Tag: culture

Can You Say “Bubble”?

By James Kwak

Yesterday’s Wall Street Journal had an article titled “Foosball over Finance” about how people in finance have been switching to technology startups, for all the predictable reasons: The long hours in finance. “Technology is collaborative. In finance, it’s the opposite.” “The prospect of ‘building something new.'” Jeans. Foosball tables. Or, in the most un-self-conscious, over-engineered, revealing turn of phrase: “The opportunity of my generation did not seem to be in finance.”

We have seen this before. Remember Startup.com? That film documented the travails of a banker who left Goldman to start an online company that would revolutionize the delivery of local government services. It failed, but not before burning through tens of millions of dollars of funding. There was a time, right around 1999, when every second-year associate wanted to bail out of Wall Street and work for an Internet company.

The things that differentiate technology from banking are always the same: the hours (they’re not quite as bad), the work environment, “building something new,” the dress code, and so on. They haven’t changed in the last few years. The only thing that changes are the relative prospects of working in the two industries—or, more importantly, perceptions of those relative prospects.

Wall Street has always attracted a particular kind of person: ambitious but unfocused, interested in success more than any achievements in particular, convinced (not entirely without reason) that they can do anything, and motivated by money largely as a signifier of personal distinction. If those people want to work for technology startups, that means two things. First, they think they can amass more of the tokens of success in technology than in finance.

Second—since these are the some of the most conservative, trend-following people that exist—it means they’re buying at the top.

Why Citigroup?

By James Kwak

I think Ezra Klein is probably right about Peter Orszag:

“Citigroup is a really big, really powerful institution. Orszag’s position in it is the sort of position that could one day lead to being president of Citigroup. If you’re him, and you’re trying to figure out an interesting and high-impact way to spend the next 40 years, I can see why it’s appealing. But it’s the power and the job and the opportunity, more than the money, that make it appealing.”

Klein says the problem is that this kind of job transition makes people lose faith in government, and I agree with that. But I think there’s a deeper problem as well.

This is the mindset of the ambitious educational elite: You go to Harvard (or Stanford), maybe to Oxford (or Cambridge) for a Rhodes (or Marshall), then to Goldman (or McKinsey, or TFA), then to Harvard Business School (or Yale Law School), then back to Goldman (or Google), and on and on. You keep doing the thing that is more prestigious, opens more doors, has more (supposed) impact on the world, and eventually will make you more and more famous and powerful. Money is something that happens along the way, but it’s not your primary motivation. Then you get to Peter Orszag’s position, where you can do anything, and you want to go work for Citigroup? Why do our society and culture shape high-achieving people so they want to be executives at big, big companies that are decades past their prime? Why is that the thing people aspire to? Orszag wanting to work at a megabank — instead of starting a new company, or joining a foundation, or joining an NGO, or becoming an executive at a struggling manufacturing company that makes things, or even being a consultant to countries with sovereign debt problems — is the same as an engineer from a top school going to Goldman instead of a real company. It’s not his fault, but it’s a symptom of something that’s bad for our country.

Why Do Harvard Kids Head to Wall Street?

By James Kwak

That’s the title of a post a couple weeks ago by Ezra Klein, in which he interviewed a friend of his who went to Wall Street after Harvard. Having seen this phenomenon from a couple of different angles, I’d say the interview is right on. This is how Klein summarizes the central theme:

“The impression of the Ivy-to-Wall Street pipeline is that it’s all about the money. You’re saying that it’s actually more that Wall Street has constructed a very intelligent recruiting program that speaks to the anxieties of the students and makes them an offer that there’s almost no reason to refuse.”

When I graduated from college, I had no interest in investment banking or its close cousin, management consulting. But I went to McKinsey for reasons that were only slightly different than those of the typical Ivy League undergrad; after getting a Ph.D. in history, I discovered that I was unlikely to get a good academic job and was pretty much unqualified for anything else, and McKinsey was one of the few places that would hire me into a “good” job with no discernible qualifications (other than academic pedigree). Now that I’m at Yale Law School, where maybe 15% of students (my wild guess) come in wanting to be corporate lawyers but 75% end up at corporate law firms (first job after law school, not counting clerkships), I’m seeing it again.

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