But the current financial crisis is a different story altogether. It hits close to home—or rather, work.
For the past several years, the financial industry has provided employment to a shockingly large segment of Harvard graduates. Consulting and financial services companies commanded the services of 39 percent of workforce-bound graduates last year, and 47 percent the year before that.
At the center of it all was investment banking, whose promise of six-figure starting salaries and eight-figure executive bonuses compelled hundreds of graduates to suffer through 80—hour workweeks spent hunched over an Excel spreadsheet.
But now, there is trouble in paradise. Industry stalwarts Bear Stearns and Lehman Brothers have vanished into the ether, while fellow bulge-bracket Merrill Lynch was engulfed by Bank of America. Even the top firms Goldman Sachs and Morgan Stanley have agreed to become bank holding companies, subjecting themselves to restrictive regulations in return for greater access to liquidity from the Fed.
For those that survive the turmoil and layoffs still to come, the future may not look like the halcyon days of the past—heavy deleveraging threatens to cut into profits, and Congressional leaders are already clamoring to include limits on executive compensation in the proposed bailout plan in return for taking toxic mortgage-backed securities off Wall Street’s hands at premium prices.
So what now for the scores of Harvard seniors preparing for a semester of Goldman info sessions?
At the end of Wall Street, Oliver Stone’s classic film about bankers gone wild in the go-go 1980s, the protagonist, Bud Fox, is faced with a similar predicament. After his son’s finance career has gone up in flames, Bud’s father Carl counsels, “It’s gonna be rough on you but maybe in some screwed up way, that’s the best thing that can happen to you. Stop trading for the quick buck and go produce something with your life, create, don’t live off the buying and selling of others.”
Many seem quick to offer a similar assessment of the brave new world facing Harvard’s would-be i-bankers. Carl Fox’s moralizing view of Wall Street life as inherently dishonest is closely paralleled by commentators who, for years, have bemoaned the culture of “selling out” that leads so many Harvard students into “morally bankrupt” finance careers instead of productive labor. This approach sees a sort of poetic justice in the collapse of financial titans, as those who spurned substantive work for filthy lucre reap their just desserts.
This popular response mischaracterizes the nature of finance and the vital role it plays in our nation’s economy. While investment bankers do not produce tangible goods, they are key players in a vast and intricate system designed to move capital from those who have it in excess to those who need it. These financiers are compensated extremely—perhaps excessively—well for their services. Finance may not be a “noble” profession, but it’s not an abomination either.
Yet there is still something tragic about the mass migration into banking—the tragedy of unfulfilled dreams. It may seem surprising that, on a campus seemingly dominated by the specter of e-recruiting, only four percent of students cite investment banking as their dream job. This confirms what many have guessed: For whatever reason, be it money, prestige, or just convenience, students are drawn into finance despite having aspirations that lie elsewhere.
Before the recent financial collapse changed the paradigm, banking was, above all other things, safe. It presented an almost guaranteed path to respectability. While many professions such as acting, journalism, or academia offer considerable prizes at the top but little along the rest of the spectrum, banking promises to reward even the mediocre with top-flight compensation. More than anything it else, it can provide a refuge from the vicissitudes of fate or personal inadequacy.
So Harvard students have flocked to it in droves, and the flight to safety is understandable. As any i-banker worth his salt can tell you, people are, on the whole, risk averse.
But whether this is a formula for generating long-term happiness is questionable. As President Drew G. Faust warned a class of graduating seniors in last year’s Baccalaureate Address, “if you don’t pursue what you think will be most meaningful, you will regret it.”
Perhaps, in order to test the tumultuous waters of the world, the average Harvard student just needs a little push. The financial system’s meltdown provides a rude, forceful shove. So maybe Carl was right: In some screwed up way, this is the best thing that can happen to us.
Daniel E. Herz-Roiphe ’10, a Crimson associate editorial chair, is a social studies concentrator in Adams House.