Friday, Dec. 2, 2011
Celebrating the End of Kids' Wall Street Dreams
Amid fears of high youth unemployment creating a "lost generation," there is suddenly a bright spot: Apparently, fewer young people are going to work in the industry that destroyed our economy.
That's the word from The New York Times, which reports that since 2008, "the number of investment bank and brokerage firm employees between the ages 20 and 34 fell by 25%," as banks have laid off young people and slowed college recruiting.
For young Wall Streeters, this is a bummer. But for society as a whole, it's cause for celebration because it may finally allow America to counter the destructive Gordon Gekko-ization of youth culture.
Recall that in recent years, up to a third of kids at elite universities have entered finance-related jobs. Such a mass shift in career preferences is, to put it mildly, alarming. A country whose best and brightest begin avoiding occupations that add value to society (doctors, engineers, etc.) in favor of vapid get-rich-quick gigs is a country that has stopped investing in itself and started mortgaging its future.
In light of that, Wall Street's youth layoffs raise a bigger question: Why have so many more kids been pursuing careers in finance?
Part of it is greed, as a 2010 Higher Education Research Institute report found a record-high three-quarters of freshmen said being "very well-off financially" was their top objective. Not surprisingly, many graduate with speculation and usury in their plans.
Such a mindset, though, hasn't emerged in a vacuum—it tracks two larger greed-driven trends.
The first is a change in the American Dream from a middle-class aspiration to an "MTV Cribs"-style fantasy. In that shift, we began portraying Wall Street fat cats as idols—the Great Men to be worshiped in our media and consulted by presidents. Taking cues from the larger culture, kids have naturally tried to follow in the idols' footsteps.
Simultaneously, the American economy changed from producing tangible assets to now more often generating paper profits for bankers. The numbers, as recounted from economist Simon Johnson, tell that tale: "From 1973 to 1985, the financial sector never earned more than 16% of domestic corporate profits ... last decade, it reached 41%."
This metamorphosis was no force of nature—it was the result of bank-owned politicians deregulating and subsidizing the finance industry, turning it into a monster swallowing an outsized share of national wealth. That, in turn, prompted an employment shift, which included young people.
"When banks get 25% to 30% on credit cards, and 500 or more percent on payday loans, capital flees from honest pursuits, like auto manufacturing," author Thomas Geoghegan wrote in Harper's Magazine. "We set up the incentives to keep our best and brightest out of Detroit ... (They) went off to work at AIG."
Those incentives highlight the final part of the youth story: need.
Today, the average undergraduate matriculates with $25,000 in student debt. That burden compels kids to base career moves on where they can get the richest the quickest so as to pay off their loans. In an economy that has privileged finance, that often means heading to Wall Street.
Now, though, that career path may be closed—and even if it's only temporarily closed, the reprieve is significant.
A few semesters worth of kids driven into occupations that build and sustain rather than cannibalize and leech could begin moving a nation back to economic fundamentals. It could mean kids finally appreciating that greed isn't so good and that policy debates—whether they're about regulation or student loans—aren't meaningless.
Ultimately, young people might see that those debates actually matter—and that they better get involved in them or their future will remain in jeopardy.
David Sirota is best-selling author of the new book "Back to Our Future: How the 1980s Explain the World We Live In Now." He hosts the morning show on AM760 in Colorado. Email him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at DavidSirota.com.
That's the word from The New York Times, which reports that since 2008, "the number of investment bank and brokerage firm employees between the ages 20 and 34 fell by 25%," as banks have laid off young people and slowed college recruiting.
For young Wall Streeters, this is a bummer. But for society as a whole, it's cause for celebration because it may finally allow America to counter the destructive Gordon Gekko-ization of youth culture.
Recall that in recent years, up to a third of kids at elite universities have entered finance-related jobs. Such a mass shift in career preferences is, to put it mildly, alarming. A country whose best and brightest begin avoiding occupations that add value to society (doctors, engineers, etc.) in favor of vapid get-rich-quick gigs is a country that has stopped investing in itself and started mortgaging its future.
In light of that, Wall Street's youth layoffs raise a bigger question: Why have so many more kids been pursuing careers in finance?
Part of it is greed, as a 2010 Higher Education Research Institute report found a record-high three-quarters of freshmen said being "very well-off financially" was their top objective. Not surprisingly, many graduate with speculation and usury in their plans.
Such a mindset, though, hasn't emerged in a vacuum—it tracks two larger greed-driven trends.
The first is a change in the American Dream from a middle-class aspiration to an "MTV Cribs"-style fantasy. In that shift, we began portraying Wall Street fat cats as idols—the Great Men to be worshiped in our media and consulted by presidents. Taking cues from the larger culture, kids have naturally tried to follow in the idols' footsteps.
Simultaneously, the American economy changed from producing tangible assets to now more often generating paper profits for bankers. The numbers, as recounted from economist Simon Johnson, tell that tale: "From 1973 to 1985, the financial sector never earned more than 16% of domestic corporate profits ... last decade, it reached 41%."
This metamorphosis was no force of nature—it was the result of bank-owned politicians deregulating and subsidizing the finance industry, turning it into a monster swallowing an outsized share of national wealth. That, in turn, prompted an employment shift, which included young people.
"When banks get 25% to 30% on credit cards, and 500 or more percent on payday loans, capital flees from honest pursuits, like auto manufacturing," author Thomas Geoghegan wrote in Harper's Magazine. "We set up the incentives to keep our best and brightest out of Detroit ... (They) went off to work at AIG."
Those incentives highlight the final part of the youth story: need.
Today, the average undergraduate matriculates with $25,000 in student debt. That burden compels kids to base career moves on where they can get the richest the quickest so as to pay off their loans. In an economy that has privileged finance, that often means heading to Wall Street.
Now, though, that career path may be closed—and even if it's only temporarily closed, the reprieve is significant.
A few semesters worth of kids driven into occupations that build and sustain rather than cannibalize and leech could begin moving a nation back to economic fundamentals. It could mean kids finally appreciating that greed isn't so good and that policy debates—whether they're about regulation or student loans—aren't meaningless.
Ultimately, young people might see that those debates actually matter—and that they better get involved in them or their future will remain in jeopardy.
David Sirota is best-selling author of the new book "Back to Our Future: How the 1980s Explain the World We Live In Now." He hosts the morning show on AM760 in Colorado. Email him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at DavidSirota.com.
© 2011 CREATORS.COM
Back in Jimmy Carter days, my in-state tuition at UW-Madison was about 375 hours of minimum wage work for 1 year's "tuition and fees". Today, 1 year in-state is over 1200 hours of minimum wage work. That did not even cover costs of books, laptop computers or student housing. I can see why the new payback terms drives students into greed pay-scales.
Even my own niece, a bright young woman who seems to have strong "how things work" skills, she has chosen a business major because she wants "to make money". Her mom is of a stock that says "work is work, the satisfying parts of life should never be anything someone would pay you for", yet saying she wants her daughter to have a career, not a job. She really meant "make enough money to pay for what you want to do, and still have the free time to do it." Her mom is a public school teacher, by the way. All in all, that is a greed motive, not a job where you excel because your heart is into it. -- We need more "heart", not more greed.
This is why I like certain things to be socialized, not operated for profit (and some must go bust). When your citizens know that their basic needs will be taken care of, the work ethic can be driven by the need to be useful, the need to do something personally satisfying, rather than to be brutally on your own survival at the expense of your fellow citizens on the other side of town. In capitalism, the need to survive creates a need to classify, prejudge, stereotype and segregate. The problem with switching over now is that it will take a couple of 40 years at 40 hours a week life-cycles to pass before public attitudes and motives can change. You ask anyone if they would continue working after they win the jackpot, and you can see why most Americans would turn into freeloaders if they could get away with it.
The American Dream to have a house with a fence around your yard, a place to raise your kids, have your pets, garden, your toys, (and no interference from your neighbor) ended with the moving picture, with the commercially subsidized boob tube. Now that we could see the "lifestyles of the rich and famous", it gave us a new dream, to be the next Andrew Carnegie rags-to-riches, to be the next lotto winner, to be the next NFL fathead on some kids wall or American Idol star with recording contracts and endorsement deals. We wanted to be rich enough to be accepted by people who do not know us while being able to do anything we wanted to do, right or wrong. Gone was the dream to "have enough", now we had to "have the most".
Economist Simon Johnson's statement about "From 1973 to 1985, the financial sector never earned more than 16% of domestic corporate profits ... last decade, it reached 41%." -- Supply-side Reaganomics failed. The real economy cannot grow without "making stuff". Simple "money on the books" will never result in an increase in wealth, you need to "make stuff that lasts" in order to have something left over after all the loans are paid off. If all we have today is on the backs of a loan... our future earnings, how can the game end with all the loans paid off, and We the People still "got stuff"?
Social Security is no a "Ponzi scheme", but fractional reserve Big Bank finance most definitely IS a "pyramid scheme", can never make everybody a winner, only the top 1% can win.