The Columbia Business School's Glenn Hubbard defends the value of an MBA and his former boss George W.Bush 'IF YOU CAN ADD, subtract, multiply and divide, you can do business,' my father once advised me. 'And if doing business doesn't make sense then you shouldn't be doing it.' That paternal advice has long summed up my scepticism toward the value of an MBA, aside from the salary premium a degree from a top-flight business school commands in the marketplace and the access it affords to an exclusive alumni network. So it was with some reluctance that I accepted an invitation to interview the dean of the Columbia Business School, Glenn Hubbard, who was in town late last month to give a keynote address at CSFB's pre-Rugby Sevens investors' conference. Mr Hubbard, however, was for four years one of the chief economic advisers to US President George W.Bush, working with him for two years on the 2000 campaign trail followed by two more in the White House as chairman of the president's council of economic advisers. That suggested a workable interview strategy: breeze through a few questions about the business-school business before moving on to more interesting topics, such as whether deficits really do matter and whether there is in fact a method to the madness that, critics contend, characterises the Bush administration's economic policies. Mr Hubbard is clean-cut, almost boyishly so, and carefully articulate. From an inquisitor's perspective, neither trait suggests an interesting interview. Initial signs were indeed discouraging, as Mr Hubbard began with a boosterish plug for a US$1 million donation Columbia had just received from Hopewell Holdings chairman Sir Gordon Wu Ying-sheung. '[Sir Gordon] is a very generous soul and a big believer in the Columbia impact,' Mr Hubbard said. Sir Gordon is one of those high-flying business types who wears his alma mater, in this case Princeton, proudly on his sleeve. Not sure what exactly the 'Columbia impact' was, I asked whether Sir Gordon's gift might have more to do with the lack of a Princeton Business School for him to fund instead. 'Gordon certainly is generous to Princeton as well and yeah, we're lucky they don't have professional schools,' Mr Hubbard laughed, adding that Sir Gordon's brother was a Columbia trustee. With this first inkling that the dean might in fact have a sense of humour, I thought that maybe the interview wasn't going to be so bad after all. Mr Hubbard clearly does not have any doubts about the value of an MBA degree, but does admit business schools are at something of a crossroads. 'I think we're at a kind of interesting point,' he said. 'If you think about your traditional MBA programme, it was centred on specific skills - finance, accounting, marketing, what have you. But that doesn't really prepare you for a lifetime career. It prepares you for your first job.' For the dean, these challenges require a focus on 'leadership, entrepreneurship [and] the array of thinking that carries you through your career'. But can one really teach entrepreneurship, especially to a class of twenty- and thirty-something strivers whose main metric of success after two years of business school is the number of fat job offers they have landed from big consulting firms, investment banks and Fortune 500 multinationals? Many of the world's most recognised entrepreneurs (Bill Gates and Sir Richard Branson spring to mind) seem almost proud of the fact they never finished college, let alone an MBA. The lack of a business degree is even more common among Hong Kong's most successful tycoons, notably Cheung Kong Holdings and Hutchison Whampoa chairman Li Ka-shing. (Exceptions include Wharf Holdings chairman Peter Woo, Columbia Business School class of '72.) Mr Hubbard disputed both points. 'There's a tendency to think about entrepreneurship as starting a small business, but I never thought of it that way because to me running a division of General Electric could be very entrepreneurial, too,' he said. 'The classic economist definition of an entrepreneur is someone who puts pieces together in a different way than other people. You don't have to invent Windows [software] to be an entrepreneur. 'There are certainly a number of entrepreneurs who didn't go to college. But it doesn't follow as a matter of simple logic that getting an MBA is not the route to being better paid ... Suppose there's a shift in the [business] environment. Can you look at a shift in regulation, in what's happening in the macro-economy, and deduce great business opportunities? 'That kind of ability to look at the environment and spot an opportunity is what we teach in business school. Does it mean everyone who gets rich will have an MBA? No. But I would argue that it could help a great deal.' Columbia also has an ace up its sleeve in any does-business-school-matter debate: Berkshire Hathaway chairman Warren Buffett is a graduate, and has said his experiences there were among his most formative. It has been suggested that America's top business schools are at least partially responsible for the culture of corporate excess in the late 1990s that led to scandals such as those at Enron and Worldcom. The charge, more or less, is that they graduated crop after crop of profit-maximising Masters of the Universe for whom the bottom line was the only one. Mr Hubbard found that all a bit rich. There had always been scandals and there always would be, he noted. To his mind, what is most worrying about Enron, Worldcom et al is that corporate-governance mechanisms failed so completely. But the scandals have affected business schools, he admits. 'One of the things that struck me when I was in the White House [was that] when you saw these major scandals you didn't see any of the top business schools or business school deans using the pulpit that they had to make a change. 'One of the things we've done at Columbia is introduce a new curriculum called 'The Individual, Business and Society'. It focuses a lot on trade-offs - on what's good for me as an individual and what's good for the firm, and then what's good for the firm versus what's good for society. 'Students have to think more broadly than the business on the table. Not because [they should be] goody two shoes, but because it's part of being successful over the long term in business and we're really excited about that.' Ahhh, yes, the White House. It has been more than two years since Mr Hubbard left Washington - a decision driven in large part by family values. White House hours, he noted, were 'brutal' and 'constant' and he missed his family, which had remained in New York. Mr Hubbard's former boss, who he briefed at least twice a week, has been famously controversial not only across America but even among some of his own staff. Most, of course, adore him. But a few, such as former treasury secretary Paul O'Neill and counter-terrorism adviser Richard Clarke, have savaged the president and his policies in best-selling books. Mr Hubbard remains fiercely loyal and is a staunch defender of the Bush administration's economic policies. The president he worked for is not Mr O'Neill's or Mr Clarke's in-over-his-head bumbler, but rather a disciplined, intellectually curious and politically courageous man. 'The good news is I only had one boss - the president,' Mr Hubbard reflected. 'The bad news is that he always had a lot of questions and a lot on his mind. And you had to be ready whenever he wanted to talk. 'He's really incredibly curious about economics and one of the things that really impressed me was that given the amount of bigger things on his plate, frankly, he understood and dissected economic issues ... I found myself getting busy in my one narrow slice of his day. And his day had a hundred other slices.' Asked of Bill Clinton's reputation as more of a 'thinking man's' president than his successor, Mr Hubbard was scathing. 'Clinton economic briefings, as I understand them, had a flavour of a group grope,' he said, advertently or inadvertently alluding to Mr Clinton's moral flaws that so enraged the Republican right. 'You know, they could go on for a couple of hours like a seminar where you have junior faculty who don't really know what they're doing. I think [President Bush] is very organised with his time. I think it's a hallmark of maturity.' The classic Democratic critique of the Bush administration's economic policies, in a nutshell, is that fiscally irresponsible tax cuts disproportionately benefited a privileged few and contributed to the rapid deterioration of the government's budget position. Mr Hubbard bristles at these charges. 'President Bush did win re-election, so probably more than a handful of people benefited [from the tax cuts],' he countered, though this argument assumes the presidential election was a referendum on economic policy alone when other issues, most notably domestic security post 9-11, were probably at least important to many (if not most) voters. Mr Hubbard's argument is that the tax cuts helped the US weather a recession and laid a foundation for longer-term growth and prosperity. 'I designed [the tax cuts], so I like [them]. I'm a big fan,' he said. 'If you look at the American economy's performance over the past few years [and] the resilience of the US economy in response to the recessionary impulses, I think tax cuts played a big role in helping the economy come back. 'I'm not a politician. Moving the tax code you want to be right for the long term ... President Bush's tax cuts were well-timed and provided a lot of short-term cushion for the economy. But where I give the president the most credit was moving to cut capital gains taxes. I think he helped reflate the stock market and cut the cost of capital investment. That was not popular. He put his political capital on the line and got it because he thought it was the right thing to do.' As for Vice-President Dick Cheney's assertion, according to Mr O'Neill, that 'deficits don't matter', Mr Hubbard agrees - at least at current levels. 'The long-term quote 'costs' of the president's tax cuts are about 1 per cent of GDP,' he said. 'The budget deficit as a share of GDP is likely to decline sharply over the next several years, mainly because the economy's growing so rapidly. 'We do have a fiscal problem ... but it has very little to do with the deficit that you're talking about and [has] a lot to do with the old-age programmes Social Security and Medicare ... Social Security and Medicare are projected to increase by about 10 percentage points of GDP over the next 25 years. 'The fiscal problem facing the US is one that's almost entirely in these programmes and the only way we're going address that is by cutting these programmes or by raising taxes enough to pay for it. That's the political choice. The arithmetic is clear but the politics will tell you which one you're going to do. To pretend otherwise is not right.' To the Bush administration's detractors, this focus on entitlement programmes such as Social Security and Medicare (the fiscal plight of which are hotly contested) rather than the budget deficit signals the beginning of a concerted Republican effort to roll back two of the core pillars of Franklin Delano Roosevelt's New Deal and Lyndon Johnson's Great Society. But though this great debate is only just taking shape, Mr Hubbard is content to watch the battle from afar. 'There are clearly great economic questions,' he said, before citing some paternal advice of his own. 'My father used to say there's a rocket ship leaving for the moon every day. There's always an interesting time and every time is interesting. 'But I think one can be involved in these things from afar. I speak a lot and write a lot on these issues. So no, I don't miss [the White House].' Biography Glenn Hubbard was appointed dean of the Columbia Business School in July last year, and is also the Russell L.Carson professor of finance and economics there. He served as a key economic adviser to George W.Bush during the 2000 presidential campaign and chaired the president's council of economic advisers from February 2001 to March 2003. He also served in the first Bush administration from 1991-93, as deputy assistant secretary in the US Treasury's Department for Tax Policy. A 1979 graduate of the University of Central Florida, Mr Hubbard went on to do his Masters and PhD at Harvard, where he remains a visiting professor at Harvard Business School and the Kennedy School of Government. He also lectures at the University of Chicago on a visiting basis. Married with two sons, Mr Hubbard resides in New York.