Arts education might have averted crisis

Financial markets fall apart without sense of trust

February 26, 2009 - Ray Pennings

A friend recalled recently how, at an event in support of a small liberal arts university in Canada, one of the speakers wondered just how practical a liberal arts education might be in this day and age.

"It makes for good dinner conversation," piped up one of his counterparts, soliciting a few chuckles from around the room, most likely from those inclined to "hard" and "practical" pursuits such as accounting and engineering.

This has long been a debate that successfully applied a lot of pressure on universities in the past generation or so to retool their undergraduate requirements to de-emphasize the humanities in favour of more "practical" pursuits.

Those of us who find beauty in the "hard" pursuits, but believe that the ability of a liberal arts education to mould character, logic and reason is also vital to a society's architecture have watched, troubled, as this trend unfolded.

We now have a champion in none other than Paul Volcker, chairman of the United States Federal Reserve from 1979 to 1987.

Speaking in Toronto earlier this month about the world's current economic crisis, he made it clear that there are elements beyond the numbers that, when the numbers people don't understand them, lead to trouble.

"Finance doesn't work without some sense of trust and confidence and people meaning what they say," Volcker said, sounding ever so much like a philosopher and not the number-crunching hero credited with wrestling inflation to the ground in the 1980s.

"There was so much opaqueness, so many complications and misunderstandings involved in very complex financial engineering by people who, in my opinion, did not know financial markets," Volcker said. "They knew mathematics. They thought financial markets obeyed mathematical laws. They have found out differently now."

Markets, of course, are not solely about numbers nor are they comprised solely of mathematicians. Yes, many of the people who manage markets live their lives through the numbers and not through their grasp of philosophical understandings of emotion and belief. But even Adam Smith was careful to distinguish between acting in self interest, which he believed to be good, and greed, which he believed to always be bad.

Theodore Malloch, chairman and CEO of the global strategy firm, Roosevelt Group, wrote recently in the American Spectator: "Those nations, peoples, and businesses that neglect the moral ecology of their own cultures, especially corporate cultures, and financial firms' cultures are most noteworthy, cannot enjoy the fruits of capitalism."

The fact of the matter is that there are not enough, if any, people working in the world's financial and banking sectors who have the first idea where to begin the conversation on how to define the difference, as Smith put it, between acting in one's own self interest and acting through greed.

There are some, such as fellow Cardus Senior Fellow and AIC Mutual Funds CEO Jonathan Wellum, who understand the moral and philosophical reasoning between economic and personal "short-termism" and long-term thinking and behaviour.

But, let's face it, the humanities studies and the intellectual skills taught at modern liberal arts universities have been denigrated and downgraded for more than a generation now by people and cultures who see them as having no value other than to inspire "good dinner conversation."

As a result, there is an enormous hole in the education of our business leaders -- one through which our economy has recently tumbled. Some of the exceptions such as Wellum--who in addition to his MBA from McMaster holds a Masters of Arts in theology from Trinity Seminary in Chicago --have training in the construction of both social and mathematical architecture.

Volcker, notably, began his post secondary education with a Bachelor of Arts degree from Princeton before adding an M. A. in political economy at Harvard. His is, in fact, the sort of education resume that would make people in today's business world wonder about its "practicality."

Volcker's speech, as it appears online, was blunt to the point where he publicly expressed his disappointment in a "brilliant" grandson who was about to "waste his life" as a financial engineer.

"He sent me a note: "Grandpa, don't blame it on us! We were just following the orders we were getting from our bosses." The only thing I could do was send him back an e-mail: "I will not accept the Nuremberg excuse."

Hopefully, enough people reading this will begin to understand that a liberal arts education and philosophers, theologians and moral scholars are not superfluous to economies and markets. Quite the contrary: they are vital to it.

Ray Pennings Is A Senior Fellow And Director Of Research For Cardus.

Posted in Business, Markets.

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Originally Published

date: February 26, 2009
publisher: Calgary Herald