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Kai Ryssdal: While Wall Street waits to see what its regulatory fate is at the hands of Congress and the president, there are thousands of brand new college graduates out there with a stake in the Street’s future. The big money that can be had in finance attracts some of the brightest minds. And when financial services were helping to drive the economy, sending the cream of the academic crop to Wall Street seemed to make sense. After the last few years of financial crisis, though, some people are asking whether it’s worth it for the graduates and for the country.
Marketplace’s Jeremy Hobson took a trip up the Charles River in Cambridge, Mass., looking for some answers.
JEREMY HOBSON: It’s a crisp spring evening on Harvard’s campus. Students are filing into those infamous brick buildings for final exams and study sessions.
Many seniors will soon be exchanging the ivory tower for a glass one, and it’s likely to overlook the Hudson river, rather than the Charles.
Hobson: When you came in here as a freshman, what was your ideal career down the road?
COLIN Motley: I think like a lot of kids at Harvard, embarrassingly, my goal was to be president some day.
Instead, Colin Motley will be heading to a well-known private equity firm.
MOTLEY: I like to believe that money didn’t have a lot to do with it, but the paycheck, you can’t get away from. You need to eat, you need to live somewhere and a lot of times, being in an exciting place like Boston or New York is expensive. So it is important to be able to afford somewhere to live.
Tejas Sathian was enchanted with a career on the Street after an internship at an investment bank. He’ll be heading back to the same bank shortly after graduation.
TEJAS SATHIAN: It’s something that can be very difficult to resist once you’re there, but I think the fact that it pays well keeps a lot of very smart people in an industry that challenges them, and I think as we’ve seen from this crisis that finance has an important role in the economy, and I think it’s important that smart people get there with the right perspectives to make sure they’re doing well for the American economy rather than just seeking profits.
But if they’re doing more than just seeking profits, where are the results? What’s the country getting out of all these high-paid, well-dressed bankers and traders?
Maybe not as much as we could be, according to Harvard economist Kenneth Rogoff.
KENNETH Rogoff: For the past many years, a disproportionate share of students have been taking jobs on Wall Street. Far, far more than was the case 15 years ago, even 10 years ago.
Hobson: And are these students who you could imagine taking a totally different career path and using their skills in a completely different way?
Rogoff: Well absolutely, I think that’s a concern that people across the spectrum of education have.
But many of the students I talked to say Wall Street is just the beginning for them. It’ll be a learning opportunity, and it’ll make grad school affordable.
Then, they can take their new skills crafting derivatives and brokering deals elsewhere.
Vikas Lonakadi will start a job at a major investment back this fall.
VIKAS LONAKADI: You know on Wall Street, there’s a significant number of people who go from Wall Street or from the business world off to non-profit organizations or in government or other institutions like that, so I definitely see myself as being one of those people in the long term.
Lonakadi makes no apologies for his chosen starting point.
He sees Wall Street as a job creator and says there’s no greater contribution a person can make to society than to help create jobs.
LONAKADI: I think it’s unarguable that there needs to be a change in the way people on Wall Street get paid, but the function that Wall Street provides is enormously important to society. I think that’s just demonstrated by the fact that when Wall Street stopped working, the economy stopped working.
Professor Rogoff buys that to a point. The economist in him wants to believe that all those Harvard students are heading to the Street because the free market is offering the best rewards for the most important jobs.
ROGOFF: You know, I think we can point at some real examples where the U.S. has a great financing system for venture capital. We’re willing to take a flyer on people in ways that countries with less sophisticated financial systems don’t. But there’s an aspect to what happens on Wall Street that seems to have nothing to do with that, where they’re just trading exchange rates and interest rates with each other, really making money off their clients.
And all the while, denying us a potential mathematician or physicist, maybe even a president.
Then again, presidents only make $400,000 a year.
In Cambridge, Mass., I’m Jeremy Hobson for Marketplace.