I suppose I should have expected a backlash when I joined about twenty of my classmates in protesting Goldman Sachs’ summer internship info session on November 28th. Last year, more seniors who took jobs after graduation (16.5 percent) took them in finance than in any other sector of the economy; in 2010, the figure was 31 percent. Finance is popular (and at the salaries it pays, why wouldn’t it be?) and trying to make it more difficult—or at least more uncomfortable—to enter is sure to produce resentment.
And once Goldman announced that it would cancel similar events here and at Brown due to the protest, the mumbled misgivings got louder. “Occupy alienated a large portion of the student body that might have been persuaded to be sympathetic to their causes,” tut-tutted Katie R. Zavadski ’13 in the Crimson on Wednesday. The idea here, I guess, is that if Occupiers would just abandon the cause of fighting finance recruiting, people would get on board. And maybe that’s so. But abandoning the recruiting fight would mean ignoring the single biggest way that Harvard is contributing to economic inequality.
The story of inequality’s rise in America is not one of the 1 percent but of the top 0.1 percent and the top 0.01 percent. And despite Zavadski’s protestations to the contrary, the enormous increases in the share of national income going to the super-super-rich are due almost entirely to the increased earnings of, one, “superstars” like musicians, actors, and athletes and two, financiers and those in finance-related professions. As the economist Tyler Cowen has detailed, recent research indicates that hedge fund managers, Wall Street-affiliated lawyers, and bankers are a huge force behind top-end inequality. For example, the economists Steven N. Kaplan and Joshua D. Rauh found that the number of Wall Street investors making over $100 million in 2004 was more than nine times as many as the number of executives at public companies making that much.
Not every Harvard graduate who takes a job at Goldman Sachs is going to end up making that kind of cash. But most of the financial super-rich went to places like Harvard. Take Citigroup CEO and Columbia grad Vikram S. Pandit, or Goldman chief Lloyd C. Blankfein ’75, or Blackstone head and Yale alum Stephen A. Schwarzman. Some current Harvard seniors are going to take finance jobs, stick with them, and make tens or hundreds of millions of dollars a year by the time they reach their forties. Those students will be part of the problem. The many more students trying to get there and failing will be part of the problem.
This kind of inequality in and of itself is troublesome. Study after study has found that unequal societies are more likely to be politically polarized, experience slower growth than more equal societies, and even have higher divorce rates. But it is especially troublesome because it is ill-gotten. As Cowen explains, a major reason that finance went from the mundane business of making loans to the profit-producing behemoth it is today is that financiers have started to make huge, leveraged bets against improbable events. Usually, these bets pay off big and make the gamblers making them millions. Then 2008 happens, the bets fail, and the whole economy implodes. The bankers get bailed out and don’t suffer. The rest of us are screwed.
This sort of betting is of no social value. Bankers will tell you that it allows for more efficient pricing of assets, but if the last decade taught us anything, it’s that it actually leads to bubbles where assets aren’t priced accurately at all. It’s destructive, greedy behavior. It hurts real people. It puts people in poverty and throws families out on the street. Those who engage in it, from hedge fund managers to analysts just out of Harvard, are doing something gravely immoral.
And part of being a responsible member of a community is speaking up when something gravely immoral is going on. Part of being a good friend is telling your friends when they are doing something that is horribly wrong. The reason the Goldman protest hit a nerve, I think, is that people took it personally. The picketers seemed like they were calling those attending the info session bad people.
I can’t speak for the other protestors, but I for one hope the attendees took it personally. Taking a job at Goldman Sachs is immoral. To take a job in finance is to become complicit in a socially useless enterprise that ruins lives. You should feel bad about yourself if you do it. You will be a worse person if you do it. That sort of message may very well alienate a lot of Harvard students. But we need to hear it.
Dylan R. Matthews ’12, a Crimson editorial writer, is a social studies concentrator in Kirkland House. His column has appeared on alternate Wednesdays this semester.