Saturday, April 25, 2009

Investment bankers and educational reform

Some good commentary from Megan McArdle on why we shouldn't hate investment bankers. She also throws in some good advice to investment bankers: don't whine. You are not entitled to being paid millions of dollars a year. And it's not just the people on Wall Street who have to come to terms with reality.

The real problem with investment bankers goes deeper, and is the problem of the entire upper middle class: we have come to believe that complying with the rules produces excellent results as by some natural law. In school, if you do your work, teacher gives you an A. It comes to seem like a sort of a natural law: if you have a good education and work hard, the universe is supposed to reward you. After school, the upper middle class gravitates towards careers with very well defined advancement hierarchies: medicine, law, finance, consulting, where this subtle belief is constantly reinforced

I am very familiar with this problem. I graduated from Swarthmore with a degree in philosophy, and was expecting to be able to just get a job. I have a degree in a very intellectually sophisticated and demanding subject from one of the best schools in the country. Shouldn't I just be able to snap my fingers and presto! get a well-paying, intellectually engaging, emotionally satisfying job? Shouldn't I be able to just send my resume out to a bunch of places and then wait for the job offers to roll in?

Uh, no. I grew up spoiled. Not by my parents, who were very fair and moderate, but by my situation. I'm a heterosexual white male in contemporary America. I took for granted that I would have the nice house and great vacations and all the consumer goods I could want and all that, because that's normal.

Uh, no. It's not normal. It's the product of hard work. Part of my mistake was thinking that education is the key to success. Because that's what we're told: work hard in high school so you can go to a good college, and then you're set. That's the most important thing in being successful: going to a good college.

For many people, maybe it is. And it doesn't hurt. But I think we have confused cause and effect. Many successful people have gone to good schools, so that must be the key to being successful, right? Except that those people got into those schools for the same reason that they were successful. They were smart, competent, hard-working and creative in high school, they were smart, competent, hard-working and creative in college, and then they were smart, competent, hard-working and creative in the real world.

But going to a good school does not guarantee that you will be successful. It just makes it a little easier to get started on being successful. That's it. I have known flaky people with degrees from Harvard and Stanford.

This is something that we as a society have not yet come to terms with. For previous generations, higher education was something that was available to very few people. So people with college degrees were a scarce resource. That made them valuable.

That is no longer the case. Higher education is now much more widely available, so the value of a college degree is now less, as a function of greater availability.

I fell into the trap of thinking that my college education made me special, because I was thinking of it in the terms that had been defined by previous generations. This is not surprising, because the people running the college when I was there were the people from those previous generations. For the people on the Board of Managers when I was in college, Swarthmore was a very special place, because it gave them an education like no one else in their generation had.

So I thot the same would be true for me. I was getting an education that made me unique and special. Except that it didn't. Almost everybody in my high school graduating class went to college and got at least a Bachelor's degree. The one who didn't end up with a BA actually has the coolest job of almost anyone I know - he's a brewmaster at a brewpub, and is doing much better professionally than I am. And he has no student loan debt.

Not everyone in my high school class went on to an elite liberal arts college, but even the ones who went to state schools did really well. Three of my friends went to the University of Michigan. All three have Ph.d.'s (one from Harvard), and all three are successfully pursuing careers in academia.

Megan's friends in investment banking are discovering something that many of us in Generation X have discovered: your college education does not guarantee that you will be successful. All it does is guarantee that you will be able to go to reunions every five or ten years.

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