Volcker on regulation

Agree or not, Paul Volcker's op-ed piece today makes as solid an argument as I have seen for financial re-regulation. Well worth reading. My guess is that a critical mass of Republicans will go along with this initiative because of public hostility to the bailout and fear of attack ads in the fall. But how will the legislation change as it works its way through Congress?

Technology applications at b-schools

I am attending an annual meeting of MBA deans and directors and some of the talk has centered on technology, especially with yesterday's launch of the new iPad. New devices are coming out that promise to combine all texts, cases, spreadsheets and simulations in a single platform. Experience suggests that we will see competition between different devices regarding which one will become the standard (remember HD DVD players?) and that prices will come down -- a lot -- over the next two to three years. I don't expect the used text market to dry up anytime soon (although this is one reason publishers are pushing digital platforms).

Business Week online reports some wide-ranging experiments at other universities, including virtual classrooms at Warwick, iPod Touches at HEC Paris, e-learning resources at iTunes U, and various video channels. I am especially intrigued with the potential that gaming will provide; if students can learn to slay dragons, they ought to be able to use the same platforms to develop leadership skills.

I was shaking my head at one so-called revolutionary development:

Traditional history-based case studies, the bedrock of so many MBA programs, would disappear, replaced by real-time, real-life case studies in which organizations work with students and academics to solve problems and meet challenges on a day-to-day basis.

We have been doing live cases at NC State for a long time; sorry to hear it is news at some other schools.

Obama's new financial regulation proposals

Rather than leave financial re-regulation to Chris Dodd and Barney Frank, the President has come up with his own proposals, largely based on the ideas of until-now-unseen economic advisor Paul Volcker. (Aside: Greg Mankiw's blog has a post that suggests the proposal has been in the works for months and that the release last week had nothing to do with the Massachusetts tea party.) The proposal would prohibit banks from running hedge funds or trading on their own accounts if they accept deposits covered by FDIC insurance. It also would impose new limits on bank size. Saturday's WSJ "Intelligent Investor" column by Jason Zweig points out some complications related to the new proposals and summarizes some interesting research by Boston College finance professor Ed Kane on how regulation can become more effective. One idea I liked: send the regulators to bootcamp to instill "a sense of honor and duty" and pay the regulators like bankers -- bonuses for fewer meltdowns on their watch.

More on tax deductions for part-time MBA

Today's Bucks blog on the NYT website runs a story that explains in more detail the circumstances in which MBA tuition becomes tax deductible. The key issue is that the MBA student must prove that the degree "maintains or improves the skills required for the taxpayer's current trade or business."

It turns out the rules for M.B.A.’s depend on whether individuals can prove that they were already established in a certain trade or business before going to get an M.B.A. and that the degree will help them maintain or improve their skills in that specific trade or business.

If they can demonstrate both, they can deduct whatever tuition costs their employer didn’t reimburse or offer to reimburse. And if they can’t — say they are switching careers or didn’t have qualifying work experience before heading to school — they can’t.

Charitable giving and Haiti

Citizens, nonprofits and governments have stepped up quickly to donate funds to help the earthquake victims in Haiti. But before you write a check, think about (1) doing some research to see how much of the money will go to the victims versus how much will go to overhead and (2) strongly considering making an unrestricted gift to your nonprofit of choice as opposed to a gift earmarked to Haitians. The reason for the latter is that donors in this type of situation historically have tended to give more than is needed at the time. Blogger Felix Salmon raises some additional points in his post "Don't Give to Haiti" (disclaimer: I saw the link in Andrew Sullivan's blog). Final thought: also consider upping your gifts to the charities you normally support. Why? The principle of substitution: gifts to Haiti are likely to displace other forms of charitable giving this year.

How much is your fandom worth?

Yesterday's WSJ contains a front page article summarizing economic research that attempts to put a price upon an emotion, in this case how much is it worth to be a fan of the Minnesota Vikings. Some fans put their money where there feelings by buying tickets and merchandise. But many fans simply follow a team, so how much is it worth to them?

The research reported here revolves around a survey done at the time the owner was threatening to move the Vikings to another city (would they still call them Vikings in San Antonio?). Citizens were asked how much they would be willing to pay to subsidize a new stadium to keep the Vikes in M-town and the average answer came to $530 per household. In a cost-benefit analysis, this information would be used along with tangible economic benefits (such as extra sales of tickets, hotel rooms and viking helmets) to determine if the city should subsidize a new stadium.

This same type of research is used to determine the value of such items as maintaining a pristine wilderness that most people will never visit but value nonetheless. The obvious criticism: it is one thing to say you would voluntarily spend $500 in a survey and quite another to actually part with the $500. The researchers might get a better answer if they posed the question this way: mayoral candidate X proposes raising your taxes $500 to pay for a new stadium -- does this make you more or less likely to vote for this candidate?

Economists gone wild

The American Economic Association recently held its annual meetings in Atlanta. WSJ reports that this was probably bad news for Atlantans whose livelihood depends on the convention trade because --- economists tend to be cheapskates. My favorite anecdote in the article was the one about Milton Friedman returning reporters calls collect. My own claim to fame: I continue to cut my own grass. But is it because I am a cheapskate, or because I have so few earnings opportunities on the weekend?

On a more serious front, there was much talk about the current economic crisis. Ben Bernanke's speech got the most attention, as one would expect. Bernanke warned that the Fed may very well act to pop any future bubbles. Last week WSJ ran another article that gave some interesting perspectives on how to deal with the financial crisis, growing federal debt and our old friends Fannie Mae and Freddie Mac. Money quote from Stanford economist Robert Hall:

If the banks really feel that they are insured, then we have a dangerous situation. The incentives are to take a very risky position. They get to pocket it if they win and it's the federal government's problem if they lose.

MBA tuition now tax deductible?

Last weekend's WSJ reports that a Maryland nurse won a case in US Tax Court that will allow her to deduct MBA tuition from her federal taxes. The IRS ruling cites the finding that the MBA was necessary for her current job, as opposed to some future position, as the decisive factor. This could be a tremendous boost for part-time and executive programs. ADVICE TO NC STATE MBAS: Please read both articles and strongly consider consulting with a tax accountant or attorney before claiming your 2009 MBA tuition as a tax deduction.

Critical thinking skills in b-schools

Interesting page one story in NYT business section about how some b-schools are starting to put more emphasis on critical thinking skills in their curricula. Most of the article focuses on the Rotman School of Management at the University of Toronto. At NC State we certainly are guilty of not having any courses with "critical thinking skills" in the title. But we do have courses in innovation management that are fairly similar to those at Darden, Rotman and Stanford that are mentioned in the article. Is this an area where NC State students would like to see more activity?

MBA students as customers

Columnist Greg Burns takes on this touchy subject in Sunday's Chicago Tribune, while NYT online has five guest columnists expressing their views. Business schools face a much more competitive environment in student recruitment than other units on campus, as indicated by their aggressive marketing efforts. To make talk match walk, b-schools definitely need to have current students and alums say good things about the program. But what is the best way to do this? Clearly different schools have chosen different paths. Ed Snyder, dean at Chicago, thinks the obligation of the school is to provide a challenging educational experience with excellent professional support. David Bejou, dean at Elizabeth City State, has a different take:

The goal should be shared governance, he said, with faculty, students and staff working together. "You need to understand what this new generation wants," he said. And it's not "a faculty member with white hair and a tie standing at a blackboard trying to write a formula."

At NC State, we certainly take student feedback from focus groups, teaching evaluations and the annual student survey very seriously. But I do not expect to add any students to voting slots on the curriculum committee any time soon.