Greed and Growth at War With Each Other

If this is true it is stunning:

The financial sector, which includes lending, stock brokerage, complex securities and insurance, among many other services, derives enormous profits from collateralized debt obligations. These new products require such sophisticated engineering that the industry now focuses its recruiting on new master's- and doctoral-level graduates of science, engineering, math and physics, and pays them starting wages that are five times or more what they would have earned had they remained in their own fields.

"Because these new hires are often the very individuals who otherwise would have comprised the most robust pool of prospective founders of high-growth companies, the financial services industry's steady rise has had a cannibalizing effect on entrepreneurship in the U.S. economy," said Paul Kedrosky, Kauffman Foundation senior fellow and one of the paper's authors. "Excessive financialization exacerbated and distorted the flow of capital in the economy, potentially suppressing entrepreneurship by drawing away entrepreneurial talent."

The knee-jerk reaction is to say "the big bad financial sector is draining America's braintrust." Certainly that is how the Kauffman Foundation makes it seem. But think again. No one is forced to go into finance.

Yglesias adds:

Certainly my observation when I was in college is that almost everyone who had the mentality “I’d like to make a lot of money in life” was planning to instantiate that plan by working in the financial services sector.

That's exactly right. The greedy kids in the engineering (undergraduate) school already had plans to get their law degree or MBA as soon as possible after graduation. They weren't in engineering school to be engineers, really. They had made the shrewd (and often true) assessment that business acumen plus a technical background made them almost universally coveted in non-engineering fields. Engineering, to a certain point, was/is a meal ticket degree, because you could often use it as a leg up into a graduate program. And then you coupled your "technical background" with your graduate degree and sell yourself as a "six figure starting" employee with grandiose claims that engineering, almost magically, prepares you for virtually any and all future jobs.

The problem, dear readers, isn't the brain vacuum being swept across the carpet by the financial sector. No the problem is the culture of greed in this country where people say to each other "I'd like to make a lot of money in life." When did that become a serious goal? Was it always?

It seems to me (and I say this as neither a philosophy student nor a business student) that a business behaves (and is legally recognized) as an entity that is completely self-serving, and in a perfect world (relative to that business) it thrives while all its competitors fail, and fail miserably. The theoretical pinnacle of a business is complete monopoly on its sector of the economy. Multiply this by a million businesses in America and you get our oft-lauded "capitalist economy" which does seem to function pretty well.
However, to crush your enemies, see them driven before you, and hear the lamentation of their women is not necessarily a strategy conducive to national prosperity. But in America that is basically considered sound corporate strategy. So yes, we have a brain drain in engineering and sciences. And yes, its partially caused by the financial sector having high-paying jobs available.

But its also caused by America being greedy first, and enterprising second.


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