Rajeshwar: Keep the mob from the bankers

Of all the calumnies to emerge from this financial crisis, the worst has been the condemnation of Wall Street bankers, traders and speculators as overpaid parasites who contribute nothing to society. The mob says these men and women, who have worked hard their entire lives, deserve nothing at all, simply because it does not approve of their career choice. Such a system is madness and debases the fundamental nature of the American Dream.

The American Dream is the pursuit of happiness and success. Why blame AIG executives for being paid so highly when we would all gladly accept any bonus our employer paid us? It is not human nature that these employees with children, families and financial obligations would turn down money handed to them by their bosses, nor should we expect them to.

Workers are not paid a wage based on their value to society but based on their value to their employer. Last time I checked, Urban Outfitters sold “packaged air” (an empty box) as a gag gift. The employees who thought up such a concept should be rewarded by their employer for bringing in the profits, although they contributed nothing to the overall societal good. Professional athletes earn salaries far in excess of their societal contribution. Alex Rodriguez will earn $27.5 million this year; good for him. I might not have paid him as much, but I respect his ability to convince the Yankees he’s worth it.

But the angry mob does not understand what exactly happens on Wall Street. It’s easy to understand that Alex Rodriguez can hit a baseball in ways no other American can. It’s harder for those uninitiated in the world of finance to understand that behind the complex financial derivatives and securitized mortgages, there’s real work to be done, and it’s not at all easy.

In many ways, the financial sector epitomizes the American Dream. It is notoriously meritocratic, with first-years working long hours to impress their bosses and earn their end-of-year bonuses. America’s recent dominance in finance has been a pillar of our continuing position as the lone world superpower at a time when our manufacturing industries are being exported to countries that will do the job for less.

Most importantly, finance is a fiercely competitive industry. Star traders and executives do not make their salaries because they are greedy but because each firm has a multitude of competitors. If Goldman does not pay enough, its employees might defect to JP Morgan instead. It’s for precisely this reason that the Yale Corporation pays David Swensen and his deputy, Dean Takahashi, more than double what it pays President Levin. Swensen is astonishingly good at his job, and he could earn substantially more money on Wall Street. Strong competition is at the heart of the capitalist system that makes possible the American Dream.

The difficulty of investing aside, the social benefits of Wall Street are substantial. When Americans put savings into mutual funds and depend on their 401(k)s for retirement, they are trusting their savings in the hands of highly trained and highly paid investment professionals. Wall Street has fueled and fed the American Dream for decades. The current turbulence in the market indicates in part a failure of some Wall Street institutions to understand and properly quantify the risks they were taking. But in no way should it reflect negatively on the existence of these firms or the performance of the vast majority of their employees.

This current madness of mobs threatens the prosperity promised to us by the American Dream. There should be no ceiling on this prosperity, and no one should be excluded from it. Wall Street has become the villain through the misguided envy of Americans.

For years, Yalies have referred to entering the finance world as “selling your soul.” But the American Dream has always involved the pursuit of happiness, which necessarily includes Freedom from Want. No one should be reviled for choosing a financially stable lifestyle; such people should not be scapegoated for the financial catastrophes that have befallen us.

The mistakes of Wall Street — the failure to acknowledge risk — are mistakes central to our humanity. The failure to acknowledge risk is not Wall Street’s failure alone. Millions of Americans thought their home values would rise eternally. Millions of Americans underestimated the perils of credit card debt, and millions of Americans overestimated their job security. The men and women of Wall Street do not deserve the vile contempt and hatred spewed at them. The American Dream should not die here.

Julian Rajeshwar is a junior in Jonathan Edwards College.

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