At places like Harvard, the percentage of MBA students going into finance as a whole has dropped slightly from its peak...( Rana Foroohar)

At places like Harvard, the percentage of MBA students going into finance as a whole has dropped slightly from its peak (31 percent today versus 39 percent before the crisis), but the share who are bringing skills like mathematical finance to areas such as private equity, venture capital, and high tech is increasing. Indeed, at many of the country’s top MBA programs, students report that recruitment fairs are still dominated by financiers and financial institutions, whether they be traditional banks and consulting firms or small boutique companies.

This underscores yet another of the most corrosive effects of financialization, which is the brain drain from more productive areas of the economy. Finance is now scooping up the country’s brightest people, diverting them from careers that would move our economy forward in more productive ways. Before the 1980s, banking was boring and not nearly as lucrative. But now PhDs who might once have crafted new engines at Boeing or come up with new polymers for Dow can make four to five times those former starting salaries at a hedge fund, where they can busy themselves creating twelve-dimensional computerized trading models. Eleven percent of the undergraduate class at MIT, for example, now goes to Wall Street, and despite the 2008 crisis, financial engineering is the fastest-growing field at many of the country’s best engineering schools. “Not only are these people not making scientific progress, says Greg Smith, the former Goldman Sachs quantitative trader who famously published his resignation letter in the New York Times, “but the complex derivatives products they create are being sold to unsuspecting public pension funds and investors (who don’t  know any better). So there is actually an argument to be made that diverting our smartest PhDs to finance is a waste, at best, and detrimental to (overall economic growth) at worst.

 

Fuente: Makers and Takers. Rana Foroohar. Crown Business. New York. 2016.

 

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