Generation MBA

When investment legend Jim Rogers was asked about getting an MBA his response was that one could learn more by sitting in a hot tub in Boston than going to some of its elite universities. Since the coming of what could quite possibly be The Greatest Depression we’ve seen another crash, namely the crash of the FIRE economy (Finance, Insurance and Real Estate) and The Plight of the MBA Generation.

This is a crash that’s been in the works since at least the 1980’s that has involved fields mainly related to the building industry and caused by Washington and The Federal Reserve’s easy money policy. With the real estate bubble, many related fields became inflated, and with the flood of professionals into the FIRE industries, employers demanded additional credentials-hence, the MBA Bubble. With inflated credentials of their own, professionals directly related to the building industries such as Architecture, Construction and Engineering are also feeling the pain.

And you shall lend to many nations, but you shall not borrow.

It’s a sad waste of resources that didn’t have to be. Instead of sound monetary policy, the elites went on an entitlement binge fueled by massive borrowing and creating money out of thin air. What happened was that, since interest rates were so low and new money was created, businesses thought they were more prosperous than they actually were, and so they used their resources on unsustainable projects. People tend to go where the money is so they went into fields and took paths that were unsustainable (and forwent fields that probably were sustainable).

Doug French explains how this MBA Generation came about:

A generation born at the tail end of the baby boom did what mom and dad told them they should: Get off the farm, don’t be a barber, forget about being a mechanic. Go to college and then go be a doctor or lawyer or such. However, high barriers to entry and lack of mental horsepower kept most out of medical or law school. But a business degree means you will still be able to wear a shirt and tie to work, not get dirty, and push paper for a living. An MBA will make you unstoppable.

What’s worse, with astronomical salaries, and no end to the boom in sight, many people personally lived way beyond their means until the party that kicked-off sometime in the 80’s was crashed in 2006.

The World’s not coming to an end, and it’s not hopeless; but to return to economic sanity won’t be without taking the bitter medicine. We can all start by acknowledging that nothing’s free, and resolve to live within our means.