
A Harvard Professor Has Mixed Feelings When Students Take Jobs in Finance - danso
http://www.nytimes.com/2015/04/12/upshot/why-a-harvard-professor-has-mixed-feelings-when-students-take-jobs-in-finance.html
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bduerst
Kind of disappointing. They go on explaining the agency effect side of
capitalism's double-edged sword, but never really give any alternatives or
solutions.

Sure, certain economic behavior, that may not align with the good of society,
becomes necessary to survive in a given industry or market - but how would
they recommend fixing this? Surely they aren't suggesting that their students
throw away rationally beneficial opportunities?

I was hoping by the end of the article they would propose something.

~~~
danbruc
_Surely they aren 't suggesting that their students throw away rationally
beneficial opportunities?_

They probably should, this is somewhat at the heart of the problem. Economic
theory suggest that you will act in the best interest of society if you act in
best interest of yourself. But this is obviously not true, there is nothing
that justifies the assumption that maximizing your gains will simultaneously
maximize gains for society. Quite the opposite is true - improving your gains
a tiny bit will often decrease gains for the society as a whole by a
disproportional amount.

~~~
tsotha
>But this is obviously not true, there is nothing that justifies the
assumption that maximizing your gains will simultaneously maximize gains for
society.

That's not clear to me at all. If society gets wealthier as people pursue
their own interests there's more money to devote to things like cancer
research.

~~~
matthewowen
That isn't the case if the way you're becoming wealthier is by frontrunning by
a few milliseconds. By doing so you're effectively leeching off other
participants in the stock market, including large institutional funds (like
universities, which spend on basic science research).

Sometimes people get wealthy because they help create value. Sometimes they
get wealthy because they're leeches. So maximizing your gains clearly doesn't
always maximize gains for society.

------
alexashka
Looking through the comments here, I can't help but feel like folks are
missing the forest by looking at individual trees in the article.

It doesn't matter if you go into finance or washing cars - it's the mentality
that you have toward life and others.

It is the short sightedness that we are born with, that breeds selfishness and
leads us down the path of ignorance that the author laments. The idea of 'get
mine, worry about the rest later' attitude. That's a child's attitude.

When there's unrest in the minds of parents, they worry and urge their
children to go for the sure thing. That's ok. But do they remind their kids
that once you land a good job and make a living, that there's more to it than
that? That if you're going to do something, do it well? That if you're in a
good place, be nice, be humble?

I don't know. I've seen the mass media apparatus grow more and more desperate,
risk averse and pathetic to please their lords of 'More money, more! Or else
there's somebody else in line who will make more and replace you!'

It's become so bad even the modern billionaires (Bill Gates, Warren Buffett
and others) are devoting time to trying to fix the system.

We're going toward recognizing we have to be supportive of one another and
Americans have poisoned their own well of compassion while fighting against
the Soviet Union. 'Communism' is a bad word and as soon as you speak of doing
something positive and broad for others without getting 10x returns on your
investment, people associate it with communism and have a sour taste in their
mouth.

There's no quick solution that I can see in sight but the idea of only doing
things for profit has to go. Just stop, be nice, be humble, learn, give and
receive. When you get sick, that money isn't going to buy you friends and
family who sit by your side and care for you.

------
goodcanadian
I like the fact that this article identifies that finance serves a purpose,
that it can do a lot of good. At the same time, it also recognizes that not
all finance is useful or good from a societal point of view. This distinction
always seems to get lost in the arguments that result when articles like this
are posted on HN.

Take HFT, the perennial point of controversy. It is true that it provides
liquidity (though, I would suggest not necessarily when you need it), but is
it true that more liquidity is always better? At some point, I would argue
that the market is liquid enough, and continually pushing the limits of HFT is
quite simply rent seeking and may have other detrimental market and/or
societal effects. To bring my comment back to the article in question, I have
to agree with the author that it is somewhat sad to see people pursue careers
in fields of dubious societal value, but if I were offered the paycheque, I
would almost certainly take it, too.

~~~
HarryHirsch
_but if I were offered the paycheque, I would almost certainly take it, too_

One would think _everyone_ would take the paycheck if offered a position on
Wall Street. There's almost nothing left that pays equally well.

~~~
yodsanklai
Don't think everyone wants to earn a lot of money. There are many other things
to take into account when choosing a career.

Conversely, some people choose finance because they find the job interesting,
and not for the money.

~~~
gress
You talk as though earning a lot of money was just a lifestyle choice. The
problem is that as income inequality increases, not earning enough money
becomes career limiting in itself, regardless of what you would like to do in
your career.

------
netheril96
I was once adamant to become a researcher in physics, until I realized how
difficult it is for any one to stay in that field. There are so many much more
intelligent people vying for a single professorship, and most have no
stability as they constantly hop from one post-doc position to another. I left
physics to become a software developer and I did not regret a bit.

So the truth is, the world does not need or can afford that many people
researching cancer, teach and inspire the next generation. Quit lamenting that
people are leaving these fields. They are already overcrowded.

~~~
rwallace
I agree with your last sentence, but not your third last. Society could easily
afford to invest far more in research than it does, and the investment would
be repaid many times over; unfortunately it has not chosen to do so. I don't
believe this is a fundamental choice. People really do want things like clean
energy and cures for cancer. It's just that the issue of adequately funding
such has slipped down the cracks of politics.

If your comparative advantage is in politics, I would recommend that as the
single most important potentially solvable problem of our time.

If your comparative advantage is in STEM, mind you, I think it's perfectly
sensible to stay out of the rat race for the handful of physics professor jobs
and become a programmer or petroleum engineer instead.

~~~
dnautics
> People really do want things like clean energy and cures for cancer.

No, people SAY they want these things (because maybe it makes them feel good
or because it gives them social capital). But when it comes time to actually
put their hands in their pockets and give, they come short. I know this since
I tried to crowd-fund for cancer research. It was hard. I got barely enough.
I'm still backing the project out of my own pocket to the tune of 10-20%.

I've had my nonprofit website (with a donation link) on my lyft line profile
for a week. I've had about 10-20 good conversations about what i'm doing. My
conversion rate? 0%. In this time, I have had zero dollars donated to my
nonprofit. It's ok - I am well within budget for my project.... But I'm just
saying that it is facile to say people want these things but in the end one
really wonders.

Fact of the matter is, that politics is not very good at funding these things
either. A lot of grantsmanship goes into twisting your expertise to allow the
bureaucrats to dispense their money into your project. There is very little
accountability, and the administrators are trained in the same system that
creates the professors, (and reviews the journal articles) so it is a bit of
an echo chamber.

------
sseveran
I wonder if he has mixed feelings for students who take jobs getting people to
click on ads...

~~~
pen2l
He does. He's expressed those feelings before (though in a limited manner).

~~~
Balgair
Where?

~~~
danbruc
The entire article is about that. It's not against a specific profession, it's
against people happily taking every opportunity to make $101 instead of $100
for themselves even if that additional $1 for them may cost society as a whole
$1000.

------
HorizonXP
At the end, the professor writes about the fact that lower income folks
typically have variable income levels, yet still have to pay rent, forcing
them to resort to payday loans.

There is a startup called Even that is trying to help with that problem:
[https://whatiseven.com](https://whatiseven.com)

~~~
icebraining
Interest-free loans to people with low incomes for $12/month. I wonder how
they're financing that, and still making money.

~~~
dragonwriter
Even expressly does not provide loans; since it uses an undisclosed algorithm
to calculate "averages" that are expressly _not_ actual averages, they can
probably guarantee that they are more likely to be taking in funds that are
above the "average" than paying out for below "average"; with an undisclosed
algorithm, they could even guarantee that you can _never_ receive more in
"Boosts" than you've paid in previous deductions.

They also don't seem sure what their fee is -- their ToS says $5/week, other
parts of the site say $3/wk.

------
techtivist
This reminded me of a great piece in the Atlantic a while ago looking at the
cause: "Elite students with few marketable skills are perfect forms for
financial firms to mold."
[http://www.theatlantic.com/business/archive/2012/02/why-
do-s...](http://www.theatlantic.com/business/archive/2012/02/why-do-so-many-
ivy-league-grads-go-to-wall-steet/253245/)

~~~
HarryHirsch
Required reading: Karen Ho, _Liquidated: An Ethnography of Wall Street_

[https://www.dukeupress.edu/Liquidated](https://www.dukeupress.edu/Liquidated)

------
dnautics
Does the professor have similar mixed feelings when students take jobs in
politics? What about in the academy? In the sciences 'Grantsmanship' is so
often a euphemism rent-seeking.

------
eldude
There's a presumption here that there's an objective "good" for society,
likely as defined by this professor. One of the primary virtues of capitalism
is that it makes no such presumption and empowers and frees disparate tribes
to pursue their own "good" within the bounds of a constructive construct.

Correspondingly, one of the vices(?) of socialism is the presumption of a
single societal good. This of course makes sense when we have non-
reproducible/limited resources like the environment or rights that could
conflict like the use of force, but for __all other resources __like how we
spend our lives, what we build, where we go, what we enjoy, freedom by
definition means a subjective "good".

I always find it curious when postmodernism (skepticism of societal mores)
presumes any form of objective truth.

------
jpmattia
> _But the winners of the 1956 Nobel Prize in Physics, John Bardeen, Walter H.
> Brattain and William B. Shockley, who have been widely credited with
> inventing the semiconductor, did not receive even a fraction of the wealth
> that their invention would help create._

I don't know about Bardeen or Brattain, but this was not because Shockley was
an altruist. The fact that he could not capitalize on his inventions like he
thought he should was a source of frustration for him.

Source: Conversation with someone he expressed frustration to.

~~~
jeffwass
Out of curiosity, has anyone heard similar frustrations from the authors of
major open source code bases?

Eg, has Linus ever felt frustrated by all the millionaire tech company
founders that built their product using Linux and/or Git, but didn't open it
up as he did with those two projects?

------
iAMjoseph
I wonder if this is more of a higher education ecosystem problem of survival.

Smart Universities know the winds of change are coming. Up until recently, Ivy
League educations acted as a "proxy" of future success to employers in the
industrialized world.

Once more short-term apprenticeship-type learning start getting "accredited"
(hack reactor, Udemy, etc.) and talent recruiters adopt the new reality - the
traditional University will begin to become irrelevant.

Their only hope to survive is to make surefire bets on privileged background
applicants who will become alumni gifters to keep the veiled Ponzi scheme
going.

An assertion can be made that these types of candidates following a rote
program for their life since birth may have wrote about how they want to
change the world in their applications (or hired somebody else to write them).
But, this very same background created an entity that no longer can think
creatively and keeps following the path. Some awaken. Most do not.

There is a strong argument that transformational leaders who truly change the
world and are not good at what "school" says what we should be good at, and
don't think about education in this way. For example, many of these folks
surely would not have been accepted at the Ivy Leagues: (
[http://www.onlinecollege.org/2010/02/16/50-famously-
successf...](http://www.onlinecollege.org/2010/02/16/50-famously-successful-
people-who-failed-at-first/) )

------
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------
kelukelugames
I wonder how all of my EE professors feel that I dropped out of the academia
track to be a code monkey for $$$.

------
marincounty
In my little world "Rent-Seeking" individuals have always been around.
Personally, I couldn't stomach making money off the poor, animals, or the
environment, but for some people it just doesn't matter how they make their
money. "If it's legal, I see nothing wrong with it?". They are in such denial,
some think they are cute? The one's in my little world think no one knows, but
we do know. You can be the Doctor who charges too much for addictive meds, the
non-profit director who makes a very comfortable living off other people
misery.(free preview Guidestar.), or the rich kid who made millions off
plastic tooth picks(which don't decompose) and moved to another state to get
away from daddy(inventor, funder, bank, cheerleader), dodge taxes, and act
like Horatio Alger.

What I want to talk about is Payday loans. We need something else. My first
introduction to these leach pits is when I drove a co-worker to the pit. She
cashed a check for under $200 and was charged close to twenty dollars. (I
tried to explain how she was being exploited, but she was just tired. Tired of
life. I didn't give her a lecture. It was not the time--she just climbed out
of Homelessness.)

Elisabeth Warren has a good idea on replacing PayDay loans.

[http://thinkprogress.org/economy/2014/02/03/3239261/elizabet...](http://thinkprogress.org/economy/2014/02/03/3239261/elizabeth-
warren-post-office-financial-services/)

(Sorry about the popup, and remember Payday loans are not always dischargable
in Bankruptcy court. The payday loan lender may challenge the discharge of its
debt, and it might violate the law if you've written a post-dated check.)

