Ambitious young people in search of their fortune once went into finance, then they tried tech, and now they’re looking for a new industry.
I remember the exact moment in 2007 when I knew the financial industry was headed for a reckoning. There was no data point that tipped me off, no great insight about the housing market. It was a conversation with a man who worked in finance. He had no real interest in his job and didn’t seem particularly knowledgeable or curious about financial markets; he had studied English in college. But he was making a lot of money, and he was the first person who told me about “the number.”
The number is the amount you need to earn before you turn 40 so you never have to work again. This man, who was about my age, was close to his number. The economist in me, who finds markets fascinating but was then a poor graduate student, saw this as a warning sign: If an industry is paying high salaries to people who aren’t great at what they do, then something is wrong. It is a bubble — a bubble in human capital.
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
Photo by Justin Sullivan/Getty Images