I Guess It’s Your Fault

What happeend to our economy?  Why are we in a recession and facing massive structural problems in the financial sector?  If Wall Street is mortally wounded, or already six feet under, who has blood on her hands?

I guess it is you…at least according to the American Enterprise Institute’s Kevin Hassett.

When Wall Street was run by people randomly selected from the population, it was able to survive everything. After the best and brightest took over, it died the first time real-estate prices dropped 20 percent.

Are the two facts related? In other words, did Harvard kill Wall Street?

The suspect certainly had the opportunity. If you walked into any major Wall Street firm a year ago and randomly selected an employee, chances are that person would either be from an Ivy League school like Harvard University, or have an MBA, or both.

The statistics are striking. Back in the 1970s, it was typical for about 5 percent of Harvard graduates to work in the financial sector, according to a recent study by Harvard economists Claudia Goldin and Larry Katz. By the 1990s, that number was 15 percent. It probably climbed since then.

By you, I mean Bucknell students, especially BSBA graduates, who, I imagine, would by and large have been quite happy to accept spots in the Harvard (or other Iv league) MBA programs ca 1980-2007.

What do you have to say for yourselves?

Hat tip: Org Theory.net

One Response

  1. This really presents an issue that is absolutely the central focus of the Enron scandal: is Wall Street too smart for its own good. As fine as the line is between genius and insanity, so too is there a very fine line between genius and crookedness. By this I mean that in order to pull of the kind of illegal schemes like Enron and now Madoff pulled off. Look at Andy Fastow, he set up accounting practices and entities that made even the smartest finance executive’s heads spin. There may be something fundamental about the environment of Wall Street to leads good (smart) people to flip to the dark side, but they wouldn’t be able to pull it off if they weren’t so smart and didn’t have the training of elite business schools. Maybe Wall Street would be better off being run by a bunch of idiots?

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