dagblog - Comments for "The Ivy League/Wall Street Connection"

I would go as far as to say

Anonymous — Tue, 04 May 2010 21:45:00 +0000

In reply to The Ivy League/Wall Street Connection

I would go as far as to say the simple reason for recruiting comes down to one thing, and its not intelligence (although that tends to go hand in hand (most of the time) with an Ivy League education...it is simply that most (not all) but most who have an Ivy or Prep pedigree come from a moneyed background. Quite simply, most parents of these recruits have money and are successfull in their own fields.....have friends who have money..thus their children are all friends who went to the same schools and country clubs etc and it just perpetuates the network...more money, more clients, more network...I guess that was a long winded way of defining the Old Boys network. Believe me, just because you went to Princeton doesnt mean you are automatically in the club either. There are infinite hierarchies within hierarchies at these places. The underpriveleged student who got into Harvard on their own merit, but comes from a middle class family in bumble fuck has nothing to offer an Investment Bank (ie network of rich friends). Maybe they will get hired as a back office grunt but they will not get into the right club etc etc....Wall Street is just an incestuous horrible place....really no different than any other aristocratic entity.

Meh. If I've got a point

Doctor Cleveland — Tue, 04 May 2010 04:41:40 +0000

In reply to The Ivy League/Wall Street Connection

Meh. If I've got a point buried in here, I'm going have to get it across in another post, it seems. Thanks, guys.

While I usually really like

Earnie — Mon, 03 May 2010 17:33:09 +0000

In reply to The Ivy League/Wall Street Connection

While I usually really like your writing, in this piece, there is no there there.

Did you maybe miss among your three points the real 1., which is, like all top-end employers in finance, law, etc., they want to hire really smart people, and trolling for Ivy Leaguers, while not the only way to do so, is more reliable than many other means of hiring really smart people in their early 20s? (And I disagree with your "competitive" thing. If you want the truly sharklike people, get the very tops from lesser institutions, not some kid who finished in the middle at Harvard College.)

So people from Ivy League schools do both good and bad things. Not sure what the point is here, or what the point was in Klein's crosslinked piece. It seems to be, on both your and his part, talking around associating Ivy Leaguers with the concept of Goldman Sachs as a talisman of evil, but being too intellectually honest to write a column condemning them all as Gordon Gekkos. Which is a souffle that doesn't really rise.

IMO.

So I think that your notion

Michael Wolraich — Sun, 02 May 2010 22:05:51 +0000

In reply to No, of course not. I didn't

So I think that your notion is wrong, or at least unsupported. There is no evidence that Wall Street is any more of an old boys network than it used to be, and if anything, it's probably less. Nor is it possible to document a growing sense of selfish entitlement. (I don't deny the pervasiveness of selfish entitlement on Wall Street, just the idea that it was ever any different.)

Thus, your notion that a cultural or psychological transformation at the big banks significantly contributed to the crash is at best unsubstantiated speculation. And it seems to me like an unnecessary stretch. The recent crash was really not much different from boom-bust cycles that have occurred in various nations and eras since the dawn of global capitalism. Last year, it was derivatives, ten years ago it was tech startups, a century ago it was railroads, two centuries ago it was tulips. I'm skeptical that one can fix the culture of any given industry, and I'm skeptical that it would help avoid the cycles even if one could.

I'll go further and suggest that the idea that the whole idea of enlightened investors is a dangerous one. It's when we think that these folks know what they're doing and that their actions are good for the community that we get into bubble trouble in the first place. Not very long ago, people thought that derivatives were clever and that the housing boom was helping the poor realize the American dream.

So I say, just assume that whenever there is an opportunity to make money, greedy people will fill the gap, whether they come from the Ivy League or community colleges. Given this assumption, the only realistic solution is to increase transparency, prosecute fraud, and minimize the fallout from business cycles. This solution offers no one-time fix. You have to constantly adjust to the regulation to handle innovations and changes to the business environment. But the approach does work. The massive global market today would be far more precarious than it was in 1929 were it not for the safeguards that we've already put in place.

No, of course not. I didn't

Doctor Cleveland — Sun, 02 May 2010 16:33:33 +0000

In reply to Regulating banks to keep them

No, of course not. I didn't mean to propose that the government try to break up old boy networks.

I guess what I was trying to get at, or what was getting at me, is the notion that the insider perspective of Wall Street is contributing a larger problem, in which the finance sector is not merely dysfunctional, but views its own dysfunction as normal, necessary, and admirable.

One can have an old-boy recruiting network for a business that works well. The Onion can have its Wisconsin pipeline, and The Simpsons can keep its Harvard Lampoon pipeline. But both of those businesses remain focused on putting out good material. Wall Street isn't anymore. It's moved from taking a bunch of bright kids from competitive schools and putting them rich by making the clients money (which makes the financiers money in the bargain, and builds the economy), to ensuring that a bunch of insiders make the money to which they feel entitled, clients and the economy be damned. Somewhere along the line Goldman Sachs stopped imagining itself as the service provider it properly is and imagined itself as an institution that its clients are obligated to enrich.

Regulating banks to keep them

Michael Wolraich — Sun, 02 May 2010 05:04:28 +0000

In reply to All the more reason to

Regulating banks to keep them from wrecking the economy and breaking up the old boy networks are entirely different matters. The first is an economic necessity, the second is not really the government's purview. The old boys networks suck, but that's not grounds for federal intervention--at Goldman Sachs no more than at the Atlantic or the Onion.

(I'm not sure how you're measuring the perception of academic pedigree other than by the homogeniety of employees' backgrounds, which is partly due to factors other than perception. But my point was that academics also use alternative measures that are more meritocratic. The banks do not.)

All the more reason to

Doctor Cleveland — Sun, 02 May 2010 00:01:47 +0000

In reply to The finanical sector was

All the more reason to regulate this pseudo-capitalism, which is more deeply connected to preserving the entitlement of a small, privileged caste than it is to actually capitalizing useful businesses.

(On a side note, the power of academic pedigree is somewhat stronger than you represent it as being, and almost inevitably so. How much it matters depends on who you ask: people within the system assign various weights to pedigree, and it counts more or less at various points in an academic's career. But Goldman Sachs believes in the value of Ivy League degrees even more than the people who confer those degrees do.)

The finanical sector was

Michael Wolraich — Sat, 01 May 2010 21:29:36 +0000

In reply to Maybe you're right, G.

The finanical sector was never strictly capitalist. It has always been a notorious old boys network of prep schools and colleges. It is a bit more merocratic than it used to be only because the colleges themselves are more merocratic. It used to be that you had to have pedigree to be a Wall Street player.

Consider - when people apply to graduate programs, they submit grades, test scores, and recommendations, and they are evaluated more or less anonymously. When people apply to i-banking and management consulting jobs, they try to connect with friends and aquaintances, frat brothers and teammates. If they have no closer relationship at the firm, they contact an alum. Connections and interviews are far more important than at graduate programs. It's a recipe for clubbiness. The Atlantic is a much better comparison than academia. For a non-ivy example, look at The Onion, and ask why so many of its writers are Wisconsin alumni.

Maybe you're right, G.

Doctor Cleveland — Sat, 01 May 2010 20:50:04 +0000

In reply to For once, I think that you're

Maybe you're right, G. Perhaps it's simpler than I make it. But certainly, the factors I discuss play a big role in how the Ivy League recruits operate on Wall Street.

You're absolutely right that many industries attach a premium to graduates of highly selective schools. Consulting is another excellent example. And it's not really a coincidence that almost all of the Atlantic blogroll, including alumni, have Ivy or Oxbridge degrees. (The superb Ta-Nahesi Coates is the big exception, and an example of how good you have to be to crack that list without the fancy sheepskin.) I'm not saying that the Atlantic bloggers aren't very good at what they do (although what McArdle is good at doing ought not to be done). I'm saying that there's an intense Ivy premium there. TV writing is

But not every industry attaches as much of a premium to Ivy credentials. Some attach much less, and some have come to attach less of a premium over time. The CIA was initially something like a chapter of the Yale alumni club; by the nineties, evidently, it was not so any longer. From what I can see, Wall Street currently appears to attach an even higher premium to elite schooling than academia does, and I find that odd.

It's especially strange that finance, which is imagined as"practical" and "real-world" and "results-oriented" should be so in thrall to social prestige. It's a sign that perceived value has partly eclipsed real value, so that "association with the best" is more important than the bottom line. And it's a symptom of a financial sector that is no longer strictly capitalist, because privilege is more important than productivity.

For once, I think that you're

Michael Wolraich — Sat, 01 May 2010 05:08:00 +0000

In reply to The Ivy League/Wall Street Connection

For once, I think that you're over-analyzing. I went to a preppie liberal arts college which probably sends an even higher percentage of its graduates to Wall Street than the Ivy's. Some of my friends went that route; others went for management consulting, which is really the same track. Top consulting firms are also full graduates from the Ivy's and top liberal arts schools.

I think that there are three reasons, in order of importance:

1) Perception of superiority. While you are completely correct that Ivy Leaguers are not "an intellectual breed apart" from other students, many employers do not share that opinion. They assume that students at the top schools are the country's best and brightest and think that if they hire the smartest ones among them, then they're getting the best of the best. This attitude extends well beyond Wall Street, but Wall Street can pay top dollar for the perceived best of the best.

2) Old boy network. Almost all the people at top investment banks went to top schools, and people like to hire applicants whom they see as having similar backgrounds to their own. This behavior is not unique to Wall Street either. What is unique is that top banks and consulting companies send their employees interview and recruit from their own alma maters, which institutionalizes the old boy network.

3) Feeder schools. There's a whole system in place to deliver graduates from top schools into the waiting arms of Wall Street. My college's career center had abundant resources available to help students become investment bankers or management consultants, and frankly, the career center staff didn't know diddly about anything else. Likewise, the HR departments at the banks and consulting firms have relationships with the career centers, though which they schedule information sessions and interviews.