Would the economy be better off without MBA students?

http://www.economist.com/debate/days/view/900

by calpaterson • 14 years ago

112 80 14 years ago

economist.com

guylhem• 14 years ago

Would the economy be better off without "insert the people you don't like here"

Film at 11.

Works with : - politicians - lawyers - liberals - libertarians - communists - the military industrial conglomerate

Also work with any minority or any ethnic group, although it may result in classifying you with a special tag which is generally frowned upon.

crooneys• 14 years ago

Not exactly what this article is arguing.

rayiner4• 14 years ago

Can we add flash in the pan "Bubble 2.0" startup founders to the list too?

lallysingh• 14 years ago

This is HN. You can say "Would the economy be better off without %s?"

natrius• 14 years ago

That's not an accurate characterization of the article at all. It's not asking whether managers are valuable; it's asking whether a popular way of training managers is valuable. It's an excellent question.

001sky• 14 years ago

But it is accurate re: the linkbait title.

gojomo• 14 years ago

The MBA credential is but one special case of general 'degree pollution', overinvestment in credentials as relative-rank signalling. See for example this analysis:

http://econlog.econlib.org/archives/2012/09/degree_pollutio....

As suggested there (including the author's expansions in the comments), when an activity confers private benefits but at a cost in negative externalities, a traditional economic/policy response is to tax the activity in proportion to its net externalities. So perhaps excessive upper-level/professional degrees should be taxed, rather than subsidized. (That is, tax the degrees themselves, not any consequential rise in income, if any.)

wissler• 14 years ago

YES. More importantly, the economy would be better off without the reason why an MBA has some value -- too much government-induced bureaucratization.

gxs• 14 years ago

>> Similarly, demand for slots in the top programmes is extraordinarily competitive

This is something I picked out from the article in a quick skim. And sums it up pretty well.

If you can get into a top 10 business school, the consensus is it's worth it. If not, it may be wise to skip it.

As always, the truth lies somewhere in the middle.

TreyS• 14 years ago

I wonder how much benefit an MBA from a top school gives beyond signaling. If you are admitted into Harvard/Stanford/Wharton/etc you've been successful early on in your career. It seems to me that pursuing an MBA at that point is an extremely risk averse move. Credentialing for the sake of credentialing.

While there are tons of successful graduates of top MBA programs, it may be a function of who is admitted and not a function of the value added by the program.

rayiner4• 14 years ago

It depends on what you want to do with your career. If your interests run towards being the next Tim Cook, then an MBA can teach you a lot and help build your professional network. MBA's teach you how to manage the capital structure of a company, optimize operations, etc. This stuff is useless for a web startup, but tremendously valuable for a big organization.

theorique2• 14 years ago

Three words: networking, networking, networking.

You are going to get in the trenches with the next generation of self-selected future business leaders. These are the people that will form of the nucleus of your professional network for the next 30 years.

wtvanhest• 14 years ago

Most people on hacker news don't realize that within business there is a huge amount of types of business jobs. Most people go to business school to switch to a new type of business job. About 40% come from engineering because they realize they hate it and want to do something making more money with less hours.

If you had a great job, lets say Investment Banking, you may go to a top business school to switch to Private Equity. To an hacker those don't sound different, but they are worlds apart.

The biggest benefit to getting an MBA is that it gives you an excuse to interview with whatever company you want to. It gives you the opportunity to really change your path. Few other places do that.

johnrgrace4• 14 years ago

You get to reboot your career and go into a new industry, beyond signals that's the great value of the MBA.

wpietri4• 14 years ago

A friend who went to a top business school after a brace of technical degrees and some work experience said that the only value the friend received was in the network, in the social connections made. There was almost nothing in the curriculum that the friend couldn't have figured out from first principles in short order. I expect the friend would agree with the signaling value as well; the point was more that there was little intellectual heft to the material.

Aloisius• 14 years ago

The question is not whether it is worth it for an individual to get an MBA, but rather if MBAs are good for the economy.

I don't think anyone is arguing that for an individual, getting an MBA from a top tier university isn't worth it. There is enough MBA-run businesses with a heavy amount of nepotism to ensure it makes financial sense.

stephengillie4• 14 years ago

This is the "IT certification" argument all over again. Paper MBAs are as useful as paper MCSEs. Who's more valuable to your startup, someone with a degree/certification learning about what you need, or someone with years of experience doing what you need?

rmcastil• 14 years ago

'Who's more valuable'

Exactly. The title makes it sound as if this is some sort of binary choice. Different businesses need different pieces or backgrounds.

com2kid• 14 years ago

Or someone who is smart, hard working, and willing+capable to be flexible in their roles and responsibilities?

Tloewald• 14 years ago

Wow, take that Betteridge's Law!

xaa• 14 years ago

This floored me:

"The professionalisation of management has, some argue, been the single biggest factor behind the economic advancements of the past 100 years."

Not electricity, rapid transportation, semiconductors/computers, telephones, the assembly line, or public investment in research. Professionalization of management. Mmkay.

KeroseneKid• 14 years ago

well the operative word is "economic" .. you may have all of the above but without commercial acumen there is nothing economic.

stephengillie4• 14 years ago

You can have economies without commercial acumen. And you can gain commercial acumen without a college education. Many have done this by growing fruit and then selling it.

pjscott• 14 years ago

I want to argue with this, but I'm not sure what you're trying to say. Please clarify?

rayiner4• 14 years ago

You're mixing up management acumen and business acumen.

stephengillie4• 14 years ago

Please note the past 100 years barely includes WWI.

Professionalization of management is not a phrase I've read before, but I'm assuming it means management as a profession. The benefit here is that managers are supposed to be interchangeable gears driving a company forward. The drawback is that the "interchangeable gears" idea really doesn't work in practice.

yuhong• 14 years ago

It reminds me of this: http://news.ycombinator.com/item?id=2011013

mseebach3• 14 years ago

> The drawback is that the "interchangeable gears" idea really doesn't work in practice.

No, it's not just a part you can replace overnight, but interchangeability works like it does for software engineers. If a software engineer's career takes him from a bank to Google to an airline, nobody lift an eyebrow. A professional manager can take the same journey.

ivix• 14 years ago

Well, look at some countries with rampant corruption, nepotism and other abuses. They have all the technologies you mentioned available, but generally still do not have economic success.

unavoidable• 14 years ago

What they're lacking is not professional management, but the rule of law.

richardjordan2• 14 years ago

Gotta agree with you on the nonsense in that statement. Economic advancement maps very closely to increased availability of energy resources better than any other correlated factor. I'd suggest that's more of a driver than professional management qualifications. Psh...

mseebach3• 14 years ago

Professionalisation of management is what happened when managers started getting hired and promoted on the back of merit rather than their belonging to the family of the owner of the business.

It's actually a story arc in the most recent season of Downton Abbey where the middle class lawyer/businessman Matthew Crawley bails out the old-money estate and with it it's undisputed master, his father-in-law, the Earl of Grantham. Looking over the books (which, it's implied, is beneath his new status), he realises that the estate is mismanaged, running a deficit and multiple avenues of efficiency are left unexplored. He faces stiff opposition from the Earl with reference to "that's how it's been done for generations". Eventually, (spoiler alert), Matthew, his brother-in-law, a mere servant (gasp!), and the Earl form a coalition to turn the estate around.

The triumph of "the world of business and the law" over "that's how it's been done for generations" is the professionalisation of management.

Whether it's the single biggest factor is of course disputable, but it's very big.

fudged71• 14 years ago

Very interesting debate format. I like it! Great way to combine the strengths of the internet with expert opinions.

pixie_• 14 years ago

I agree, I'm more interested in this innovative design than the debate itself.

It gets me thinking as well, like what if people for and against the issue could vote up comments independently. So you get the the agreed talking points on both sides of the issue facing off against each other.

southphillyman• 14 years ago

Yup.

simba007• 14 years ago

This question totally retarded and I'm incredulous that the economist entertained it. Would the economy be better without MBAs? Really? There are people out there who are trying to tell other people that the entire economy would be much better without a small group of people spending another couple of years at university learning more about business? A better question might be 'Would a startup be better off with out MBAs?' or something more specific. But to try and claim that the entire economy would be better off because a tiny proportion of young people decided to do a masters is incomprehensible. Disclaimer: I have an MBA.

wpietri4• 14 years ago

It's a serious question. Did you even read the article?

Not all that many people do law degrees, but the Economist has repeatedly covered studies that suggest the number of lawyers we have is well above the economic optimum, that having too many lawyers harms the economy.

Further, since you have an MBA, you should be fully aware that the tiny number of MBA holders have wildly disproportionate influence on the economy. As the article says at the beginning, 40% of Fortune 500 CEOs hold an MBA. So it's entirely reasonable to ask whether the degree, like a law degree, is really benefiting everybody. Perhaps it mainly benefits MBA-holders at the expense of others.

luk3thomas• 14 years ago

Solid advice from the comment section in the article: "Major in business? Just read Business Week and the Economist every week and you'll pick up more than you will in a business program. Major in something worthwhile."

kreilly• 14 years ago

I have a business degree and an MBA and I agree with this statement. If I could go back, I would major is something more technical.

But, I also have an MBA. And I would get that again.

irahul2• 14 years ago

> I have a business degree and an MBA and I agree with this statement. If I could go back, I would major is something more technical.

I don't know much about MBA programs, but don't you study Economics, Accounting, Finance...? Or Economics isn't considered technical enough?

rayiner4• 14 years ago

An undergraduate degree in business isn't that useful by itself. An engineering degree will buy you a lot more credibility down the line, no matter what you end up doing. But the real money isn't in being an engineer--it's in finance, operations, and strategic management. So the MBA is still crucial--it allows you to transition between the two domains.

rdl• 14 years ago

Do you really think an MBA is that important for operations?

I sometimes think it would be fun to get one (although, since I dropped out of MBA undergrad, the only easy way for me to get one is LSE or LBS or another UK or EU school).

I know finance to the extent of "how to read a balance sheet", run a startup, or do very basic investment analysis, but nothing really exciting. If an MBA actually would be useful for something beyond credentialing in operations/management, I might consider it more.

MattRogish• 14 years ago

Having an MBA myself (nowhere near from a top-10 school, although friends who have gone to better schools report similar curricula) I don't see B-Schools teaching/reinforcing what it is to be a "manager".

I think the MBA does a disservice because it often either doesn't teach "people management" at all or (worse?) reinforces hard-core Taylorism (http://en.wikipedia.org/wiki/Scientific_management#Taylor.27...). We get disastrous manage-by-the-numbers and "us vs. them" mentality, ultimately devaluing the role of the manager! If all you need to manage is a report that says how many widgets employee X made relative to compensation you can automate away most management.

Yes, under that definition (not all MBA programs are like that, but it seems the majority are), I think the MBA is bad for the US economy. It promotes underperformance, lack of innovation, and sucks up resources that could better be spent elsewhere.

Instead, they should teach Drucker-ism (http://en.wikipedia.org/wiki/Peter_Drucker) and Organizational Systems Theory (http://managementhelp.org/organizations/systems.htm).

Managers can and do amazing things by enabling their coworkers to scale better by:

* Removing roadblocks that get in their way

* Listen to, and allow employees to change and shape the culture

* Coach coworkers to improve skills and develop flow

* Help mentor and guide the organization as it scales up

Though, we need far fewer of them if we leave it to stuff like this. It allows organizations to be a lot flatter and scale better without dedicated managers, putting causing downward demand on managers so it seems something most MBA programs won't adopt. Still, it would prevent wholesale manager-bankruptcy that I envision is the future for the "managing" class in most businesses.

marblar• 14 years ago

An aside: As of this comment, that wikipedia article on scientific management needs some serious work.

jewbacca• 14 years ago

Continuing off-topic:

It's vandalism. I just did an hour of procrastinatory cyberstalking, it's the work of a high schooler in Ohio. Probably vandalizing articles they read for class.

Speculation: if not just out of frustration, perhaps sabotage against classmates reading later? Is that a thing now?

----

Last good revision:

http://en.wikipedia.org/w/index.php?title=Scientific_managem...

johnrgrace4• 14 years ago

I agree 100%, MBA programs are giving people the building blocks to be an executive decision maker. The building blocks to be a manager, not really. Far too many people walk away with the idea that management by the numbers is the secret to sucess.

pinaceae• 14 years ago

There is a big Drucker fan over here in Europe, Fredmund Malik. He is hit and miss in his observations, but his riff on Drucker's insight into 'learning' management fits my personal observations.

- MBA... Master of Business ADMINISTRATION. For some reason this morphed into management material, which it isn't. the whole thing teaches you about the administrative side of running a company. awesome, useful. it does NOT teach anything about making a company successful or how to make people within it successful. it is NOT a management course.

so where can one learn management then?

1., the product success side you can't learn anywhere. hence all these shitty companies with shitty products and services. the product side is sort of covered in engineering. technical founders, for example, understand the core principle of what works and what will be an issue down the line. what is right and what is wrong.

a generic 'manager' armed with an MBA and technical background of 5 years of XBox Live just doesn't. the concept of 'wrong' or 'down the line' does not exist. excel has no formula for that.

2., the people success part is very much a soft skill which needs to be learned through practice in an enforced learning environment. current organisations that do this are the various Armed Forces (NCO and Officers) and similar orgs like the Boy Scouts. some companies emulate this through trainee programs - Siemens has a structured way of giving you a team early on, then giving you challenges. which include firing 2 people from that team after you have worked with them for a while. for real. but now you KNOW first hand how a layoff looks like. not just a spreadsheet anymore.

the armed forces gradually give you more responsibility, group, platoon, etc. you have constant feedback loops focusing on your leadership abilities, not just the pure outcome of a task. after action reviews, the whole spiel. nothing grounds you like hearing in an AAR that your team had no clue what you told them, etc.

in austria we have technology and crafts-oriented higher colleges, which have an interesting concept. i completed one for constructional engineering. not only do you learn how to calculate a large construction project (both from a structural and a economic side). you actually learn to build it with your own hands. now you KNOW how much work it is to build 1m of brick wall. so shaving off a few minutes per 1m to make a project 'viable' to build 1000m of wall in a week with 5 men doesn't come so easily anymore, because you know that the workers will simply get exhausted and produce errors and accidents. no MBA on earth teaches you this insight. backache and blisters on your hands do. humans are stupid in that way.

zalzane• 14 years ago

Of all the useless, worthless, pants-on-head retarded degrees out there, why have they chosen to rant on business degree?

At the very least, a business degree would be theoretically applicable for doing work in the real world. Why isn't this discussion about art, history, or political science majors?

johnrgrace4• 14 years ago

They rant on it because far too many people don't think it's a pants-on-head retarded degrees.

wpietri4• 14 years ago

Because this is The Economist?

Further, the harm, if any, of most degrees is to the person who pays for it. People are generally allowed to do stupid things that don't hurt others. But Mintzberg and others argue that the harm caused by MBAs is to the economy, while individual MBA-holders profit. That would be a tragedy-of-the-commons situation, which isn't self-correcting.

Spooky23• 14 years ago

MBA's are different than people with degrees in Sociology. They tend to hire other MBA's, and stuff organizations with fellow MBA buddies. They damage things.

IMO, the problem is that these degrees give you the technical tools needed to function as a manager, but fall short in developing leadership skills -- which is bad news when companies automatically place McKinsey alums with top X MBA's in influential positions.

cdcarter• 14 years ago

My arts degree has been very practically applicable for doing work in the real world! I'm an employed artist!

tnuc• 14 years ago

On one of the toilet paper dispensers at my college someone had written;

"Pull for Arts Degree."

Underneath it someone else wrote. "Wipe for Business Degree."

localhost3000• 14 years ago

so, i dropped out of Dean Danos' program just hours before moving to New Hampshire.

i have the utmost respect for his program and the people they admit - everyone i met seemed highly intelligent and extremely driven. it may yet be in my future. to anyone interested in an MBA - take a long look at Tuck. i was admitted to several elite schools and this one stood out to me. it felt the most like a family, which is what i wanted. for me, a poor 27 year old (relative to the typical MBA entrant) with a strong interest in early-stage technology, the arithmetic didn't make sense. i had a moment, late in the evening before leaving Boston for good, where i saw into a future in which i was saddled with extreme debt and forced to make decisions about where to work and what career to pursue based upon a pending loan payment rather than a passion. it would take several years post-mba to pay off the debt over which i'd begin adding expense to my life e.g. kids, house, marriage, car... i'd likely earn a great deal of money (by my measure) and i'd find myself in a strange mix of being stuck, due to circumstance, but also comfortable and content. i would pay my loans off but, would i realistically be willing/able to leave that lifestyle? the answer to me was clearly, "no." so, the choice was: take extreme risk now, when i have no baggage and next to nothing to lose or, take extreme risk never. i wasn't comfortable with the latter option. explaining this decision to my parents was a horrific experience.

rickmode• 14 years ago

The oppositions opening remarks do not, in fact, refute the motion. Instead of talking about how MBA's benefit the economy as a whole he talks about how MBA's benefit the individuals who obtain an MBA degree.

wpietri4• 14 years ago

It's a similar problem when you think about the number of lawyers in America. Individual lawyers and MBAs can have handsome incomes while being a net drain on the economy.

Anybody who has been on the receiving end of a frivolous lawsuit can understand how that's true for lawyers. But it's less obvious for MBAs. A good example, though, is Simmons Mattress:

http://www.nytimes.com/2009/10/05/business/economy/05simmons...

noblethrasher• 14 years ago

Interesting comment on the problem of MBA programs: http://news.ycombinator.com/item?id=2470694

mitchi• 14 years ago

I'm surprised no one has said it. Experienced programmers should manage programmers, experienced professors should manage university affairs. Not a freakin MBA! Let's have people learn how to do useful work. Then, the people who have the experience will be able to lead the others. We need more engineers, more computer scientists, more scientists. Not MBAs.

http://thedailywtf.com/

thedufer• 14 years ago

> Free markets are generally good at determining value, and for decades the market for young business leaders has given a strong vote of confidence to the graduates of top MBA programmes.

The opposition's entire argument hinges on this one sentence, but they supply no evidence to refute the idea that this segment doesn't behave like a free market at all. As the moderator pointed out, there's no reason to believe that this is anything other than the effect of the "old boys' network".

The opposition needs to come at this from another angle - to show that an MBA gives advantage to the holder in such a way that it isn't clearly an effect of networking rather than learning. Unless they can do that, I will remain unconvinced. I will, however, admit that this a big ask. Performance of business leaders is difficult to measure in a meaningful way.

jacques_chester• 14 years ago

Worse, he's conflated merit with value-at-market.

Hayek taught us to be smarter than that, dammit. I'd expect a good MBA to know that.

krat0sprakhar• 14 years ago

There's another dimension to be looked at here - especially in India's case. I'm currently enrolled in a Bschool and my class mostly comprises of students from an engineering background. Most of them have joined an MBA program to switch careers. Their primary argument is that they were forced to do engineering and when they figured out that they'd rather be doing something else it was too late. Since none of them wanted to spend their early life debugging code for big IT company (read: TCS, infosys) they preferred to do an MBA program.

epa• 14 years ago

I think that MBA's teach a very valuable thing (also found in undergraduate commerce degrees): How to efficiently and effectively work with different types of people in teams.

No one ever addresses this issue when talking about the bad aspects of MBAs.

spiritplumber• 14 years ago

yes

smoyer• 14 years ago

There are two types of MBAs ... a) people who can already "get stuff done" and then went on to add an MBA to their credentials b) people that have no other skills and (IMHO), no underpinnings for their new business knowledge. I think the second type is typified by someone that goes to college in business for their undergrad degree and moves straight into the MBA program.

I don't know what the current climate is, but early in the last decade, MBAs were about half the salary of a good programmer. It was economical to hire one for about every 2-3 programmers just to offload some of their non-programming tasks (updating MS Project schedules, specifications, etc - and yes ... it was BDUF).

Would the economy be better off without MBA students?

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