I read an article in the October 15, 2011 issue of The Economist entitled “Trouble in the Middle.”  The article begins by stating that interest in MBA programs at American business schools peaked in 2009 and applications have fallen since then.  The author states that some business schools are worried that the trend is related to more than just a slow recovering economy, but in fact a greater change.

The Economist presents data that may back the case that it’s not just the economy.  In examining data accumulated in their annual ranking of the top 100 MBA programs, they note that in 2010, the average cost of an MBA for the 85 schools outside of the top 15 was $81,911 while the average starting salary for the graduates of those schools was $81,178.  Five years earlier, the two year cost for the same 85 schools was $60,247 while the starting salary average was $78,442.  The attached graph shows that the disparity was greater ten years ago when the average starting salary was over $80,000 and the average cost was slightly less than $50,000.  The comparison could hardly be more dramatic; increasing costs of tuition have cut the noticeable advantage of attending a residential MBA program outside of the top 15. 

Elite schools like Harvard still have an advantage according to The Economist’s survey data.  Additionally, the article mentions a recent event at Harvard hosted by a large consulting firm where a member of that firm’s senior management noted while speaking to the faculty that the most valuable player on the Harvard Business School team was the Director of Admissions, a not so subtle reference to the elite students recruited to the school and subsequently recruited by that consulting firm.

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It is really hard to identify when ethics –or the lack thereof –became a social issue of the magnitude that it seems to be now.  When I received my MBA from Tulane in 1978, a course in ethics was required for everyone in the last semester of the two year program.  It was considered the capstone course of the MBA program and our professor utilized the case study format.  Later, when I passed the CPA exam, I had to take an ethics exam in order to obtain my license in the state of Maryland.  In the early years of my career, I remember the Ivan Boesky scandal on Wall Street in the 1980’s.  Boesky took down Mike Milken of Drexel Burnham and a few others.  Of course, most recently, we have seen the fallout from Enron, Bernard Madoff, and others.  But ethical lapses are not limited to businessmen.  Almost all of us can name a few politicians who strayed from the norm like Congressman Dan Rostenkowski, Governor Rod Blagojevich, President Richard Nixon, etc.  We can also name a few government employees who earned notoriety by selling their country’s secrets including Aldrich Ames and Jonathan Pollard.   Baseball fans might think about gamblers like Shoeless Joe Jackson and Pete Rose or steroid users like Jose Canseco, Rafael Palmeiro, and Manny Ramirez.

I don’t know if the omnipresent nature of the media has drawn more attention to ethical lapses of our political, corporate, governmental, and sports figures or if the frequency has, as I suspect, increased.  However, a recent article in the New York Times spurred me to write this piece.  Written by Leslie Wayne, the article mentions that nearly 20 percent of this year’s graduating MBA class at the Harvard Business School have signed a voluntary student oath that pledges to “serve the greater good” and to “act responsibly and ethically.”  MBA programs have not stopped teaching ethics.  In fact, Harvard, Wharton, and Columbia have several ethics classes and Wharton and Columbia have ethics centers.  I think it is good that these students created this pledge.   However, ethics is not just business ethics.  Ethics is ethics.   Good ethics is good for business.  Good ethics should be good for all of our leaders and followers, no matter what their chosen field.

When our communications staff suggested that I begin a blog, I had major reservations about starting it.  I found a website that tracks blogs written by college and university presidents and I took a look at a few of them to see what type of communication was published and how often.  I also sent an email to other presidents who had attended Harvard’s New Presidents seminar with me in 2005.  A number of them weighed in on the pros and cons of initiating a blog.  As you might imagine, a few were active blog writers, a few had started a blog and cancelled the initiative, and most had not attempted to write a blog.

With more than a little trepidation, I ventured into the unknown and launched it last year.  For the most part, writing pieces for the blog has been fun.  When I get busy or suffer from writer’s block, I find it difficult to publish at a consistent pace.  Recently, I thought about what I could do to make the blog more relevant and more current.  I decided that I would try to write more often but with less verbiage.   Hopefully, that provides more people with a perspective about what I am thinking about and talking about.  If you have any thoughts or ideas on topics, feel free to send them my way.  After the end of July, let me know what you think about my new style.  Thanks.

I have had a few weeks to think about President Obama’s Stimulus Act and its impact on higher education.  During the same period of time, I have read the daily headlines covering higher education in The Chronicle of Higher Education, Inside Higher Education, and New Realities in Higher Education.  The news is not good. 

In a typical year, the federal government contributes approximately $20 billion to higher education and the states contribute about $80 billion. At the state level, funding for higher education is behind mandated priorities such as K-12 education and Medicaid.  Many governors and legislatures have relied on the public’s willingness to bear tuition increases and in times of budgetary crisis, have pared back funding to higher education assuming that the colleges can increase tuition to offset the state funding cuts.  Given the fall in real estate values and real estate foreclosures, the unprecedented level of job layoffs at companies reacting to the economic downturn, the lower income taxes paid by fewer people working, lower sales taxes paid by people forced to pare back on their discretionary expenditures; it is inevitable that most of the state budgets have to be reduced this year and next.  Some states like Maryland are using some of the stimulus funds to delay cuts to education.  Other states are unable to use stimulus funds to absorb all of the declines in tax revenues and are cutting higher education before K-12.  Among the more notable state cuts that I have read about include:

• Tennessee – $180 million in cuts over two years
• North Carolina – $175 million in cuts this year and $191 million next year
• Washington – $500 million in cuts
• Arizona – $388 million in cuts
• California – $1.1 billion in cuts
• Louisiana – $219 million in cuts

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From Thanksgiving to New Years Day and the following weekend, the college football schedule is filled with bowl games.  After the New Year begins, college sports fans can turn their attention to the height of the college basketball season that culminates in the annual March Madness NCAA Division I tournament.  College athletics is big business although perhaps only ten to twenty Division I programs make money each year.

While many books have been written about sports including college sports, there are a few that I found interesting for their background about the origins of the modern college sports “game” and its current state of commercialization.   John Thelin’s  A History of American Higher Education is a fairly comprehensive book about the origins and development of America’s colleges and universities.  In a chapter entitled “Alma Mater,” Thelin outlines major developments during the 1890’s to 1920, a time period that he calls the “age of university building” and the “golden age of the college.”  During this period, going to college became “fashionable and prestigious” and the national media covered the daily life of a college student in the same manner that the lives of the rich and famous are covered today.  During that period, university colors and mascots were conceived and adopted and the role of alumni associations and fundraising became very important.

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In July, Richard Stengel, editor of Time Magazine, interviewed Bill Gates about his theory of Creative Capitalism.  A six-minute video from this interview is available on Time’s website.

Gates passionately believes that technology provides solutions to many of the world’s key problems.  He also believes that life changes due to technology can only occur where people can afford the technology.  In a speech that he delivered at the World Economic Forum in Davos, Switzerland in January 2008, Gates spoke about Creative Capitalism. In that speech, he defined it as “creative capitalism – an approach where governments, businesses, and nonprofits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world’s inequalities.”  Some examples of companies engaging in creative capitalism include:  (1) Microsoft – provides low cost or free technology to those who do not have access; (2) Crucell, a Dutch company that holds the patents on a cholera vaccine in the developed world but shares those rights with drug manufacturers in developing countries so that the drug can be manufactured and delivered at very low costs ($1/dose in Vietnam); (3) Iscar, an Israeli metalworking company, that locates its plants in areas where it can employ minorities such as Israeli Arabs; and (4) other companies such as Converse, Gap, Armani, Dell, and Apple that participate in the RED Campaign started by Bono.

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