It’s so hard to get kids into a good kindergarten these days. So complains the wife of the villainous Gordon Gekko, played by Sean Young, in the iconic 1987 film, Wall Street. She wasn’t kidding. It’s supposedly as tough to secure a spot at one of Manhattan’s most exclusive private pre-schools as at an Ivy League college. You’re best hiring a consultant to walk you through the process. Prepping your child for the Educational Records Bureau test, a sort of SAT for tykes, is also advisable.
Don’t think it gets any easier the older your kids get. Judith Warner, author of Perfect Madness: Motherhood in the Age of Anxiety,” chronicles the efforts of driven parents, some of whom put aside their own careers, to ensure their budding Messiahs reach the overachiever’s Promised Land. “One of my [12-year old] daughter’s classmates has a pilot’s license,” she observes in the New York Times.
Other parents build their children’s credentials by sending them on archeological digs in the Negev or to Guatemala to teach English to underprivileged children. All this may sound excessive but it’s a brutally competitive world. Being a top student isn’t always enough; high school valedictorians are routinely rejected from top universities. So there’s good reason to lament how hard it is to get junior into Dalton or Horace Mann or a handful of other exclusive preschools charging $25,000-plus for a year’s tuition. Getting ahead requires starting early.
Of course, most families don’t have the wherewithal to participate in this cutthroat race to the top, as they are preoccupied with preventing their dramatic fall to the bottom. One-third of Americans raised in the middle class fall from that status as adults according to a Pew study. But for the haves, the frothy layer of cream in a saucer of souring milk, this is the age of endless possibility. Few in history have had more opportunity.
So where are the talents of this gloriously pampered and prepared cohort being directed? To curing disease, writing great literature, erecting monumental architecture, or discovering the cosmos? Some pursue these noble ends but many migrate to Wall Street: as late as 2007, nearly half of Harvard’s graduating class went into finance or financial sector-related consulting, a trend mimicked at other elite schools filled with those long-groomed for greatness.
The siren’s call of Wall Street should be of concern, though not because the financial sector is inherently rotten. It’s not. Financial institutions help efficiently channel capital to productive investments, thereby creating wealth (and jobs)—in theory, anyway. The problem is that much of Wall Street’s profits now derive from non-productive activities, such as high-speed trading that takes advantage of small price differentials across markets, providing no net benefit to society. Former Federal Reserve chairman Paul Volcker’s observation that the only useful recent financial innovation in the last few decades is the automated teller machine may be off the mark but not by much.
Finance’s growing share of the economic pie—it has grown from four to eight percent of GDP over the past decades—has also helped exacerbate income inequality, which fuels social discord and, according to a study by the International Monetary Fund, smothers economic growth. Thus, Wall Street is not just unproductive but destructive, too. Yet finance is where much of the Genius Generation chooses to reside, prompting one Harvard economist to note, “Incredibly talented people are wasting their talent on something that is essentially a zero-sum game.”
Wall Street’s implosion reduced by more than half its share of job-seeking graduates from top Ivy League schools, but the numbers may be rising again. Those who Theodore Roosevelt once called the “malefactors of great wealth” ensured, through their diligent glad-handing in Washington, that corporate America, Wall Street included, escaped unscathed from its greed-induced collapse. Happy days are here again for the unpunished and well-heeled.
Finance’s renaissance is bad news for many reasons. One is the brain drain from productive to largely non-productive industries, which undermines the nation’s competitiveness. But Wall Street’s miraculous revival isn’t even good for Wall Street since unregulated markets, however gloriously profitable in the short-run, are ultimately self-defeating. Not that this will deter the Genius Generation. The promise of fortune is too irresistible. Exclusive preschools may even begin offering courses in investment banking.