Everyone has his own model of appropriate behavior. My nemesis is people who think their model is right, not just for themselves but for everyone else too, and have no compunction telling you so. Many of them have standards that change with time, sometimes by 180 degrees, but their certainty that you should be following their current set of standards doesn’t.

No doubt I am guilty of the same crimes, but ?

A few posts ago, tired of reading about how the world would be better off if the financial engineers of the world did real engineering and put their brains to better use, in a vain attempt to divert attention I wrote: There may be too many financial engineers. There are certainly way too many MBAs and economists.

Now, confirming my temporarily bad-tempered prejudicial view, here are excerpts from Philip Broughton at www.timesonline.co.uk/tol/news/uk/education/article5821706.ece…, himself a Harvard MBA, on Harvard MBAs.

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Harvard Business School alumni include Stan O?Neal and John Thain, the last two heads of Merrill Lynch, plus Andy Hornby, former chief executive of HBOS, who graduated top of his class. 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.

Business schools have shown a remarkable ability to miss the economic catastrophes unfolding before their eyes ?

In the late 1990s, their faculties rushed to write paeans to Enron, the firm of the future, the new economic paradigm. The admiration was mutual: Enron was stuffed with Harvard Business School alumni, from Jeff Skilling, the chief executive, down. When Enron, rotten to the core, collapsed, the old case studies were thrust in a closet and removed from the syllabus, and new ones were promptly written about the ethical and accounting issues posed by Enron?s misadventures ?

You can draw up a list of the greatest entrepreneurs of recent history, from Larry Page and Sergey Brin of Google and Bill Gates of Microsoft, to Michael Dell, Richard Branson, Lakshmi Mittal ? and there?s not an MBA between them.

Yet the MBA industry continues to grow, and business schools provide vital income to academic institutions: 500,000 people around the world now graduate each year with an MBA, 150,000 of those in the United States, creating their own management class within global business.

Given the present chaos, shouldn?t we be asking if business education is not just a waste of time, but actually damaging to our economic health?

etc.

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500,000 MBAs a year is daunting. If half of them, I don’t know, each wrote just ten error-free lines of C++ a day, or co-authored one paper on behavioral finance a year, or babysat one day a week so that more women and househusbands could go out to work, imagine the effect on the world.

Now is the time for all good men to come to the aid of their country.

Next up: management consultants. Still on the bench: executive coaches.

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I wonder if fat tails have finally peaked.

Here is Rick Bookstaber on the Fat Tailed Straw Man:

“I remember a cartoon that showed a man sitting behind a desk with a name plate that read ?risk manager?. The man sitting in front of the desk said, ?Be careful? That?s all you can tell me, is to be careful??

Observing that extreme events can occur in the markets is about as useful as saying ?be careful?. We all know they will occur. ? The flaw comes in the way we answer that question, a question that can be stated more analytically as ?what are the dynamics of the market that we failed to incorporate. ?

So, to recap, we all know that there are fat tails; it doesn?t do any good to state the mantra over and over again that securities do not follow a Normal distribution. Really, we all get it. ?

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I’m still not sure the administration understands psychology. As I wrote previously, “As far as the bailout goes, the stock market responded badly to Geithner because it is crying out for someone in authority who can make bold moves and justify them, someone non-mealy-mouthed, someone who has an equal mix of brains, principles and confidence. The market wants Churchill and they keep tossing it Chamberlains.”

The latest NYR of Books has an article by Amartya Sen in which he points out the contributions of Arthur Cecil Pigou (never heard of him) to economic psychology, and its importance:

“One of the problems that the Obama administration has to deal with is that the real crisis, arising from financial mismanagement and other transgressions, has become many times magnified by a psychological collapse. The measures that are being discussed right now in Washington and elsewhere to regenerate the credit market include bailouts?with firm requirements that subsidized financial institutions actually lend?government purchase of toxic assets, insurance against failure to repay loans, and bank nationalization. (The last proposal scares many conservatives just as private control of the public money given to the banks worries people concerned about accountability.) As the weak response of the market to the administration’s measures so far suggests, each of these policies would have to be assessed partly for their impact on the psychology of businesses and consumers, particularly in America.”

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Recently a journalist emailed me: “Should working in finance equate with the responsibilities of public service?”

“Should working in journalism equate with the responsibilities of public service?” I responded.