According to a spring 2008 survey in The Harvard Crimson of more than 600 seniors, 40 percent of these graduates will enter the finance or consulting industry. It is disappointing, and alarming, to see so many members of society with the most productive potential be lured into one of the least productive industries — an industry whose greatest contribution to society in the last decade is the creation of opaque financial loopholes. It seems quaint that the assets of the financial service sector comprise 64 percent of our country’s GDP without manufacturing, inventing, researching, designing or creating a single thing. Banking has become an industry that has deviated far from its initial socially valuable purpose — to provide loans to businesses — and has adopted new roles of cash carousels, magically creating money by simply moving it around. Take Citibank, for example. It now only earns 14 percent of its revenue through small business loans and consulting and 80 percent from trading securities. But Harvardians and alike are only being rational: Who can refuse a golden ticket to ludicrous signing bonuses and six figure salaries, especially after paying $50,000 a year of college tuition? The problem arises when our government attempts to regulate these run-away institutions. While our nation’s first-rate students have been lured onto Wall Street, their peers who scored lower on the curve in Economics 101 are in charge of curbing their greed. No wonder our economy spectacularly failed in 2008: We have put the sheep in charge of the wolves. And naturally, the wolves have duped the sheep using complex financial instruments like mortgage-backed securities and default credit swaps. Yet the problem extends to other parts of the economy. Wall Street has become a black hole that has sucked up our country’s collegiate talent. The offers from our country’s VIP jobs that the United States needs the most — the teachers, the doctors, the scientists, the public service workers, the civil servants, the engineers — cannot compete with those from the private financial sector. After all, when was the last time you met an Ivy Leaguer who aspires to become a government worker that wasn’t the president or a Supreme Court justice? It is a pity that the proposals attempting to limit the role of public sector unions have gained momentum, because our country needs the opposite. We need a substantial increase in the salaries and benefits of occupations that contribute societal value in order to compete with the siren calls of Goldman Sachs and J.P. Morgan. The precise reason why our graduates from the top schools decide to become bankers instead of teachers is that the teacher’s salary is pathetically paltry and his reputation in shambles. While they work 1080 hours each year, teachers are only compensated on average $43,633 after fifteen years and minimum training. The solution to our poor education system is not to stymie unions, but to listen to their calls for higher pay. Teacher unions may make it difficult to fire incompetent instructors, but their absence will also make it difficult to hire the competent ones. Unfortunately, what our country has done instead is enable a job culture that fosters this financial brain drain away from Main Street by quashing those who defend our V.I.P jobs and allow those on Wall Street to run free. Yet the solution is simple: salary reform. And we can see its remarkable effects by looking at the tiny, yet not-so-modest, country of Singapore, an economic oasis in a desert of poor nations. While mostly surrounded developing countries, the island has become an economic beacon for foreign investors, leading to a GDP per capita greater than that of the U.S. Last year, its economy grew by 14.7 percent and, despite having an unusual combination of a free market and an overbearing government, corruption remains largely a non-issue. Its education system is top notch as well, taking first and third place in science and math, respectively, according to the 2007 Trends in International Math and Science Survey, and beating the United States, which placed eleventh and ninth. Even China would be envious of this island country. But how is it possible?Because Singapore knows that it must adequately compensate its most important members of society. The prime minister of Singapore earns some $3,000,000 a year, and other members of the bureaucracy are paid just as generously. The system is purposely designed to compete with the salaries of private industries in order to save their most precious commodity — manpower — for their most important roles. That means that their smartest and brightest do not choose jobs in industries with little societal value. Rather, they choose jobs that allow them to become stakeholders in the future of their country — a concept that our economy has failed to capture. Just imagine our country’s V.I.P.s receiving compensation on par with an investment banker. Our schools would attract the top students at our best universities. Our Congressmen would be immune to private interests and lobbyists because money would no longer be a strong incentive. And those in charge of Wall Street would no longer be vulnerable to being outsmarted. The most important members of our country are those who are able to support it through production, not consumption. It is about time we begin to express our gratitude. Steven Zhang is a junior in the College of Arts and Sciences. He may be reached at [email protected] The Bigger Picture appears alternate Tuesdays this semester.
Original Author: Steven Zhang