One of the outcomes of the economic downturn has been a robust debate about the role of business schools and the level of ethics education at business school. For a while there, it seemed like every week, I was reading an article about a new ethical shift among business school students and faculty. Schools adding ethics pledges, students forming associations of people interested in behaving ethically while working in the financial industry, and so forth.
It’s kind of inevitable, looking at what the financial industry did to us, that there should be substantial backlash against not just the industry, but the educational institutions that feed it. Business schools clearly fed some of the attitudes and beliefs that contributed to reckless, thoughtless, and abusive behavior in the financial industry. When students at these schools learned that they were on top of the world and could do anything they wanted, they clearly brought that with them into employment. Those attitudes were reinforced and supported by the work environments at a lot firms, according to reports from people who worked in the financial industry and have a picture of what it was like on the inside.
The question is, for all this public posturing, how much is the financial industry really going to change? I’m already reading about the development of new exotic derivative products and other bizarre ways to make money without actually doing anything, by shuffling paper from place to place and creatively contorting numbers to make them read the way people want them to. It’s clear that many people working in the industry now either haven’t taken the economic situation seriously, don’t think it applies to them, or think that they know better and will avoid the mistakes made by the people caught up in the heart of the collapse.
These people seem to ignore the fact that the financial industry is being heavily supported, nay, propped up by the government right now, suggesting that it is actually in a very fragile state. If the industry is so robust, so ready to bounce back, why do we have to keep pumping money into it? Why are bank failures continuing? Why are economic indicators faltering, despite all claims that we are in a recovery? If the financial industry was such a juggernaut in the first place, one might wonder how it was brought to its knees, and why it’s still on its knees and being spoonfed by payments from the government; payments made, I would note, with the money we citizens could really use for things like paying teachers, paving roads, and funding fire departments.
Don’t get me wrong. I think it’s good to see b-schools thinking about ethical issues and encouraging their students to take ethical pledges and integrate more ethics education into their training. But I wonder if it’s going to be lip service ethics, or real ethics. If students are really going to learn ethics, from a social justice standpoint, to internalise the importance of what they are doing, to learn about how their actions can have an impact on actual people in actual places, or if students are going to get the ‘so, you need to do this ethics course, but it’s really very easy, and you don’t need to worry about’ line.
The financial industry didn’t really get disciplined. The financial industry is like the cat that peed on the carpet and got a finger wag, but nothing else, and the government is the owner that just left the puddle of pee lying there and didn’t bother to clean it up. It doesn’t really seem to me like there’s a commitment on the part of government regulators to actually changing the industry, addressing reckless behaviour, and preventing future economic meltdowns. It seems to me that students graduating business school are entering pretty much the same world they would have entered five or ten years ago, filled with high flying industry and the belief that it’s impossible to get burned, or to fall. The cautionary tales are all about other people, somewhere else, another time.
And thus, I wonder, really, how much will the industry change? Because I don’t think it will change at all. It’s not that the intent on the part of these ethics programs is bad, or that people don’t really care about them; I think some schools and people really are serious and really do want to see reform. But they’re also going up against a huge establishment, a very thoroughly completed construct, and I just don’t see how they can fight that. The ethical person in an inethical office either leaves the workplace out of frustration, or adopts sloppy ethics to fit in. That doesn’t really suggest ‘reform’ to me. It suggests more of the same.
After all, I suspect that many of the people behind some of the most egregious abuses of the financial system believed themselves to be ethical once too. Some of them even probably thought that their derivatives and things were pretty clever, pretty innovative. And all of them would have defended their practices if challenged with eloquent words and convincing statements, just as people defend the new questionable financial products flooding the market.
I hear people say the financial industry (like the insurance industry) is too big to fail, and I wonder what they really mean. Do they mean that it’s so integral that we will collapse without it, or do they mean that it is so powerful that they dare not do anything other than support it, because people who go against the industry get trampled? How often are whistleblowers penalised, even though they aren’t supposed to be, for daring to speak out about abuses in the financial industry? How often are we reminded by financial policymakers that decisions are ‘for our own good’ when they only really seem to benefit the most wealthy and powerful members of society?
Too big to fail? Or too big to fight?