Ethics and business school

I keep coming back to this topic but the current state of affairs at business schools gives me no confidence that, as a society, we’re heading in the right direction.

A couple of days back, in my Ethics class, we had a hypothetical case.

My bank is trying to win the business of a Saudi oil company. The lead manager on the project is a woman. During the negotiation phase, she couldn’t travel to Saudi Arabia but her team informed the Saudis that their boss is a woman. This was obviously lost in translation. When the Saudis come to the US to sign the final contract, they balk and refuse to deal with a woman. Period. What do you do?

As we went around the class discussing what our options were, I was disturbed when I realized that no one was calling this out for what it was – discrimination, plain and simple. There were suggestions that the female executive should be compensated for her work and put on a different project, with promises of lucrative assignments in the future. There was appreciation for coming up with “creative solutions”.

The very idea that a CEO should throw his “undesirable employee” under the bus in order to appease a customer’s prejudice (call it “cultural values”) and money seems unpalatable, and frankly, disgusting. What was even more shocking was the fact that most of the students didn’t see it as a huge problem.

Earlier in the class, several students admitted that they wouldn’t hire a balding, bulging marketing manager with impeccable credentials because “looks are important” in marketing.

There’s a crop of tomorrow’s business leaders.

We’re all screwed.

Is greed still good?

If you close one door, another one opens. A recent article in the NYTimes on credit card companies and credit unions going to desperate lows to make money, was appalling and gut-wrenching.

Several of these banks were bailed-out by the federal government’s TARP program. For many of them, it was greed and an unapologetic willingness to rip-off the customer at any cost that brought them to that stage. You’d think they learned something from that. You’d be wrong.

Not only are they charging exhorbitant fees (3250% in one case), they do other things that any reasonable individual would consider unethical – re-arranging transactions so the highest charge is paid first, leaving the customer with no balance, and therefore triggering an overdraft fee.

From an “economic thinking” perspective, regulating this would be bad. Supply-side economists would say that by regulating this industry, consumers who have a need for this overdraft with ridiculous fees would not be able to get them. But are the customers really asking for this? Or are they simply opted-in by default?

Which brings me to a bigger point – why are default opt-ins even allowed? In you look at any industry – travel, credit cards, phone companies, advertising – an optional opt-out is always a ploy used to sucker somebody into giving up something that they may not be willing to do so if asked. It’s just as bad as those other scourges of commerce – mail-in rebates and “new & improved” products that hold less but cost the same. If you really want to give me a discount, just give it.

When this topic came up for discussion recently in class, it was interesting to watch how most students reacted. The general feeling was that it was the consumer’s responsibility to watch out. Companies had absolutely no responsibility to be transparent about unit costs.

Made me wonder – if the MBA students from Gecko’s generation brought us to this recession, where will this generation take us?

Green Software

A while back, in one of my Environmental classes, I’d mentioned that I’d like to work on projects where “Green IT” doesn’t just involve efficient and sustainable hardware and data centers.

My biggest beef is that every year, software companies create bigger and more bloated software and they’re able to get away with it because hardware is cheap. Anyone remember PCs with 640KB of RAM and floppy disks? I learned C++, Fortran, Pascal and Assembly programming on a PC with 640K memory, 2 1.25″ floppy disks and no hard drive. Granted I couldn’t run anything really graphics-intensive but hey, I was happy playing the Prince of Persia on it. In addition, it ran dBase III+, Lotus 1-2-3 and several other useful software. All on 640KB.

The PC I’m using right now has 3GB of RAM, an 80GB hard disk and a 2.33 Ghz processor; and it simply can’t cope.

Which brings me to Snow Leopard. CNET has run tests that show that it saves about 8.2KwH of energy. Not a big deal, unless you multiply that by the number of copies of the O/S that Apple plans to sell this quarter, and you have over 42 million KwH saved! That’s 143 billion BTUs. Combine this with their annual desktop/laptop/tablet sales and you have incredible power savings. (btw, total energy consumption in the world in 2010 is estimated to be about 508 quadrillion BTUs).

And all this from just software. Imagine where we’ll be if all developers decided to similarly improve the efficiency and power consumption of their software. Imagine if Microsoft did it.

There’s a “green” revolution for you, and it could be as simple as writing Hello World.

Economic thinking

As a student of economics, I’m running into a wall. It’s hard to keep a sociological perspective when you have to put on the economic-thinking hat.

Conventional economic thinking says government controls on almost anything is bad. Rent control, minimum wages, taxes…the theory is that the market eventually figures out the optimal solution and government intervention leads to a distortion of supply and demand.

If the markets could really do that magic, what happened that caused this recession and financial crisis? Paul Krugman has a theory. The ketchup economists screwed up.

That would be good if we could just get rid of them and move to what the “saltwater economists” think is the right set of policies. But unfortunately, that’s what’s being taught in schools today. Efficient market hypothesis, CAPM, Fama, deregulation…

Maybe it really is time for a 2nd Keynesian resurgence.