“Part of the charm of Wall Street and what scares most reasonable people away is that it is as close to a meritocracy as exists on this Earth. It’s dog eat dog, sink or swim, you do a trade and it works, you’re a hero! Enlist some clients, you’re a hitter! The flip side of course is what makes Wall Street so dangerous. You lose money more than once and you’re out of a job. Just like that- gone. There’s no tenure on Wall Street. No job security. Ten and twenty year careers end in a flash. That’s one reason why everyone is paid so well. Think of it as combat pay. They make your life miserable hoping you’ll quit before they break you or hoping they break you before you lose money for the firm. It’s not the post office. It’s trial by fire. You would think that would make the entire work force afraid to do anything for fear of being tossed out on their can, back into the cruel cruel averagely paid world. But a meritocracy works in the opposite way. You have wicked smart people trying to prove to each other that they are smarter than everyone else. Unlike acing a chemistry final or even nailing your SAT test, the score is kept with real money. How much of the bonus pool you command for your do or die heroics. Lehman Brothers was a classic Wall Street meritocracy. They wanted to one up Goldman Sachs to win the meritocracy game and get paid in spades. ‘Let’s leverage this sucker up with mortgages. A trillion dollar balance sheet, hey if not us, who?’ When that trade went South, Lehman went bust. You lose money you’re out- good bye. Unless of course the government bails you out. To remit the next blow up, the G20 is trying to limit pay and banish risk. But no matter what bureaucrats do Wall Street’s meritocracy of getting paid will live on. They’re going to find their way around any new rules. The game might move to Hedge Funds or some other dark corner of the financial market. But no amount of reform is going to kill Wall Street’s animal instincts.” – Andy Kessler (Author & former hedge fund manager)
I listened to this piece on NPR’s Marketplace yesterday and found it cleverly entertaining and interesting, certainly based on a lot of truth. Wall Street is kind of a beast of it’s own that may never be tamed. ( If you wan to know more about meritocracy…http://en.wikipedia.org/wiki/Meritocracy )
