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Paul Krugman points out what too few have been saying : that Madoff’s deception and decade-long shell game is hardly different from what the entire industry has become — specifically that the 3% growth in the proportion of GDP taken up by ‘financial services’ over the past generation may be fictional, supported temporarily by the same forces that support any Ponzi scheme.
He has one particularly poignant comment about the damage done to society (OK, he’s stops patriotically at nation) by this undue emphasis:
Meanwhile, how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?
I have often been disappointed to see classmates with extraordinary talent turn to modern short-term finance and corporate law, jobs that leave no lasting foundation or failsafe for the future discoveries and recoveries of our people. Note my qualification — taken as science and art, as instruments of long-term planning, finance and law are integral to robust, efficient, joyful society. But as practiced today, both use elaborate rules of thumb, accumulated over time like so many superstitions, supported by a scattering of deep principles yet without a natural framework.
And the fallacy that high-paying jobs are proportionately valuable to their community (integral to efficient markets, necessary for successful capitalism and corporate ecosystems, for the very god progress himself) is common in the industry. Of course we should all be unsatisfied that this is a fallacy, and who better than finance theorists and economists to find a way to resolve that gap? But this is not their current purview.
If we want our best and brightest to work on “science, public service, and just about everything else“, we must provide better, clearer, comprehensive prioritization of what is important (whoever we are). So how about it, Paul? It will take more than two people, but it will certainly take more than the occasional barb from the sidelines.
Let me not leave out medical practice, that third siren luring the best and brightest of all backgrounds and natural talents into its grasp. I will say three things for it: where it has been successful, modern medical care is almost miraculous; reverence for the medical profession has held societies in good stead through some of their darkest times; and in my own family tradition, the only decent professions are those that heal and those that teach.
Nevertheless, medicine arose palpably out of millennia of superstition*, some of it still visible in modern practice; and the epidemic misuse of statistics in medical publications and research is worthy of the scorn of economists. And I was similarly pained when a friend deeply skilled in math, physics, and computing chose to enter medicine, and two years later was working on a paper she knew to be unsupported by its data.
* To be clear : superstitions may be correct, though as they are rarely stated with precision I should say they may be predictively useful. However, they are distinguished by a belief that is absolute and not to be tested, and passed on with a zeal that disparages doubt.
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