By IRA STOLL, Special to the Sun | June 27, 2016
The funniest political moment of the past month came in President Obama’s interview with journalists from Bloomberg News and Bloomberg Businessweek. Bloomberg rendered the transcript of it like this:
So it’s unlikely, then, that you’ll go to work on Wall Street?
It is indeed a humorous exchange, though perhaps not for exactly the reason that President Obama laughed. The funny thing, at least to me, was that Mr. Obama didn’t rule it out. In the rest of the interview, Mr. Obama tried to distinguish between the financial sector and other parts of the economy that he characterized implicitly as either more virtuous or more productive.
“Banking profits are not as outsized as they were, but I don’t consider that a bad thing, and I think most Americans don’t either,” the president said. “If you start getting to the point where 40 percent of the economy is taken up by the financial sector and that our best and brightest are going into financial work as opposed to engineering or computer science, then we could actually lose our competitive edge over time.”
When the Bloomberg journalists asked the president what industries he would think about going into, Mr. Obama talked Silicon Valley instead of Wall Street. “Just to bring things full circle about innovation — the conversations I have with Silicon Valley and with venture capital pull together my interests in science and organization in a way I find really satisfying,” the president said, mentioning “precision medicine.”
Mr. Obama’s concern about properly allocating talent is touching, but, as his own example shows, misplaced. If anything, top talent these days is flowing away from Wall Street and toward technology. Ruth Porat left her perch at Morgan Stanley to become chief financial officer of Alphabet, as Google’s parent company is now known. Jeffrey Bezos left the D.E. Shaw hedge fund to start Amazon.com.
Anyway, the Wall Street-Silicon Valley dichotomy is in many ways a false one.
It’s false morally to suggest that what Silicon Valley does is somehow more virtuous than what Wall Street does. Is some programmer or product manager working on some violent video game or on a messaging app that lets teenagers spread nasty gossip or indecent photographs doing more good in the world than a portfolio manager who is making a secure retirement possible for his clients?
As a practical matter, the president erred by ignoring the overlap between the two sectors. Bloomberg itself is a fine example — it’s a technology company that employs computer scientists and engineers and also part of the financial sector because a lot of its customers are financial firms. Plenty of other companies also occupy the terrain between tech and finance. What about the computer guys who make sure your bank account or brokerage account doesn’t get hacked? There’s a whole rapidly growing “FinTech” sector at the intersection of banking and technology.
Mr. Obama suggests that “40 percent” of the economy in the financial sector, however that is defined, is too much, but the Bloomberg guys didn’t ask him the natural follow-up questions. What’s the right percentage? Thirty-nine percent? Thirty-eight and a half percent? How can Mr. Obama know so confidently? Why would anyone want the president to set and manage these percentages rather than allowing the sizes of sectors to be determined organically by the choices of free individuals?
Mr. Obama will be out of office soon enough. Unfortunately, both of the major party presidential candidates vying to succeed him seem determined to follow in his Wall Street-bashing footsteps, at least rhetorically. Donald Trump has denounced Hillary Clinton as being “totally owned by Wall Street.”
“Hillary Clinton is the enemy of working people and is the best friend Wall Street ever had,” Mr. Trump said in a statement last week, as if no one on Wall Street is a working person.
Mrs. Clinton, campaigning last week in Raleigh, North Carolina, denounced “Wall Street’s obsession with short-term share prices and quarterly earnings.” She complained that government “let Wall Street take big risks with unregulated financial activities.” She promised “accountability, so Wall Street can never wreck Main Street again.”
Somehow I doubt the talk will hurt the candidates’ prospects for post-presidential employment. Say what you will about Wall Street or Silicon Valley, either place is at least capable of finding work for recovering politicians in capacities where they are likely to do less harm than in the White House.
Mr. Stoll is editor of FutureOfCapitalism.com.