Starve the Beast

The Occupy Wall Street protests once seemed so futile to me. You just can’t stop smart people from making money, and I’m not really sure why you’d want to. But it turns out you can persuade those people to make money by doing something useful beyond lining up on either side of a financial bet. They can instead build software, or reinvent real estate.

I’ve spent 15 years making that case, often to the Winklevoss types Wall Street loves to hire: folks from elite schools, with high grades, a history of leadership, strong math skills, a broad education. Every year Wall Street paid more, with Bridgewater now offering college graduates $130,000, and every year recruiting got harder.

The same starry-eyed idealists who spent the first third of their life digging wells in Tibet and marching for every crunchy cause would chuck it all after graduation to run numbers for a bank. But that is changing this year.

Redfin is interviewing at least a dozen Ivy-League students, many studying the disciplines of math, philosophy and economics that Wall Street loves, who refused even to consider finance. Many worked on Wall Street last summer, but recently decided that wherever their career takes them next spring, it won’t be to a hedge fund.

I’m sure New York-based start-ups, venture capitalists and even management consulting firms are seeing the same trend: recruiting against Wall Street got much easier this year.

What changed? Part of it may be “The Social Network,” which made a sort of poetry out of writing software alone. Part of it may be the beatification of Steve Jobs. But at least part of the reason has to be that Occupy Wall Street has stigmatized a career in finance. The first slide of Redfin’s standard talk for Ivy League campuses begins with the headline, “Consider the Alternatives,” and shows poor Lloyd Blankfein squirming before a Congressional lynch mob.

These are the images that matter. Previous critiques of Wall Street failed because they were rational: Tom Wolfe’s Bonfire of the Vanities, Oliver Stone’s “Wall Street” and Michael Lewis’s Liar’s Poker nominally deplored Wall Street’s excess while reveling in its glamour. Who after all would you rather be, the virile corporate raider Gordon Gekko or the aging union boss played by Martin Sheen? Believe me, no one at Yale in the ’80s seriously considered a life at Bluestar Airlines. But now many I’m sure want to be like Mark Zuckerberg in “The Social Network.”

The Occupy Wall Street protesters are finishing the job, re-casting Wall Street’s Masters of the Universe in a more disdainful light. Like the animal-rights activists who splatter fur-wearing women with blood, these protesters are people you just don’t want to walk by every day on your way to work. No matter how easily you can dismiss the logic of their arguments, their presence might  make you feel dismayed, shamed, tainted, unsavory. How many 21-year-olds are ready to sign up for that?

Probably not as many. And this I think will be the most serious outcome of the Occupy Wall Street movement. It won’t result in any legislation that stymies Wall Street’s essential money-making powers, but it may in fact divert some of our best and brightest away from Wall Street and toward careers creating more useful products, and more jobs.

Though I respect the work that bankers do, and would far prefer that America rather than China or the United Kingdom dominate the financial services market, I think having more of our best and brightest work on Main Street rather than Wall Street is is a good direction for America, and I’m glad to see it happening now. You can’t fight the beast, and in many cases we shouldn’t try to anyway, but maybe we can starve it for a little talent.

Discussion

  • Aseem

    OWS isn't protesting the making of money, they're protesting the rigged game the finance industry has made for themselves, where it's heads they win, tails the gov't saves their butt. This is a pretty good takedown of your point of view on OWS:
    http://www.rollingstone.com/po

    • http://blog.redfin.com GlennKelman

      I understand that point of view, and agree that after the bail-out we should regulate Wall Street more to limit proprietary trading on federally insured deposits and the like, but I still think Wall Street will make a disproportionate share of money, mostly via hedge funds, and that this will still create problems in our society, which is what the protesters are truly concerned about. So I am also in favor of changes to the tax code, but believe that the main problem is that too many smart people are making personal decisions to spend their lives in a financial casino rather than other types of work that I believe are more useful. Not every problem is the government's fault. If millions of smart people don't want to make new products, the economy will change for the worse.

  • http://twitter.com/OCModHomes OC Mod Homes

    I think this has been one of my favorite posts of the year. I graduated from a top-ranked college known for funneling graduates into financial services. While the money was oh-so-tempting, for a variety of reasons I decided not to go that direction. There have certainly been moments I've lamented the loss of income, I've largely been happy that I make my money helping people and pushing an industry forward.

  • Philip

    Very true and well said. I think it's fair to also say that at some point every industry runs out of productive things for smart and innovative people to do. In most industries it leads to too many products and a lack of pricing power. On Wall St it leads to excessive speculation and some morally deficient product design in the name of profits and bonuses. Bankers do a very important job but the number of truly brilliant people necessary to do those jobs well is far below the number who had chosen the field because of compensation. We will definitely be much better off with the best and brightest among us writing software, creating innovative solutions to environmental problems or simply pursuing science for its own sake which will enable others to create the next generation of innovative products. I don't think we can even call this starving the beast and such a negative connotation is not necessary, unless we want to express anger. I think this feels like putting a bloated beast on a diet so it can get back in shape.

  • soraya

    how crazy is this? are you really so out of touch that you do not see the big picture all around the country with the financial disater, ripping middle class and your only focus was how much young graduates can get pay as the new entery level in wall street and the only light is that smart people find other jobs in different fields (they never had problem finding job to begin with). look around the unemployment your own expensive health care, banking system and the million times more meney that they make with the cost of the middle class go down further.

    • http://blog.redfin.com GlennKelman

      I'm focused on Redfin; when I've ventured to discuss topics further afield, folks have suggested that I start a different blog. I think the solution to the problem in an unplanned economy is to get more smart people to do different things than join Wall Street.

  • http://www.mycaal.com Loan Modification

    It is a serious issue to b solved to make the  people live happy. People are separated by caste, race,religion and nation. They are again separated as Upper, Middle and Poor based on their financial status. This can change only by the young minds. Since it is impossible to educate old age groups, this protest can make youngsters to understand and respond positively.

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