View From a Height
Commentary from the Mile High City
Monday, March 08, 2004

Business School Technocrats 

Last week it was liberals. This week, technocrats. First of all, please understand that I'm not a candidate to be calling in for Medved's "Conspiracy Day" show. I don't think there's a massive conspiracy of business school professors, or even economists, to corral us all into a one-world government run by black helicopters and blue helmets. But I do think some of them are comfortable with the idea.

Take, for instance, my professor for multinational finance. A very large portion of multinational finance involves guarding against currency fluctuations and worse. These play havoc with just about everything a multinational corporation does, from accounting to operations to finance. For a while, gold was the international standard. After WWII, the dollar, pegged to gold became the world's benchmark. This worked as long as half the world's economy ran through Wall Street. But in the 70s, this exchange rate mechanism broke down, and the world went to a variety of floating mechanisms.

The net result of this has been, quite apart from currency collapses and panics like the Asian Flu of 1997-98, increased uncertainty, and billions of dollars spent every year hedging against this uncertainty. Since each country has its own central bank, and since each central bank (or treasury, in some cases) controls how much national currency there is out in the world, the rates are constantly fluctuating. Companies can take some measures to insulate themselves against these changes in the short-to-mid term. But even the best hedging mechanisms can't save some currencies from cratering, taking national economies and whole overseas sectors with them into the abyss, at least for a while.

The only, repeat, the only way to avoid this problem at this point, would be to have one worldwide currency. Run by one central bank. No doubt, under the control of one central government. There are professors for whom this poses no philosophical problems at all, preferring as they do to dodge the notions of nations as expressions of culture and values. And of course, the inconvenient possibility that there's no guarantee that our values and our protections of liberty would survive such a melding process, no matter how long it took. To them, the harmony of a single currency is worth the price. To me, the defense of our freedoms imposes a much more bearable cost.

The point here is that business is not socially conservative, liberal, or libertarian. It is not even necessarily politically liberal or conservative. It runs by its own goals - efficiency, in this case. They can be goals that do not respect national interests, or social values. While I thoroughly agree that call centers in India can lower my prices and shorten my on-hold wait-times, I don't cavalierly dismiss the fact that the destructive part of creative destruction can hurt. Some professors dismiss the short-term with a wave of the hand, noting that in the long-term it's all for the best. Voltaire aside, they forget that for some people, the short-term is all they have left to worry about.

If business school students are being taught to think either like technocrats or like creeping statists (a nice plant for the backyard, the Creeping Statist), there's little room left for them to think like classic liberals.

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