Truth, not Sophistry

For the unaware, there's a huge debate raging over how business schools should be fixed.

It is argued that business schools are the root cause of the crisis, the singular focus on the upside combined with economic imbalances have resulted in taking our eyes of the more important systemic risks. Business schools have also fueled the crisis by becoming banking factories, churning out everyone ranging from the "just following orders" financial sector rank and file to the very leadership deemed to be the most culpable. This is also a debate cutting across philosophy, education, ethics, financial incentives and many other areas of expertise which are beyond me.

However, if I had to pin down a single aspect of business school I would like to see changed, it would be this: Business schools should be institutions and purveyors of Truth, not Sophistry. We all know what truth means. But the truth (no pun intended) of the matter is, we've allowed that thin divide between truth and sophistry to disappear entirely.

So for the sake of clarity, "Sophistry" is defined by Merriam-Webster's as: subtly deceptive reasoning or argumentation.

Sophistry is now embedded in almost every aspect of modern business. Some argue that the seeds were sown with the case method, where students are essentially rewarded for finessing questions from professors and later in life, clients. Others think that it begins with the job interview process where students form dedicated teams to come up with model answers evidencing their "passion in finance".

Subtle deception, compounded over decades and practiced en masse, unchecked, unappreciated, institutionalized and internalized by students is best exemplified by the enormous build up of complex derivatives sold and held by the "too big to fail" banks over the years. Think of the number of mental contortions that transpired to get us to where we are:

1) You began by securitizing and splitting up worthless assets so they could appear to be valuable.

2) Then you had to take them off the balance sheets so they would not appear worthless at the corporate level.

3) Eventually, you sold them to other people fully knowing what you had done in 1) and 2).

4) Finally, you believe your own twisted logic and start buying worthless derivatives from other banks thinking that if they do the same and sold it to you, it might be valuable.

There is nothing particularly insightful here, you don't need sharper critical reasoning to see the madness that lay within, what you needed was conscience and strength of conviction. You needed to be focused on the truth.