Is Wharton Ruining American Business?

In the wake of Enron and ­other corporate ­scandals, America’s best-known business school, the place that produced Michael Milken and Frank Quattrone, is under siege. Our writer spent a year there figuring out what’s going on

Of course, context is everything. Yagalla and Quattrone both acted within the unique and absurd context of the Internet bubble, irrational exuberance, IPO madness, stock options, the worship of all things young and ambitious. The supposed “New Economy.” The creeping fear that it would pass one by. The Internet bubble fueled the idea that the skyrocketing stock prices of telecom giants like WorldCom, Global Crossing and Adelphia were the result of some legitimate creation of “shareholder value” that gave executives license to buy planes. That companies like Enron, corporate slogan: “Ask Why,” were profiting from their encouragement of employees to buck trends and ask questions, when in actuality they were profiting only because no one had the curiosiity to ask where their profits came from.

Money was all around, and money somehow became legitimacy. Frank Quattrone was raising billions for companies like and E.piphany that never stood a chance of turning profits, Jeremy Kraus went public, Yagalla raised $50 million. Then, of course, the market crashed, investors got angry, and prosecutors started finally asking why.

“There are two reasons for the scandals” to which the business world has fallen prey, Wharton professor Armstrong says. “The first, and the less important one, though it’s still important, is that CEOs steal. The second, more important one is ‘workers following orders,’ to make the numbers and so forth.”

But a lot of people learn to stop asking “why” the day they set foot at Wharton — because if they didn’t, they’d face the Teva guy’s paradox. Students who come for vague, restless reasons — a former Yahoo marketer, for instance, told me he wanted “confidence to make decisions” — quickly realize the MBA is about ROI. What starts as a quarter-life crisis ends with a signing bonus and a job running spreadsheets; and most of them don’t enjoy it.

And that is why MBAs — and the business community comprised of them — are to blame for the scandals, the bear market, the layoffs. WorldCom, Enron and were staffed and sold to investors by MBAs, grownups; people who should have known better.