James Kwak on Peter Orszag's decision to join Citibank:
This is the mindset of the ambitious educational elite: You go to Harvard (or Stanford), maybe to Oxford (or Cambridge) for a Rhodes (or Marshall), then to Goldman (or McKinsey, or TFA), then to Harvard Business School (or Yale Law School), then back to Goldman (or Google), and on and on. You keep doing the thing that is more prestigious, opens more doors, has more (supposed) impact on the world, and eventually will make you more and more famous and powerful. Money is something that happens along the way, but it’s not your primary motivation. Then you get to Peter Orszag’s position, where you can do anything, and you want to go work for Citigroup? Why do our society and culture shape high-achieving people so they want to be executives at big, big companies that are decades past their prime? Why is that the thing people aspire to? Orszag wanting to work at a megabank — instead of starting a new company, or joining a foundation, or joining an NGO, or becoming an executive at a struggling manufacturing company that makes things, or even being a consultant to countries with sovereign debt problems — is the same as an engineer from a top school going to Goldman instead of a real company. It’s not his fault, but it’s a symptom of something that’s bad for our country.
Tyler Cowen, in his long, informative piece on inequality, mentioned something similar:
…in so-called normal times, the finance sector attracts a big chunk of the smartest, most hard-working and most talented individuals. That represents a huge human capital opportunity cost to society and the economy at large.
This is a backward-looking perspective.
Think about it: he’s joining Citi at its least popular, in the eyes of both investors and the general public. Nowhere to go but up. And the banking environment is a far less competitive since the credit crisis, thanks to there now being quite a bit fewer banks.
On top of that he’s not from the industry–all the better to show he’s part of “the new guard” who will take the banking industry’s business practices to a new and more ethical level.
To me this could be an exceptional decision for someone looking out for his career over the next 5-10 years. Citi has the potential to engineer an enormous upward move in both its reputation and its share price, and he can claim he’s a part of it.
Terrible cliche. I see it as way too presumptuous of the squeaky critics that ordain a simplistic linear transition from domain knowledge to industry vertical, depriving the candidate of the range of options before him.
If it’s the creative mind of the engineer that is being seen as having been manipulated by the lure of a fatter wall street pay check, it’s the very original creativity of that mind choosing with little external prompt to apply its potential in a disparate dimension to experience a radically innovative if not a revolutionary outcome. After the meltdown, perhaps it’s a bit too off-putting to recognize the contributions of financial engineers in developing exotic derivative products like the ABS, CDS and so on, but let’s not forget that what caused the crisis was not the genus of these products, but its specie that got grossly misunderstood, misapplied and miscarried. Not in the least when the very products helped raise a significant portion of the billions of dollars for funding scientific and industrial research by the world’s major corporations that sustained several manufacturing innovations. It’s ok to trim the flab, but don’t chop off the muscle that holds it together.
This outlook may not be very popular with the 260,000 staff members in 140 countries. They like to earn a paycheck, too.Just sayin’
I am heartened by Bill Gates’ & Warren Buffet’s attention to the improvement of American education.
If our best and brightest can find ways to lift us up rather than invent better financial “tricks & traps”, our future will be bright indeed.
I’m not sure what I think about this, but to say that Citi is past its prime is kind of meaningless. They are a huge bank that makes lots and lots of loans to consumers and business. That may be boring compared to, say, Google, but it’s a hugely important component of the economy.
Further, banking is heavily regulated, especially compared to companies like Google. So it makes sense to value someone who understands the mechanisms of power like Orszag.
I mean, seriously. Does Kwak think Orszag can bring as much value to a nonprofit or struggling manufacturer? Those are likely very boring to a guy who’s used to having purview over litterally trillions of dollars.
"They are a huge bank that makes lots and lots of loans to consumers and
business." – Wouldn't it be nice if that's all they did? 🙂
This article runs along the same lines as what Kwak says: http://chronicle.com/article/What-Are-You-Going-to-Do-With/124651/
And there’s another problem. Maybe you never really wanted to be a cardiac surgeon in the first place. It just kind of happened. It’s easy, the way the system works, to simply go with the flow. I don’t mean the work is easy, but the choices are easy. Or rather, the choices sort of make themselves. You go to a place like Stanford because that’s what smart kids do. You go to medical school because it’s prestigious. You specialize in cardiology because it’s lucrative. You do the things that reap the rewards, that make your parents proud, and your teachers pleased, and your friends impressed. From the time you started high school and maybe even junior high, your whole goal was to get into the best college you could, and so now you naturally think about your life in terms of “getting into” whatever’s next. “Getting into” is validation; “getting into” is victory. Stanford, then Johns Hopkins medical school, then a residency at the University of San Francisco, and so forth. Or Michigan Law School, or Goldman Sachs, or McKinsey, or whatever. You take it one step at a time, and the next step always seems to be inevitable.
More relevant paragraphs here: http://bit.ly/fUuqMW
Valid point.. But minus the leverage, the funds available for making loans could also be a lot less and the cost of such loans could also have been a lot more for the borrowers.
You hit the nail on the head. 1/3 of MIT gradutes go into finance.
Personally, I reject the notion that these so called “educational elites” are helplessly following social trends (e.g., all the cool kids go to Harvard Business School!)
I don’t think we can condemn people for going after “typical” elite jobs in finance so easily either. Our country needs smart people in finance, just as we need smart folks in medicine, the non-profit community, and academia.
One commenter posted a quote about great minds “lifting us up,” and making us greater as a society. As a recent college graduate, I too would like to help the world. That being said, I don’t see a job posting for this, and the path to get there seems obscured by all that I don’t know and can’t predict.
Finally, isn’t it possible that Peter Orszag may simply be at the stage of his career where he would rather be the head of a massive company (with not-insubstantial economic influence, I might add) than playing with NGO’s? Can we judge him so easily?
Ben, as a current Yale undergrad set to sell myself out in the short-term, I have a lot of experience seeing my peers follow this kind of path. I think the biggest problem is not that people are taking these paths-of-least-resistance, but that they do so without first reflecting on their choices and asking what will allow them to feel like complete humans and really self-actualize.