It's mostly due to rising demand. Demand for business degrees went up very sharply as income inequality rose in the late 1970s and 1980s, and college students began to worry about how to avoid downward or sustain upward mobility. Hence an increase in demand for diplomas that say "business" on them--an increase that deans were very happy to satisfy.
Once you have admitted students to a business program, then you have to figure out what to teach them. Accounting and finance are obvious. A little organizational behavior seems necessary too. But what else? Economists argued that they should be taught economics--and have, for a variety of reasons I don't understand very well, carried the day.
>But then when Feenstra said
>that businesses must outsource as much as possible to protect whatever
>domestic employment base they had, interest perked up. Now he had their
>attention. There were also nods of assent that unemployment insurance was
>a waste as workers didn't use it to relocate to booming regions.
In the U.S. people do relocate to booming regions and occupations (and do use UI benefits to finance and cushion the move): of every two percentage points' difference between a region's unemployment rate and the national unemployment rate, one percentage point will be eroded over the next five years by businesses moving into the region, and one percentage point will be eroded over the next five years by people moving out of the region. When Larry Katz was the Labor Department's chief economist, he used to say that one thing of which he was sure was that the average unemployed person wasn't unemployed *long enough*--that America's unemployed would find better jobs at which they would earn higher wages and be more productive if we had a less inadequate unemployment insurance system.
In Europe, though, barriers to mobility are (not surprisingly) much, much greater)--and western Europe's unemployment is approaching Great Depression levels.
>I must
>say that I left with the impression that economics and business schools
>are something of a sick joke. I hadn't been so creeped out since I had
>been a Ph.D. student in Government at Harvard.
Not just in trade. Industrial Organization economists often return from teaching their business students somewhat shaken: the implicit point of view in IO is that of the antitrust division of the Justice Department: "where are the sources of monopoly profits in this industry, and how do we break them down?" By contrast, the subject that is IO in economics departments turns into business strategy in business schools--and the point of view is "what could be the sources of monopoly profits in this industry, and how do we create them?"
And the subject matter of Labor Economics turns into Human Resource Management...
Economists in Economics Departments maintain that the roughly $20,000 a year differential between economists in Arts and Sciences and those in Business Schools is a compensating differential: necessary to compensate the marginal business school economist for the psychic pain of dealing with the business school students. (Economists in Business Schools have a different opinion.)
Brad DeLong