Don’t look back?

London’s Times Online today has an interesting article on the fact that MBA grads, especially those who got their degree from Harvard Business School, are the “swollen class of jargon-spewing, value-destroying financiers and consultants [who] have done more than any other group of people to create the economic misery we find ourselves in”:

Harvard Business School alumni include Stan O’Neal and then of course, there’s George W Bush, Hank Paulson, the former US Treasury secretary, and Christopher Cox, the former chairman of the Securities and Exchange Commission (SEC), a remarkable trinity who more than fulfilled the mission of their alma mater: “To educate leaders who make a difference in the world.”

It just wasn’t the difference the school had hoped for.

The article’s author, Philip Delves Broughton, goes on to point to the fact that the Harvard MBA curriculum used to include such notorious entities as Enron and Royal Bank of Scotland in “case studies” as successful and innovative business models, at least until those businesses imploded under the weight of reckless and criminal conduct. At that point, though, Harvard didn’t revisit and criticize its earlier enthusiasm for what turned out to be fraudulent businesses. Rather, the school simply disappeared those case studies from its curriculum. But it’s even broader than that — despite the centrality of Harvard MBA’s in the creation of our financial disaster, there is no looking back, no reflection on what might have been wrong in the school’s approach:

You would think after failing on so many levels, the school that provides more business leaders than any other might feel some remorse. Not in the least. It’s onwards and upwards, with the very people who blew apart the world’s financial plumbing now demanding to fix the leak.

I suspect the same criticism might be leveled at law schools, or at least that faction of the law schools that has become so influential in the 28 years since I entered the University of Michigan Law School — the libertarians, the free-marketers, the Law and Economics folk, the Federalists. Their criticism of what has gone on has almost always been directed at the federal government or at any type of regulation. The Volokh Conspiracy, for example, is the home of people mostly of the laissez-faire persuasion who likely fit within some or all of the groups named above. It is also the most popular law blog there is. Yet upon searching the Volokh Conspiracy’s archives, all I can find in connection with the banking system, credit default swaps, financial derivatives, and mortgage backed securities are criticism of Fannie Mae and Freddie Mac, of former Clinton administration officials and their involvement with Fannie Mae and Freddie Mac, and of regulation that tried to limit the ability of banks to make “predatory” loans (otherwise known as loans that were doomed to default because they were on terms the borrowers could not possibly afford). At least one of the “conspirators” recognized the stupidity that was embedded in the mortgage-backed security market, but none of them came close, as far as I can tell, to suggesting that the legal system might play a role in controlling that stupidity, much less role law might play in controlling what has been described as the “greed and phenomenally excessive risk taking by these ‘Masters of the Universe’ at our ‘prestigious’ financial institutions . . . .”

I haven’t studied this question in depth; nor can I be confident that my searches through the Volokh Conspiracy’s archives were exhaustive, but it does seem there were an awful lot of law professors and lawyers arguing against the types of regulation and investigation that might have been helpful. Good god, the SEC was told at least 3 times that Bernie Madoff had to be a fraud, and Chris Cox’s agency just continued to give him gold stars. And, as Broughton doesn’t think the MBA types have reflected back on the role their ideas played, I don’t think these legal types have reflected back and examined whether their ideology might be flawed and might have been one element in the creation of our financial crisis.