Seven Untrue MBA Lessons

Here are a half dozen or so lessons taught in business schools and MBA programs that simply are not true.  I suppose it does not matter if you are going to work for a company that will be bailed out anyway, but I encounter people starting businesses who have these ideas inculcated, to their detriment.  So let’s sort them out.

1. Money is green pieces of paper with dead presidents.  No, that is just a tally, and probably debt.  Money is a commodity used as a medium of exchange, while retaining its property as a store of value.  Today it is gold and silver. Everything else is some version of a tally, as part of some cosmic balance sheet.  It matters if at any point you need money and all you have is tallies. When the state seized citizens gold in 1933 and forbid its ownership, an exception was made for international traders, since that was still money, as it is today.

2. The only basis upon which one can compete is price.  Not true.  There is also design as a competitive basis.  Monopoly is by definition not a competition.

3.  Service is a competitive advantage. We can sell products and services, but “service” as in “service level”, the other sense as an attribute a company may hold as an organization, is never a competitive advantage.  All industries have a service level.  Walmart has a service level, similar to ToysRUs.  Saks has a service level similar to Needless Markups.  Service is a standard item on offer, not a competitive item.  Your job is to match exactly the service level of everyone in your industry.

4. The same with quality.  Quality is an atribute in relation to the good or service you sell.  Quality is never a competitive item. All industries have a quality level.  Walmart has a quality level, similar to ToysRUs.  Saks has a quality level similar to Needless Markups.  Quality is a standard item on offer, not a competitive item.  Your job is to match exactly the quality level of everyone in your industry.

5. Free trade agreements help.  Talk about oxymoron!  No one has to “agree” to free trade.  Free trade is voluntary and unilateral.  The moment one says “agreement” it is no longer free trade.  “Free trade agreements” are where the violence of the state is ordered to the end of making life easier for crybaby billionaires who do not want to have to compete.

We have free trade between Oregon and California.  It takes a whole paragraph to explain it in the US Constitution.    Nafta started out at 14,000 pages, and an army of eunuchs add to it constantly.

Free trade is always voluntary and unilateral.  And it always makes a country stronger.  But no state entity uses the term honestly.

6. Cheap labor is a factor in international trade.  No it is not.  There is no evidence of that, nor could it be in fact or theory.  The idea of cheap labor is entirely a matter of social conditioning, a false dilemma to keep USA labor on the ropes.  The lie hides the real reason for most international trade, which is tax avoidance and money laundering.

7. Comparative advantage is the theory that some countries naturally have an advantage over others in some particular area of production.  The upshot is you can use this knowledge as you reckon market possibilities.  The fact is in reality comparative advantage is unworkable as an idea, since state intervention ruins any natural advantages a country may have.  As long as there is a state to intervene in a market, comparative advantage will never obtain.


Tell me what you learned in business school that turned out to be not true in the real world.


john@johnspiers.com

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