No, I am not distraught by spoilt/apathetic students and less time for research. Those are problems every PhD student faces, and in spite of them, I enjoy teaching at Oxford. Rather, the problem is that many of my students enter careers in the City, a manipulative square mile full of shiny-shoed assholes. This is for two reasons: money, and, more importantly, the City's devilish propaganda machine. At the end of the day, you have several Oxbridge-educated graduates wreaking havoc on the global economy, and one sad Oxford tutor (me), sighing in the corner - a net loss.
The financial industry is now the temple of crony capitalism; Wall Street and the City mostly trade assets around, instead of generating new wealth. For example, in 1994, Orange County, California filed for bankruptcy due to bad investments in inverse floaters. Real economy companies like Procter & Gamble also lost money on these volatile derivatives. Yet Wall Street firms that sold these derivatives raked up massive fees - Merrill Lynch alone made $100 million. Even modern mortgage-backed securities are merely ways of shifting risk, rather than reducing it. As one Bankers Trust employee said, "Lure people into the calm and then totally f*** them." The fact that talent is drawn to this industry is bad for economic prosperity; the finance industry's growth has instead created new robber barons.
This is where bright twenty-one year olds come in - the industry's number one pick-up line is money. A huge starting salary and luxurious lifestyle seem sexy to young people with no work experience or expertise. It is little wonder that the City can pay such ridiculous compensation, over and above other private sector jobs (i.e. rent-seeking). Indeed, 30-50 percent of excess financial sector wages cannot be explained by differences in individual ability. Clearly, City banks are lining the pockets of naive youngsters who hold dreams of grandeur.
These dreams are truly dangerous, and the City has a mighty propaganda arm that penetrates campuses, telling young people that they can be 'leaders' and really make a difference in the world. This means nothing, but to a smart Oxford student who believes that the world owes him everything - wealth, power, women - this is an appealing mantra. The City is also tempting to graduates wanting to enter public service; the revolving door between government and the City is horrifying. Thus Goldman Sachs wines and dines Oxford students at fancy restaurants, giving them a glimpse into life as a fast-talking banker. As one Prophet aptly put it, "Not that which goeth into the mouth defileth a man; but that which cometh out of the mouth."
I write these words as my economics students enter final exams, and then leap into a world of arbitrage trading, derivatives, and hedge funds. I feel disheartened, knowing that the skills they learned in university will be going to waste in some glass-and-concrete building in London. This blog post probably won't change anyone's mind, but at least it gives me some comfort. It is therapeutic. Yet while I am sad, I am not pessimistic - we can regulate and reign in the financial industry, and implement policies that allow for true innovation. Until that day comes, I remain a depressed Oxford tutor.