The Academy Award-winning documentary Inside Job highlighted the woeful inadequacies of universities' conflict-of-interest policies, yet faculties, business schools, and institutions of higher education have failed to champion needed reforms.
The film showed the pernicious incest among government, corporate, and academic powers that facilitated the economic crisis and showed academics scoffing at the need to even monitor conflicts of interest.
But they do matter. Most campuses today allow faculty members to teach economic policies that would buttress their pocketbook and nonacademic financial pursuits. Here's what we learned from the film:
Columbia Business School dean R. Glenn Hubbard teaches courses on public and entrepreneurial finance, lecturing on insurance providers (and related topics), despite sitting on the board of Metropolitan Life, which pays him $250,000 annually. This is one of his many non-scholastic consulting gigs. Also at Columbia, professor Frederic Mishkin accepted $135,000 from the Icelandic Chamber of Commerce to write a report on the stability of that nation's financial situation.
At my own university, Harvard economics chair John Campbell has justified not forcing economics professors to disclose the benefits or salaries they obtain from groups commissioning papers.
The presidents of Harvard and Columbia declined to be interviewed about the faculty conflicts of interest for the film, referring the journalists to their university websites.
Just as academic historians should not be employed by the regimes they are investigating, and professors of medicine should not teach about successful medicines when they are employed by drug's manufacturer, business professors should not consult for Citigroup or a hedge fund when undertaking scholarship pertaining to banks.
While some universities, such as Columbia, have tried to strengthen disclosure rules - including requiring that possible conflicts of interest be included in grant applications and that CVs be updated to reflect all past and current advisory posts - professors are still permitted to design curricula and lectures around their own checkbooks and the bigwigs of major Fortune 500 companies.
Some university officials fear that barring conflicting consulting work would force professors to flee to campuses that condone such behavior. But who would want high-profile faculty willing to sacrifice ethics?
If we want our economics students to reflect the highest standards, we must address this moral quandary. In light of the calls for reform that followed the release of Inside Job, we know there are economists who are concerned about this issue. We need academia to form a committee of such like-minded professors to create a national set of standards for business schools and faculty.
If no such collective action emerges soon, Congress should investigate these conflicts of interest, calling on deans of major business schools to determine their role in the financial meltdown. They need to be under the microscope just as much as any major CEO.
Our country simply will not survive another generation of speculators aloof from the economic realities of most American families. We must demand a better example for the next generation of business leaders.
E-mail Alexander Heffner at email@example.com.