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Mickey Edwards
Political leader

Mickey Edwards

Former U.S. Congressman, Mickey Edwards is vice president of the Aspen Institute, where he directs the Institute's Rodel Fellowships in Public Leadership.

Less Welch, More Aristotle

I'm not at all sure Wall Street can do anything at all to produce better leaders. The character of the men and women leading the financial sector will be formed long before they settle into those well-compensated nests. The better starting point is in the business schools. I've done some guest teaching in the Harvard Business School, engaged with students of good character and good intentions and believers, as i am, in the benefits business enterprise brings to a community.

Along the way, however, the idea of doing a good (providing high-quality goods or services) in exchange for a return that will allow one to live well and provide for one's family, gets transformed into the belief that one must not only make profit but also do all that's necessary to make that profit as large as possible -- or be deemed a failure at worst and a mediocre manager at best. Such things as fiduciary duty, moral constraint, moderation, get lost.

Obviously a business must return sufficient profit to attract investors, but there is ample evidence that a business content to remain within reasonable bounds can still attract capital; there are, after all, investors who themselves have a moral sense.

So what's the answer? Change the business school curriculum. Have a little less Jack Welch and a little more Aristotle. Focus more on business as a component of a community, with all the obligations that entails. Study macro-, micro- and moral philosophy. Become educational institutions, not just trade schools. Encourage campus activities that honor entrepreneurs for their contributions to society, not merely the growth in their portfolios. Speak out against high-risk business practices that jeopardize both the firm (and the livelihoods of the firm's employees) and the client or customer or third-party who has relied on the good faith of management.

Bottom line: Wall Street is not special; it's just a community of similar businesses. Like a mom-and-pop grocery or a corner filling station, it's just people being counted on to give decent service for a fee. Anybody who goes ga-ga over a CEO, any CEO, of any firm, has a screw loose. So . . . better leaders, better culture, better focus? Just concentrate on being better people; that'll do it.

By Mickey Edwards

 |  September 14, 2009; 2:01 PM ET
Category:  Economic crisis Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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good post!


I would add forget Aristotle and read history. Things don't go well when people are destroyed by a band of men seeking their own self interest at the expense of other's goods.

The professors who engaged and were complicit in this desruction of many people's parents and grandparents need to be called out by name.

They need to be shown to the nation for who they are and what they did to other americans.

The idea that saving wall street and not main street as is now being done by one of those academics is very unwise.

If jobs don't come back and if our country cannot develop a new industrial plan for all things will go very badly indeed.

Posted by: JohnAdams1 | September 15, 2009 7:10 AM
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It would be better to use the example of Welch as how NOT to run a business. To better understand Welch's M.O., one must understand the teachings of Milton Friedman - the true source of all things wrong in business. The science of unfettered profiteering gives no regard to human consequences - and is the core reason for this economic crisis.

Posted by: pcw5150 | September 15, 2009 6:34 AM
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OTOH, I heartily agree that the education has got to change: the business school environment and curriculum has been excessively and painfully narrow for decades.

But I cannot agree that "more Aristotle" is the answer. I suspect our author has mentioned Aristotle because of his own connection with the Aspen Institute. I realize the Aspen Institute has a very strong bias towards all of Aristotle's thought.

Now to be sure, the Aspen Institute's bias is not as bad as the short shrift currently given to Aristotle not only in business schools, but in undergraduate curricula as well. But we really need not just more Aristotle, but also more Plato, Adam Smith, J.M. Keynes, Veblen, John von Neumann and Durkheim to name just a few.

Our author could have take the cue from von Neumann's Game Theory, for example, to figure out that yes, it really is the 'rewards' system that is the overwhelming drive behind the collapse, not any lack of liberal education or of moral fiber among the captains of industry. That is, as long as the current system prevails, the system in which execs and investors reap huge rewards for grossly irresponsible behavior, no improvement in the liberal education of businessmen will be able to prevail over the system.

Roughly speaking, this is a consequence of game theoretical principles that are analogous to Arrow's Impossibility Theorem.

This means that President Obama is right, more and better regulation is needed. The problem is that there is a kernel of truth behind the myths the opponents of regulation fling in our faces: because of that same Impossibility Theorem, the regulation that finally gets enacted is rarely much good. Even when it is, it is always years behind the inventive knaves bent on milking the system.

But here too Game Theory casts badly needed light on the problem: the competition between "cops and robbers" (in this case, regulators and financial swindlers) is usually an example of the game game theorists call "an arms-race". Just like the long contest between NATO and the Warsaw Pact, each side is always working hard to catch up with the other. Sometimes one is ahead, sometimes the other; the competition is always intense.

I think we all know that under the previous President one side simply walked away from the arms race, conceding the field of battle to the enemy. And now that enemy has revealed how reckless and ruthless he really is, ruining the entire economy for his own selfish gain.

Posted by: Syllogizer | September 14, 2009 8:25 PM
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It seems to me that the character of the people who go to graduate business schools is mostly set before they show up for class. The time to build character and ethical standards and values is long before the MBA. What you suggest is another version of painting a dog green. It looks different, but it still acts like a dog.

Posted by: wallybock | September 14, 2009 5:26 PM
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