Can You Imagine if You Needed an MBA to Be in Business?

Can you imagine if there was a law requiring all wannabe businesspeople to have MBAs (or some other degree)? It would be pure madness.

Why, then, is there a law requiring someone who wants to be a lawyer to have a JD?  Why is there a law requiring someone who wants to be a public school teacher to have an education certificate? Why is there a law requiring someone who wants to be a doctor to have an MD?

Why wouldn’t we just let the market self-sort itself like we do in the business world? Some people get MBAs, some don’t. Some people value MBAs more highly, some don’t.

Why would we force someone who pops out of the womb with a brilliant legal mind to go through the tedium of law school? Why not let the market choose whether or not that person needs a degree? If no one hired lawyers without JDs, every wannabe lawyer would go get a JD. But I bet there would be many good lawyers who wouldn’t go to law school, and would be hired for certain kinds of jobs.

Hat tip on this idea to Ross who noted the potential positive effects of de-credentializing a variety of professions.

29 comments on “Can You Imagine if You Needed an MBA to Be in Business?
  • I would argue that it is because the consequences of a failed lawyer or a failed teacher are far greater to society than those of a failed business. You get second chances to be competent in business and most entrepreneurs view failure as paying your dues. You don’t, however, get second chances in the legal system or in teaching our nation’s youth. Can you imagine how it would further screw up our country’s legal system and educational system if we had otherwise innocent people losing cases because their lawyer was learning by doing or young kids trying to learn alegbra from a teacher who was still trying to do the same? I’m not saying things like these don’t already occur, but imagine the consequences if they became the rule and not the exception.

  • Now, Ben, while I usually agree with everything you post here, this seems absolutely ridiculous to me. First of all, “business” is a very vague word, which includes a variety of professions, some of which have more direct interaction with customers or clients than others. I bring this up, becasue your point argues that teachers, doctors and lawyers should not need degrees. These occupations all involve significant direct interaction with people who absolutely rely on them. If a teacher is not qualified (and can an exam alone really determine how qualified someone is?) the students suffer immensely. If a lawyer is inadequate, their client can end up in jail or with serious and debilitating financial problems. Finally, if a doctor is inept or unprepared, or skipped the wrong day of med school, people die.

    And, I find it irritating when people justify things by saying “the market will sort itself out!” This may be true in the long run, Adam Smith, but in the process people will be fucked.

  • Guys:

    Just because a credential isn’t the law doesn’t mean most people wouldn’t get them. In fact, I would argue that in a society where these professions were decredentialized, most people in some of these professions would still get a credential.

    Would you hire a doctor who didn’t go to medical school? I wouldn’t! That’s what I mean when I say “Let the market sort itself out”.

    Would you hire a lawyer who didn’t have a JD? Well, maybe. If I met someone and he seemed to have a brilliant legal mind and knew my particular issue better than anyone else, I wouldn’t care about a credential.

    It may be that the market would demand that everyone get a JD or MD or whatever. But maybe not. The point is you empower the consumer to make this decision.

    I would argue that the teaching profession is a good example. Many of the best teachers in America exist in private schools and do not have a credential. Isn’t it a pity that some brilliant teachers don’t teach in public schools since they don’t want to go thru the hassle of getting a teaching certificate?

  • For the upper echelons and the educated, the certifications serve no real purpose. They’ll do their research and go with the one who best serves them. For the lower levels of society and the people without the time or means to do the research, the certification test serves as a safety net. True, I’d love to live in an ideal world where safety nets and societal generalizations and the dumbing down of the process and bureaucracy were not involved but this is not the case. It’d be great if we could just change the rules instantly, what we really should be looking for are creative ways to change the policy in an incremental system. Like it or not the incremental system isn’t going anywhere in the short term, at least until creativity can tip the scales against it.

  • The real education begins when you leave school and take the plunge into the world outside where you have to tough it out. That said, the prior education does give you an insight on what is needed out there, so long as you’ve been thro an updated syllabus.

    A naturally talented individual may take some time adjusting to his level of understanding and the need of the hour. Further he has no batchmates / professor to turn to when in doubt.

  • Why do cab drivers need to pay for those shields and why do restaurants and stores have to get liquor licenses and why do you need to bother standing in line at the DMV to get a license? Certain things need to be regulated with some level of oversight. The market is far from perfect.

  • While I realise you may be doing this as a provocation for debate. The ideas you bring up are very right/idealistic on the political spectrum.

    Pure capitalists believe in the infallability of The Market contruct. They would go to the extent of suggest the removal of safety standards and food standards, as they believe — the Market would sort it out.

    The problem with this is in reality the Market is not perfect. It’s biggest weakness – the accessibility and distribution of information to make good product choices & the fact that those who are not so privelidged generally take the option of whatever they can afford(the cheapest). As it has been said earlier, for some people this is not a problem. It just isn’t possible to be completely informed about every product choice you need to make.

    For that reason accredication and standards are established to provide some degree of protection, and you could say trust so that people are able to make product choices without the concern that this doctor will kill them, this lawyer has no idea what he’s doing, and that my home will not fall over in a bg storm.

  • Oh, Ben, if you get sick or God forbid have an accident, you may not be in the position of doing “market research” yet wouldn’t want to be treated by a charlatan, would you? What remains then is trust in a system, which includes education and a set of credentials….

  • there are also other methods of training professionals that would probably work better for those that respond more to ‘hands on’ education–for example, one can be a lawyer in Vermont without that JD:

    Vermont is one of the few remaining states in which residents can become lawyers without attending law school. The practice, called “reading the law,” leads people to spend hundreds of hours reading and working alongside a member of the state bar.

    If they pass the bar exam, they can practice law in the state. Legal apprenticeships are still recognized in seven states, but the requirements vary greatly.

    In Vermont, participants don’t need a college degree, but they must have completed three-quarters of their undergraduate course work.

    Then they have to spend 25 hours a week for four years studying alongside a licensed attorney.

  • I think you take a somewhat contradictory position in the previous post. There you quote (and seem to agree with) someone who says that as more people get college degrees, the value of a bachelor’s degree as a signal goes down. In essence, the brand is diluted.

    In the status quo, credentials are linked very closely to titles. In order to call yourself a lawyer, you’ve got to pass the bar (and except, I think, in Vermont) have a J.D. So you’ve got to have a base line knowledge of the law in order to call yourself a lawyer. The thing is, it’s also true in the status quo that you can get legal advice from anyone you want to, and you can sometimes have non-lawyers represent you in court. You just can’t call them lawyers. What you seem to be suggesting is letting those brilliant, but uneducated (or maybe not so brilliant, but money grubbing) people call themselves lawyers too. But this dilutes the “lawyer” brand.

    It may not a huge harm, because after all, you’ve still got the “J.D.” brand to fall back on. It might not be as popularly known as the “lawyer” brand, but it could build up cachet with time. And since signalling is so important, I agree with you that most people would continue to get their J.D.’s.

    In your proposed system and the current system, most people will get credentialed regardless. So to me the big difference is what the uncredentialed people can call themselves. There are some benefits to letting anyone call himself a lawyer and letting the market sort out who’s actually good at his job, but there is also the possibility of harm by diluting the “lawyer” brand and therefore obscuring some relevant information that could help a person decide who to hire. The thing is, both the possible benefits and the possible harms are small enough that it’s almost irrelevant whether anything changes or not.

  • Ben,

    You’re right on here and kudos for having the guts to challenge such a commonly accepted assumption.

    It’s interesting to see how many of your readers have accepted that our current system for “professions” is better than a market based system as you suggest:

    “I would argue that it is because the consequences of a failed lawyer or a failed teacher are far greater to society than those of a failed business.”

    What does more harm to society, a business like Enron that explodes or a traffic ticket lawyer who loses a case? A failed business can bankrupt people, cost clients millions of dollars and leave employees without a paycheck. Yet we all know that if we prevented these failures by making it harder to start a business, we wouldn’t have a strong and virtuous economy.

    Another commenter calls you “idealistic” and reminds us that the “Market is not perfect”. Well, nothing on this earth is perfect. So let’s be far and compare the market with a fellow (but not equally) imperfect entity: the government. Which is more perfect? That’s the issue at hand.

    After the failure of many implementations of Keynesian economics, market’s have proven themselves apt regulators of most industries. The burden of truth should be on those who want to regulate, not on those who want to allow people to enjoy the freedom of the market.

    — Greg

  • Greg et al:

    Let me ask you this. Which is of greater consequence to you individually? Having no Freedom (being in jail) or Having no Money (working for Enron)? This is why the lawyer needs the credential and the business man does not. We place a higher premium on life and education than we do on money (as hard as that is to believe). Money is useless without the other two.

    I am formerly a proponent of an entirely free market but I must say that lately I’ve been leaning towards allowing a little bit of regulation (make all the slippery slope arguments you want…) due to one concept: Reflexivity.

    The problem with the totally free market is that it assumes humans to be completely rational, self-interested actors. The problem with that is that humans are incapable of entirely comprehending reality. In actuality they make decisions as self-interested actors based on what they perceive reality to be, not what the reality of the situation or market truly is (if you believe that you can completely and correctly comprehend 100% of every situation then 1. You’re the outlier and not the norm and 2. I don’t believe you). In turn, the market produces an inherently incorrect result based on the slightly skewed perceptions of the participants.

    Another facet of the reflexive idea is that by acting in the market humans affect the reality of the market. For our purposes suppose a lot of people start choosing a credential-less doctor or lawyer, the fact that people are choosing him in number starts to sway the market in his favor even though he may not be as qualified as someone else (think stock market tech bubble here). This creates a cycle of incorrect decisions.

    I understand this is all a bit tangential to Ben’s original post but since the discussion has turned to the free market… I agree its important to point out that the market is typically correct on the average and over the long term. However, the question I ask is whether society can deal with the short term instability of the free market and its corrections when it comes to things other than money.

  • It’s always amazed me that the tedium of the classical curricula taught in some 18th and 19th century schools in England and the States (for up to ten hours a day, six days a week), didn’t destroy the curiosity and completely break the spirit of the boys who were subjected to this tortuous regime.

    I’m even more impressed that so many of them became great thinkers and genuine renaissance men who acquired an astonishing breadth of knowledge and experience.

    And I thought I was going to go crazy because I had to sit still in a desk and study a history book that I had read all of the first week of school.

  • Alternative Greg,

    I dont any one here actually agrees with the provocation that anyone should need to have an MBA to be in business. What I do think people disagree with is using the obvious fact that forcing the MBA is inappropriate that it is then OK to extend that argument to other professions.

    I must also highlight that I called the idea Idealistic, not Ben. (quote:’The ideas you bring up are very right/idealistic on the political spectrum.’) You are personalising the argument when it doesn’t need to be.

    The preposition is that having credentials limit outstanding people from practicing. But this is thinking in absolute terms. How does the average person differentiate between poor, average, and outstanding. Im pretty sure it’s been said on these forums before: all you need to do to appear an expert in a field to another person is just to know a little bit more than they do. Some people can be really good at projecting credibility when in fact they have none.

    You counter act this with information. But as I said before product information that can allow for a good decision to be made is not easily and readily available. If a guy looks like he know what’s he talking about, and he’s more affordable than those other people – why not go with him/it.

  • If one has to pass a bar exam to become a lawyer, why is law school required? Why cannot one self-study, like Abraham Lincoln did?

    Law school as it is now formulated holds very little relation to the practice of law. A more efficient way to creater BETTER lawyers would be to limit law school to one year and then have the JD candidates work in apprentice positions for two years before they recieve full accreditation. That won’t change because law schools make a lot of money from students (which is also why they don’t flunk people out near as much as they did 40 years ago). Ask any attorney and the will tell you that having a J.D. and passing the bar is NOT a threshold for being a good, or even decent attorney.

    As for the BAR, remember that the practice of law is for the most part run by a national Guild and its state affiliates. The passage rate for a state bar exam (given twice a year) is decided AFTER the test is taken. So, you chances of passing have not only to do with your absolute score, but also the number and score of others taking the test at the same time. In essence, the organization that controls licensing decideds twice a year how many new competitors it will annoint.

  • This post is funny in a way, if only to see the vast amount of reactions the subject matter provokes.

    All this week here at UMiami the School of Communication has been having its annual “ComWeek” festivities, featuring panels and speakers from working professionals from Miami — and beyond.

    I relish the oppurtunity to hear from working professionals in my field (Public Relations) as well as those from other fields I’m also interested in (Advertising, Graphic Design, etc.) as a way to augment my studies.

    Speaking as someone who really detests theory courses, I’m prone to agree with Ben on this one. Society’s emphasis and outright obsession with degrees is getting out of control.

    Hasn’t anyone noticed that despite an increase in people either obtaining degrees or seeking to earn one, that employers are still complaining about many of the same foibles new workers have?

    Poor writing skills and the inability to work with others often top the list. Furthermore, I believe that society/universities often like to undermine the “X-Factor” (forgive the cliche, but it’s past midnight!) in its relation to success.

    I believe those who succeed in their careers, be it at a Fortune-500, a small start up, the public sector, whatever, simply have something that perhaps a piece of paper can’t provide.

  • I think the issue is putting other people at risk. If you go into business and fail, well that’s your loss. But if you represent someone as a lawyer or care for their health as a doctor, if you are incompetent other people can be hurt very very badly.

  • If the issue is risk, then the present system of Law School then Bar exam doesn’t really address it, because absent actual experience many if not most lawyers are unprepared for the actual practice of law. This is addressed partically during law school with certain summer jobs and the use of Legal Clinics. However, neither of these are wedded to law school.

    I think non-lawyers are over-valuing the effect of the law school education, which I think is the result of a long campaign by lawyers and law schools to sell it.

  • Very interesting post. I think over-regulating and under-regulating an entry to a profession is never a good policy. Especially to specialist professions such as doctors or pilots. You don’t want to be too strict or too loose. However, I think society at large tends to associate a degree particularly as a job-getting or money-making tool, not as a medium to educate oneself for personal growth. While a degree is a good way to develop oneself, it should not be a main prerequisite to earn one’s livelihood. It is funny how some people just cannot accept it when a person with a masters in or accounting decide to be a cab driver or a musician, just because they think a cab driver or a musician need not be smart or educated.

  • Hey Ben,
    Just started browsing your blog via Charles Hudson’s link– good stuff. First off, I think the hat tip goes to Milton Friedman, who voiced this concept back in the 60s.

    The issue of credentials vs. qualifications is an interesting one. I agree that there is an enforced labor shortage by credentialing organizations (e.g., AMA and medical schools) with an interest in keeping supply low (and therefore wages high). The flip side is that, particularly in medicine, the downside of malpractice could be a life or death issue, so there is incentive for society to err on the safe side (ie, overcredentialing and restricting the labor pool). I think a better medium could probably be reached in medicine by screening for certain required bodies of knowledge that must be mastered (with or without a degree) and mandating a certain amount of practical experience.

    The market has addressed some of the restricted labor pool issues by providing alternate medical practicioners: nurses, midwives, physical therapists, osteopaths, acupuncturists, homeopaths, massage therapists, speech pathologists, etc. On the legal side, many organizations have non-lawyers manage routine legal matters such as contracts. I believe in some states a JD is not required to practice law-just passing a bar exam.

    If there is a simple and efficient mechanism to increase the pool of labor in skilled professions without exposing society to undue harm, everyone should be all for it.

  • Ben,

    Everyone opposing your position is implying, implicitly or explicitly, that accreditation is necessary to insure quality. I disagree. This simply begs the question: Who is accrediting the accreditors? If we follow this logic there could be an infinite chain of accreditors. The solution to this “quality” problem is the need for proper incentives. For example, I do not have to trust my doctor if our incentives are aligned. If the doctor can not fix my problem he will not be paid. This is no different than when I buy a car. I do not necessarily trust the engineer who built the engine(whoever that is); however, I make sure I have a warranty with the dealer. The warranty aligns our incentives. If the car stops functioning before it should, I get my money back. This gives the dealer the best incentive to hire the best engineers. With that said, I will admit the market is not “perfect”, but it is the best alternative. The way we improve on the market is through game theory. Designing games that best align players’ incentives(not trust, goodwill, or accreditation) is the only way to better quality markets.

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