Wall Street’s Loss Is the Economy’s Gain
Silicon Valley just poached one of the most powerful women on Wall Street, said Neil Irwin, and I, for one, couldn’t be happier. That Ruth Porat, the chief financial officer of Morgan Stanley, would jump ship for Google isn’t all that surprising; she’ll oversee finances for “one of the world’s most valuable and most innovative companies,” not to mention “the weather is far better in Mountain View, Calif., than in New York.” What’s more interesting to me is the trend line: “Thousands of less famous names” are increasingly deciding that “technology offers a more compelling opportunity than banking.”
In 2008, 45 percent of Harvard Business School graduates “went into financial services, versus 7 percent into technology.” By 2014, it was 33 percent banking, 17 percent tech. Finance “exists to channel capital effectively from savers to investment,” and as vital as that role is, “it’s essentially a back-office function” for the economy as a whole, akin to human resources or “the janitorial service that keeps your office clean.” That’s why an inflated financial sector “actually reduces the growth rate of an economy.” Any sign that we’re funneling more top talent into industries that create the “goods and services people use” is nothing but promising.
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