Pass the buck

Duke, like many top universities, sometimes operates much like a factory: it inputs smart and well-intentioned kids, and churns out instruments for the Wall Street machine. Financial services and consulting have filled the first and second position for top employers of Duke grads for three of the past four years. In 2009, businesses in these sectors comprised almost half of all hirers. This editorial is the first in a two-part series that takes a critical look at the high volume of Duke students who pursue careers in finance and consulting. Today’s editorial assesses the opportunity cost of sending bright and motivated graduates to work on Wall Street, and tomorrow’s will examine the personal motivations that drive us to become investment bankers and consultants.

The unabated flow of Duke students into finance represents a lamentable waste of talent. A well-functioning economy requires a financial system to procure and allocate investment capital. But financial institutions’ swollen balance sheets often fail to accurately reflect the value they add to society, while more socially productive activities—like education or policy reform—are systematically undervalued. Indeed, trading in complex and risky financial instruments like collateralized debt obligations and credit default swaps raises profits and inflates paychecks, but it also spurs little growth and can place the entire economy at risk. Indeed, any argument for the value—economic or social—of the financial sector must rest on the ability of financial institutions to coordinate capital and foster innovative business ventures that produce wealth and create jobs. These arguments assume that the financial sector is only valuable insofar as it contributes to other more valuable areas.

Given the relative unproductiveness of the financial sector, graduates who pursue careers in finance or consulting sacrifice an opportunity to apply their unique intelligence and ingenuity to tackle the innumerable challenges we face as a country. Tacitly conceding the questionable value of the financial sector, many students view entering the world of finance as a stepping stone to a more socially benign career; they accept that Wall Street may place its own interests over those of the public, but justify a stint on the dark side by telling themselves that, after a few hefty paychecks, they will move back to Houston to teach middle-school history. It sounds nice, but the high-paying, status-elevating career path of finance has the tendency to entice and ensnare, making a cold-turkey exit next to impossible.

Entrepreneurial pursuits and careers in public service offer the most opportunity for graduates to do good. If more smart people pursue jobs oriented toward creating socially-valuable products and services or commit themselves to developing solutions to educational or environmental problems, society will improve in ways that trading in mortgage-backed securities will never achieve. We encourage students headed for Wall Street to stray from that tired road, but recognize the institutional, parental and social pressures that compel many to pursue careers in finance and consulting. Although these careers promise security, wealth and status, we believe that Duke students can do better. Those who choose another path have the power to improve society in lasting and meaningful ways. We hope that they will.

The editorial board did not reach quorum for this editorial.