TODAYonline | Commentary | Trust us, we're academics ... or should you? - 0 views
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the 2011 Edelman Trust Barometer, published by research firm StrategyOne, which surveyed 5,075 "informed publics" in 23 countries on their trust in business, government, institutions and individuals. One of the questions asked of respondents was: "If you heard information about a company from one of these people, how credible would that information be?". Of the eight groups of individuals - academic/expert, technical expert in company, financial/industry analyst, CEO, non-governmental organisation representative, government official, person like myself, and regular employee - academic/expert came out tops with a score of 70 per cent, followed by technical expert at 64 per cent.
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the film on the global financial crisis Inside Job, which won the 2011 Academy Award for best documentary. One of the documentary's themes is the role a number of renowned academics, particularly academic economists, played in the global crisis. It highlighted potentially serious conflicts of interests related to significant compensation derived by these academics serving on boards of financial services firms and advising such firms.
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Often, these academics also played key roles in shaping government policies relating to deregulation - most appear allergic to regulation of the financial services industry. The documentary argued that these academics from Ivy League universities had basically become advocates for financial services firms, which blinded them to firms' excesses. It noted that few academic economists saw the financial crisis coming, and suggested this might be because they were too busy making money from the industry.
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It is difficult to say if the "failure" of the academics was due to an unstinting belief in free markets or conflicts of interest. Parts of the movie did appear to be trying too hard to prove the point. However, the threat posed by academics earning consulting fees that dwarf their academic compensation, and which might therefore impair their independence, is a real one.
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One of the worst was the Ivy League university economics professor engaged by the Icelandic Chamber of Commerce to co-author a report on the Icelandic financial system. He concluded that the system was sound even though there were numerous warning signs. When he was asked how he arrived at his conclusions, he said he had talked to people and were misled by them. One wonders how much of his conclusions were actually based on rigorous analysis.
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it is troubling if academics merely become mouthpieces for vested interests. The impression one gets from watching the movie certainly does not fit with the high level of trust in academics shown by the Edelman Trust Barometer.
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As an academic, I have often been told that I can be independent and objective - that I should have no axe to grind and no wheels to grease. However, I worry about an erosion of trust in academics. This may be especially true in certain disciplines like business (which is mine, incidentally).
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too many business school professors were serving on US corporate boards and have lost their willingness to be critical about unethical business practices. In corporate scandals such as Enron and Satyam, academics from top business schools have not particularly covered themselves in glory.
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It is more and more common for universities - in the US and here - to invite business people to serve on their boards.
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universities and academics may lose their independence and objectivity in commenting on business issues critically, for fear of offending those who ultimately have an oversight role over the varsity's senior management.
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Universities might also have business leaders serving on boards as potential donors, which would also confuse the role of board members and lead to conflicts of interest. In the Satyam scandal in India, the founder of Satyam sat on the board of the Indian School of Business, while the Dean of the Indian School of Business sat on Satyam's board. Satyam also made a significant donation to the Indian School of Business.
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Universities are increasingly dependent on funding from industry and wealthy individuals as well as other sources, sometimes even dubious ones. The recent scandal at the London School of Economics involving its affiliation with Libya is an example.
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It is important for universities to have robust gift policies as part of the risk management to protect their reputation, which can be easily tainted if a donation comes from a questionable source. It is especially important that donations do not cause universities to be captured by vested interests.
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From time to time, people in industry ask me if I have been pressured by the university to tone down on my outspokenness on corporate governance issues. Thankfully, while there have been instances where varsity colleagues and friends in industry have conveyed messages from others to "tone down", I have felt relatively free to express my views. Of course, were I trying to earn more money from external consulting, I guess I would be less vocal.
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I do worry about the loss of independence and, therefore, trust in academics and academic institutions if we are not careful about it.