics into day-to-day activities, something I can't say I have noticed (although the students do do a lot of volunteer work and many serve on nonprofit boards). In one class we did discuss the ethics of paying bribes overseas but only about half the students thought it was wrong. There is an integrity board which is meant to punish cheating (laptop theft is common and the first issue of The Bottom Line last semester had an article about a B-school graduate who was busted for trying to resell a computer stolen from the school) but its bulletin board lay untouched from May to November when someone finally came along and took down the few faded posters and announcements that were there.
You will be happy to know that the solutions for the major
world crises are simple. If Asian countries had had better banking
supervision and less cronyism the 1997 crisis would not have happened.
If those pesky developing nations could just stop all their pointless
protectionism they could get rich too. And back at home, we love
the stock market and know that it's going to keep rising forever.
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