“Trump has no experience of politics. The US people want outsiders.”
Dr. Geoffrey Garrett is Dean, Reliance Professor of Management and Private Enterprise, and Professor of Management at the Wharton School of the University of Pennsylvania (PENN).
Wharton was founded in 1881 as the first business school in the United States, inside Penn University. What is Wharton today and how fast do you have to change your programmes in such a moving and unpredictable world?
The centrality of Wharton inside Penn University is striking. We are sitting right in the middle of Penn, in the middle of the campus, and a quarter of Penn students are at Wharton. This is different from Harvard for instance, where the business school is aside the university. In terms of moving forward, we obviously keep on track with globalisation and technology, but we also focus more and more on innovation and entrepreneurship. Even if we have great results and a great past we certainly don’t want to rest on our laurels. This is part of my challenge.
You said in previous speeches and interviews that the 90s were times of globalisation, that the 2000s were times of technology and the 2010s are times of private industry. Are you preparing top managers specially for the private sector and industry?
The 90s’ globalisation is not a new concept, the 2000s’ technology produced for instance the new SmartPhone and many other inventions, but today political and social needs grow faster than governments have the capacity to face them, and this needs the intervention of the private sector. Countries like Indonesia or India, for instance, need a lot of infrastructure to go on with their growing process, but government is not capable of financing it by itself, and in the First World the pension system is a great challenge because the aging population is growing considerably. I believe that, because of the growing needs of private enterprise, private business schools will be more and more important in the future.
MOOCs (Massive Open Online Courses) and other online courses are very popular, but you have often said that they do not substitute for the campus experience?
Online is a win-win. There is a clear line between the university degree education and the non-degree education. We can provide online at low prices, and some courses are free, but there will be no degree. One can get what the people who are following our online courses have called “specialisation”, and that is becoming an important value in the curricula of the students who follow us online. More and more people want to have an online education and we are moving more lectures online. This will also help students that are on campus to be better prepared when they come into class. Online will feed back positively onto campus.
How many students do you have on campus, and how many are online?
There are 5,000 students in the campus and 2,500 are undergraduates. In the last month we had 50,000 followers paying for our online content, and in the past year we had 3 million followers in the free MOOCs.
Business schools around the world are extremely competitive, and you are in a top position. What is your secret?
History and heritage matter, very much so, and Wharton made its name based on the fact that it has always been an excellent finance school, but now it is more. Nowadays there are many entrepreneurs that have worked in banks and then left to create their own hedge funds and companies, and therefore we pay enormous attention both to entrepreneurs and also to analytics. Of course we are still a finance school, and we are bigger than any other in this country.
Many students from Wharton became very prominent businessmen or politicians. Donald Trump is an ex-student of Wharton. What do you think about his idea that the President of the United States should be an entrepreneur and not a professional politician?
This is very interesting. In my country, Australia, we have a Prime Minister, Malcolm Turnbull, who was a businessman; he ran Goldman Sachs Australia and also OzEmail. He was the first person not to be a career politician. In Italy you had an experience like that with Berlusconi. Trump has no experience in politics, and what strikes me the most is that the US people want outsiders. This trend is not only in the US, it is happening in Europe and in many countries of the world. Think of Marine Le Pen in France. And this does not only happen on the right wing side, let’s think of Bernie Sanders in the United States and Jeremy Corbyn in the UK.
Why do people want outsiders in politics?
Because average people have no confidence in the system anymore, neither in big business nor in politics. It’s true that the unemployment rate is low in the United States, so one could ask why are people unhappy? They are unhappy because they are insecure about their job, and they don’t like the system.
Do you think that we could classify Trump as a populist?
Populists have done well all over the world. Populists’ appeal is at their highest when normal people are struggling, and this is a world in which whoever will be the President will have to face a huge challenge. On one hand he has to assure and continue to sustain innovation, on the other hand have more people sharing in its upside. The best way for the next President will be not just to increase taxes. No one is ever popular if they raise taxes.
What about Barack Obama, who is so highly criticised?
Obama’s problem is the “expectations gap.” It was so high that he cannot make it. But he has avoided a second Depression and he expanded healthcare benefits for 30-40 million people, and he has taken the United States out of unpopular wars in Iraq and Syria, and these are certain achievements, but he has little credit for that. Nowadays average Americans are hurting and I am not surprised that they are in opposition to Washington, not only to the President, but also to the Senate and the Congress.
Donald Trump had a proper education, first in military school and then he came to Wharton. Was he a good student?
We don’t divulge the records of our students, but it’s true that Trump had a proper education and he had a rich father who helped him to start at the beginning. He comes from the upper middle class, but he somehow managed to channel the anger of Middle America. He is an entrepreneur and he works for himself, for his own companies, and he has run a successful TV show. But he is a populist, the peoples’ answer to their political problems.
You are a Professor of global political economy. The world today is quite troublesome for many different reasons. What is your point of view?
2016 is a difficult year. Economically I am struck by two things. Number one, how important China has become, affecting countries all over the world from Germany to Brazil. What we used to say about the United States is valid for China now: “When China sneezes the world catches a cold.” Number two, the world is looking at the US to drive world growth. In 2008/9 the US economy was perceived as yesterday’s economy. Today it is the strongest, and now we are beating all the other economies.
Do you think that the role of politics and of central banks is too prominent today? Should the Federal Reserve follow economic parameters or the stock market to make its decisions?
It is a good thing that they have a double mandate. The European Central Bank (ECB) has to focus on inflation. The Fed has to balance inflation and unemployment, and that explains why they are more aggressive than the ECB.
Yes, but they look very uncertain in their rate raising policy?
Because the China slowdown was not expected, and because of the reality of economic insecurity in Middle America. The Fed has to return to normal interest rates, and the US is certainly in better shape than Europe, Japan and China. As I said before, it is a great coming back for the United States.
There is a debate all over the world about the real importance of college education vis-à-vis self-made people. What is the importance of a college education today, and what are the reasons why students should apply to Wharton Penn?
It is true, but there are not many Mark Zuckerberg’s or Bill Gates. Studying in a university is a really good investment in lifetime income. We live in a knowledge era, and the economic impact of what you do means that a university degree has a real value. I agree with Tom Friedman when he says that, “In the 21st century what counts is not only what you know, but what you do with what you know.” Wharton is a good place to be.
Are you pleased with your job?
It is a great, wonderful life.
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University of Pennsylvania
29th February, 2016.