Forget
About Saving Trees. Let's Kill all the MBAs
By LARRY
ROMANOFF – September 20, 2020
"The
first thing we do, let's kill all the lawyers"
(William
Shakespeare, Henry VI).
Confucius taught that wisdom must come before
knowledge, the reason for which is not difficult to fathom. When we impart
knowledge, we give people tools - and the power to use them, and we all know
that many tools, improperly used, can cause harm. The tools of knowledge
imparted in most of the prominent MBA programs have a surprising capacity for
malevolence and which, in the hands and minds of immature recruits lacking the
basic wisdom of tool safety, i.e., morality, have altered our corporate ethical
landscape beyond hope of repair.
The world's large corporations have always
contained a shrouded element of malevolence inherited from the characters of
their owners, but there was a discernible point in time when this element
became wholeheartedly embraced as part of the politically correct mainstream of
corporate thought, a true watershed in the history of unbridled capitalism. As
you no doubt already know, the US financial system, fueled by credit and cheap
money alternating with deliberate monetary contractions, all controlled by the
FED, has been responsible for most of the world's recession. It was thus in
1971 when the US was deeply immersed in its war in Vietnam, and it was this
that would set the stage for the management changes that were to follow. When
in 1971 the US government reneged on the Bretton Woods Agreement, it set in
motion a worldwide inflationary spiral that ended with the savage FED-induced
economic contraction in the early 1980s, initiating an abrupt and brutal
recession. If we have to choose a time when everything changed, this was the
time.
Until this point, much of the corporate world
still possessed a social conscience and an occasionally-respectable ethical
standard. Prior to this time, few corporations would lay off or fire large
portions of their workforce in response to a poor financial quarter or even a
poor year. Corporate loyalty still existed, often functioning more or less well
in both directions. But as the world slowly recovered from the severe economic
contraction, all the rules changed. The corporate world discarded its social
conscience, personnel became costs instead of assets, and the quarterly
financial statements became the new bible of capitalism. In one case in the
early 1980s, and I could cite many, a regional telecom company in Canada fired
without notice about 3,500 people, 30% of its workforce. In the next quarter,
the company re-hired more than 3,000 people, this time as contract workers
only, meaning no pensions, no health care, no paid vacations, no benefits of
any kind. And no more corporate loyalty in either direction. This disease
infected and spread throughout the Western corporate world, and this is where -
and when - the MBA became prominent. This is when the tools of management began
to be imparted without the necessary wisdom. And this is where greed became the
mainstream religion of our new capitalism.
I recall a conversation I had with a new MBA
during that brutal recession, an ex-banker who boasted to me of "a nice
little M&A project" he had done. He had convinced the owners of two
successful and profitable small oil companies to merge their operations. For those
who don't know, the oil industry is not labor-intensive; doubling the amount of
your oil production may require no additional staff. His plan was to merge all
the assets into one company and fire fully 50% of the combined staff, thereby
adding several millions in profit to the pockets of the owners, and of course a
pleasantly fat fee for himself. The highlight of the conversation was his
recounting that a senior geophysical engineer, a Ph.D., one of the unlucky
high-salaried ones to be fired at 55 years of age, was later seen mixing
milkshakes in his own little shop in a strip mall. I can still recall him
telling me almost breathlessly, "It's amazing how individuals are able to
adapt and cope with adversity." When I suggested that this senior
professional had had his career prematurely and senselessly terminated with no
future hope of employment, that his losses in future salary, pensions and other
benefits, to say nothing of his reputation and self-esteem, were formidable,
and that there had been irreparable human damage, he abruptly terminated our
discussion. I would have to say he exhibited an intense disappointment at my
inability to appreciate the intricacies of his corporate finesse. What a
dullard I was, to 'focus on the negatives' of human loss in the face of such
clear financial gain.
For our corporate descent into the moral
swamps of capitalism, I lay much of the blame on the business schools and on
the MBA graduates they produce. It should not go unnoticed that these schools
are increasingly financed by the top 1%, with their curricula increasingly
dictated to conform to the beneficial interests of this group. Management has
become a commodity, like garbage collection. If you have the skills to empty
one trash bin, you can empty any of them. Executives began complaining in the
1980s that it was almost impossible to find senior staff "who loved the
product". Given the standard approach by the prominent business schools,
we can understand why. The product is irrelevant.
Look at this from the point of view of a new
MBA graduate. He knows how to "manage". Not manage anything in
particular, but just manage. However, auto manufacturing is very different from
making pizzas or running an airline, and he knows nothing useful about any of
these. He could invest the time to learn the business, and perhaps even learn
to love the product, but that appears unprofitable to him. He could spend some
time on the factory floor, but he didn't invest all that MBA tuition money so
he could get his hands dirty. So, he tries to focus his attention on areas that
will result in bonuses and promotions, and to him that means increasing
profits. But since he knows nothing about the business or the industry, the
only part he can understand is the financial statements. And when he looks at
those statements, the first thing he sees is a huge number for salaries, and
the light goes on. Let's just fire all the people or hire only contract
workers, or cut salaries, or outsource all labor to a less expensive
environment. Since he wasn't given the wisdom necessary to use his tools
correctly, he graduates from his business school with no social conscience and
no ethical standards. Money and profit are now the only measures.
By avoiding the shop floor and any workforce
contact, by focusing only on screens of numbers, our new MBA is desensitised to
the point of numbness and appears incapable of recognising that real people,
live human beings, are behind those numbers. He doesn't know, and doesn't want
to know, about the tragedies of unemployment that he causes. He willingly
blinds himself to his own inhumanity, ignoring the stark evidence of displaced
families and derailed careers, of the trauma he inflicts on his own colleagues.
This blindness is legendary. An MBA who was a very close friend for many years,
had become the president of a tiny oil company. He, and a former classmate -
lifetime friends - worked together to build this firm into a very respectable
mid-size energy company. The two were indispensable to each other, and to the firm.
Then one day, in what I would describe as a fit of insanity brought on by his
'knowledge without wisdom' education, he fired his best lifetime friend for the
sake of meeting analysts' profit projections for that quarter.
Wal-Mart in China knowingly sells meat from
diseased animals, labels regular food as 'organic', repackages food with new
prolonged expiration dates. The fines paid are lower than the profits
collected. Forced to remove its SK-II cosmetics from Western countries because
of their carcinogenic content, P & G shipped them all to China. Being
forced again to remove all SK-II products from the shelves in China, P & G
reportedly shipped them to Africa. Faced with a new national labor union,
Coca-Cola in Mexico hired thugs to force all employees to resign - often at
gunpoint. They were rehired the next day, but were no longer union members and
were unlikely to ever become such. Nestle's unconscionable baby milk marketing
in Africa has indirectly resulted in the deaths of millions of babies, producing
a continuing worldwide boycott of all Nestle products, but the profits are
immense and the Saatchi brothers do great damage control. The International Red
Cross in Canada knowingly distributed blood plasma that was infected with HIV
and hepatitis for over a year, and covered up its sins for a much longer time.
Merck sold Vioxx for 10 years, knowing that medication may have killed as many
as 500,000 people in the US alone, but it produced so many billions in profits,
it was worth doing. American pharmaceutical companies began outsourcing their
clinical drug trials to poor countries on the financially-sound but morally
bankrupt theory that killing Asians and Africans was safer and cheaper than
killing whites.
The list of serious and felonious corporate
acts from this same lack of social conscience and ethical standards would fill
an encyclopedia. It is true that some of these have always existed, that
"the public be damned" has always been with us, but it was never so
accepted as standard behavior that the perpetrators were immune from
prosecution as they are in the US today. And again, I lay most of the blame for
the greed and the rampant desensitisation to humanity on the amoral capitalist
culture promulgated by the prominent business schools and so eagerly adopted by
our MBA graduates - so weak, so immature and so easily corruptible.
In a book titled The End of Equality, (1)
author Mickey Kaus clearly hit on the crux of the matter, the focus on
"free markets" and the ruthless drive for profit maximisation in our
new globalised world. It is that ruthlessness, the single-minded and
empty-headed, thoughtless push for profit at the eventual expense of everything
else, that changed the world for the worse. It is at the most admired Business
Schools like the USA's Harvard or Canada's Western or the LSE, and in their MBA
classes, where students' heads are filled with values that have no value to
either themselves or society, and are taught only the things necessary to
further entrench the top 1% in their financial enslavement of humanity. It is
axiomatic in human society that just because a thing can be done, that is not
necessarily a reason to do it, but MBA students are taught only 'what and
'how', and heavily proscribed from asking "Why?". Business schools,
MBA graduates and multi-national businesses have no such questions because they
have no values against which to measure the wisdom of their actions. Indeed,
questioning the capitalist bible at this stage will lead to rejection,
isolation and ostracism, to say nothing of failing the MBA program.
The capitalists in our corporate world openly
discarded their social conscience and replaced it with greed. So a firm like
Pepsi will today come to China, form a superficially good-faith Joint-Venture
contract giving it control of a renowned Chinese brand like Tianfu Cola, then
siphon off all the profits, drive the JV into bankruptcy, and kill the brand.
Pepsi's executives in China did this because of a business-school morality that
told them profit and market domination are the only values. Society is
irrelevant, as is culture. Morality doesn't exist. Ethical conduct is an
archaic concept for the weak. The law of the jungle: the strong prey on the
weak and only they survive. It was this loss of morality and the substitution
of greed that marked the main contribution of the 1% elite to the world's
business schools and their MBAs. It is the main reason these people give huge
donations to the business schools: they get their names plastered on the
building and they dictate the curriculum.
From this, there were many concurrent
corporate events and social changes, apparently disparate but in reality
closely connected. This was when the time horizon of businesses became
truncated, with increasingly short-term focus entirely on profits and share
prices, eventually where the future consisted almost exclusively of the next
quarter. This was when a corporation's profits became more important than the
products produced or the customers who purchased them. This was when business
schools began to deny that the proper focus of a corporation was to identify
and fill needs, instead teaching students to use marketing and psychology to
manipulate real needs and fabricate imagined ones. This was when corporations
abandoned the theory of giving value for money and of products filling needs,
and in practice abandoned the concepts of value and needs altogether. This was
when firms like H-P metamorphosed from companies that made products to
companies that made money. This was when personnel became commoditised and
dehumanised, when employees became costs instead of assets, when firms would
lay off large portions of their workforce simply to improve the current
quarter's financial statements. Corporations now thought nothing of closing
their factories and firing all their employees, to outsource production to
another country with lower wages, with no apparent recognition of, nor any
concern for, the obvious and irreparable damage being inflicted on both
societies and nations by these immoral and irresponsible policies.
The propagandists helped the MBAs mask their
social pathology by creating neutral euphemisms to describe their
dehumanisation. Mass layoffs to permit foreign outsourcing became known by the
emotionally-neutral terms of "downsizing" or
"restructuring", expressions as impersonal as 'redecorating' or
'renovating'. Another part of the dehumanising process was the introduction of
the brutal tactic of shock to accompany this callous corporate redecorating,
the practice of terminating staff without cause and without notice, a method
heavily promoted by the business schools and think-tanks as professional and
low-risk tactics that spared executives the moral agony of personally facing
their victims and one which carried less chance of being challenged in a court.
Wal-Mart in China recently terminated more than 100 professional staff - their
entire finance and accounting division, in just such a fashion. The staff
appeared for work one morning to find the building locked, with a printed
statement on the door that the division had been disbanded and all of them were
now unemployed. A rather cowardly way to fire people, but MBA grads are not
evaluated on courage.
This was when the international bankers
re-entered the gold mine of privatisation with a vengeance, convincing foolish
and short-sighted governments to sell off their nation's infrastructure and
social services in permanent, irreversible and unnecessary solutions to
short-term problems. This was the time when ignorant and misguided Western
politicians, pushed on by the same bankers, adopted the mantra of "user
pay", a process of levying countless and substantial new taxes on already
burdened populations. This was when the education of mainstream society became
an unnecessary burden to the elite 1%, when many Western nations, especially
the US, the UK and Canada began the "dumbing down" and lack of
affordability that still continue and are accelerating. This was when
university Presidents became Finance MBAs instead of academics, their main
responsibilities now being primarily endowment fund management and cost
reduction by resorting to disposable, non-tenured professors and the 'user-pay'
philosophy for tuitions. This was also when companies began to lie. About
everything. Corporate crimes became merely PR occasions, and "damage
control" became the operative expression created to deal with them. It was
during this same period that multi-national corporations went from merely
aggressive and belligerent to downright vicious, in seeking out and attacking
real and imaginary infringements on their precious IP.
This was the time also when large
corporations, with the eager support of their governments, launched an all-out
war on labor unions. It must be said in fairness that some unions, like the US
Teamsters and Canada's Postal Workers, acquired excessive power and leverage
which they applied in ways surprisingly self-destructive for both themselves
and their members. Notwithstanding this, aside from a nation's legislated
minimum-wage law, unions were the only source of protection for a great many
industrialised workers, whom the 1% attacked with a vengeance to the point
where this last defense has all but disappeared in the politically Right-Wing
countries like the US, Canada and the UK. This was when the US Congress amended
corporate bankruptcy laws to permit ease in voiding labor contracts and
eliminating unions. It was also when the elites invented, and the US Congress
legislated, individual retirement accounts to permit workers to save tax-free
retirement cash, but which were instead meant as a legal framework to eliminate
the expense of corporate pension plans.
This was the time when the goal of the
evisceration of the middle class was no longer denied or even hidden. During
the decades in question, executive and financial salaries increased by about
ten times - 1,000% - while incomes of the nation's working population remained
static or down after inflation. These senior executives and financial
professionals have increasingly come to dominate the boards of directors and
the compensation committees of the large (and not so large) firms, and all
cooperate in feathering their own nests at the expense of the entire corporate
workforce. As well, the elite have been extraordinarily successful in
pressuring governments to reduce taxes for their group, to the point where even
Warren Buffett complained that his secretary paid an income tax rate almost
twice that of his own.
There was a time before MBA's when it was
recognised that all businesses - not only yours - needed a profit to survive,
and when society strongly disapproved of profiteering and greed. The general
corporate attitude was one of "pay and be paid", evidenced by an
absence of the brutal (and often inhuman) drive for lower costs that are so
common today with companies like GM and Wal-Mart. Of course all companies
attempted to lower their costs, but seldom did larger firms intimidate and
browbeat smaller suppliers into providing products and services at little or no
profit, forcing them into increasingly smaller margins and to the very edge of
bankruptcy. Today, this latter process is standard procedure, enshrined and
taught in all business schools as an axiom. Wal-Mart is renowned for its
ruthless tactics and pressures to force suppliers to find and concede every
tiny fraction of a percent of cost reduction, most often leaving suppliers with
margins too thin for survival. General Motors was bitterly reviled for its
practice of forcing parts suppliers to concede all their profits to the auto
giant, staging competitions where the 'victor' was forced to reduce his price
in each succeeding year by yet another 5%, and refusing to permit a parts
supplier to quote on new contracts without first initiating a 5% or 10%
discount on existing contracts.
When the MBA programs first appeared, they
had a semblance of moral legitimacy, giving students a deeper appreciation and
understanding of finance or marketing, but those days are gone. Today, an MBA
is a graduate degree in sociopathology. I will say that I have met almost no
executives (above a certain level) of a large corporation or institution who
were not sociopaths, at least to some notable degree. I would go further and
claim that it is virtually impossible to enter the higher ranks of
multinational business if one lacks credible sociopathic credentials. The
reason is that no other form of insect could outsource lethal drug trials to
impoverished nations and ignore the residue of dead bodies. Who, other than a
confirmed sociopath, would market baby milk powder to poor countries and ignore
the millions of dead infants in his wake? Who else would hire a group of thugs
to force all workers to resign at gunpoint, in order to eliminate a union?
These and many other examples are the direct result of the 1% taking over the
funding and curricula of the business schools, infecting impressionable young
minds with the basic philosophies of profit maximisation and the amorality
necessary for such. It is perhaps worthy of note that MBA graduating salaries
are at an extreme level, especially for those at the top business schools and,
with such high salaries, surprisingly little guidance appears necessary to make
our budding sociopaths blossom.
*
Larry
Romanoff is a retired management consultant and
businessman. He has held senior executive positions in international consulting
firms, and owned an international import-export business. He has been a
visiting professor at Shanghai's Fudan University, presenting case studies in
international affairs to senior EMBA classes. Mr. Romanoff lives in Shanghai
and is currently writing a series of ten books generally related to China and
the West. He can be contacted at: 2186604556@qq.com.
Notes
(1)
https://archive.org/details/endofequality00kaus
*
Larry Romanoff is
one of the contributing authors to Cynthia McKinney's new COVID-19
anthology ''When China Sneezes''.
Copyright © Larry
Romanoff, Moon of Shanghai,
2020
