財經觀察 1499 --- Will the Wall Street Storm Have a Giant Silver Lin

Will the Wall Street Storm Have a Giant Silver Lining?

By STEPHEN J. DUBNER

There are surely a lot of ways to answer “yes” to the question posed in the headline. The people who hate the financial industry, for instance, must be happy to see the bloodletting on Wall Street, as must those who simply enjoy a dose of schadenfreude now and again.

But I am thinking of a different kind of silver lining, one that may reach far and wide and have lasting positive effects.

First, let’s step back for a minute and look at a different kind of labor shakeup that happened more than 50 years ago. At the time, about 55 percent of all white female college graduates worked as schoolteachers. Why? Because teaching was one of the few professions that educated women had good access to.

But as other job opportunities opened up, many of the best and brightest women who would have become teachers instead became doctors, lawyers, bankers, and so on. All those jobs paid much better than teaching (whose wages had long been held down because it was considered a women’s profession) and held higher status as well.

This was great news for the bright women. But a variety of studies have shown that the ensuing brain drain that hit the schoolteacher corps directly translated into significantly poorer classroom instruction. Not only did children’s test scores fall, but some scholars have argued that our national productivity took a serious hit — all from the decline in teacher skill brought about by new opportunities afforded educated women.

You may have guessed by now what all this has to do with Wall Street. Like them or not, the men and women who’ve gone into finance in the past 10 or 20 years have certainly been among our best and brightest. They are super-well-educated and work incredibly hard, with intense focus. In economic terms, these people represent a huge stockpile of human capital — and now, some 200,000 or so of them are losing their jobs. Perhaps even more noteworthy, however, are the hundreds of thousands, perhaps millions, of college undergrads and graduate students who had planned to work in finance.

Now where are they going to go? What are they going to do?
I’ve seen articles on the migration of New York finance employees to smaller, healthier U.S. markets … or to expanding Asian markets … or stories about the stray banker who is opening a string of barber shops or teaching kids how to bake cupcakes …

But I think there’s a much broader and possibly hugely beneficial shift taking place. The other day I was interviewing someone who runs a company that does some very unusual work — let’s call it “inventing” for now — and he noted that one research group he was putting together was suddenly able to hire a bunch of recently unemployed Wall Street “quants” who are more qualified than his typical applicant.

I can’t say anything specific about this company (we’ll be writing about it in depth later), but suffice it to say that many of its products could have broad and deep social benefits.

I can think of a lot of other fields that stand to benefit from all the human capital that is currently sloshing out of finance and into other realms: technology in general, energy in particular, and alternative energy in super-particular; health care; research science; and, yes, education. Wouldn’t that be ironic?

I can also see a small subset of this human capital gravitating toward government work over the next few years, not only because of the decline in finance jobs but also because President-elect Obama seems interested in building an administration of best-and-brightest types who, in recent years, haven’t exactly been flocking to (or welcome in?) Washington.

Not long ago, we asked readers of this blog who were planning on investment-banking careers if they’d altered their plans. A few people said they were thinking about becoming financial regulators of some sort. Not very sexy, and surely not as high-paying as i-banking, but yes, it’s probably a growth industry in the short term, for better or worse.

Twenty years from now, when cancer has been eradicated, when the threat from global warming is a distant memory, when poverty is a hoary old cliche, I’d love to think that we could thank the Great ‘08 Meltdown for providing the human capital that helped solve these problems.

Regards,