HAPPY NEW YEAR

A wise fellow recently gave me his explanation for the financial crisis that has created havoc in the the Tiger Economies, Japan in the last decade followed by USA, Europe and now in what they vehemently called PIGS - Portugal, Italy, Greece and Spain, that "too many highly intelligent graduates went to work in the investment banks on Wall Street and in the City of skyscrapers."

I know what he means: such characters were too clever by half, pushing for a zero risk job for a pocket full of roses than poises. Financial meltdown witnessed all around as a result of creativeness in securitization, derivatives, swaps and a plethora of financial instruments to such excess that they almost destroyed capitalism. Reason – Adventures in the financial markets from the young and sharp brains.

All that concentrated brainpower focused on one thing: making as much money as they could as quickly as possible.

The legions of high-flyers in Engineering education storm for MBAs and end up queuing to get jobs, have worked out a basic truth: the closer you are to the money, the easier it is to get rich. They are right, of course. Doing tedious things such as inventing real products, manufacturing goods and providing genuine services for a profit is such a hard work and takes time. It requires one to have exceptionally superior skillsets to observe, attract, dwell and succeed on an opportunity. This is for the individuals.

Companies on the other hand have to travel to savage places with industrial estates. Whereas if you just manipulate vast sums of money – via shares, bonds, options or even more complicated and obscure securities – you just have to shave off a tiny fraction from each trade, and pretty soon you’re raking in billions. Otherwise, why does Heroic Hero Groups has to be so stupid to bet upon 30 Crore of its equities on a fraudster? Easy money, Quick money and Money breeding more Money being their mantra.

I hope ordinary citizens like you and me do not confuse such ‘would-be’ financial geniuses with real entrepreneurs. (I am sorry, if you think I am comparing Warren Buffet to Bill Gates. It is not  )

Why do not these B.Es and MBAs confess at an alumni meet that they had a dream, a desire to serve customers, see an idea become tangible, beat the competition and myriad other reasons. They are passionate and proud about what they do and – profit is just a byproduct; they gain their fulfillment by seeing their creation grow.
I am not in for blind advocacy of entrepreneurship either.
If you want to be an ambitious employee in the any business or money business, how else do you measure success except with money?
Roles, Responsibilities, Innovation, Passion, Efficiency, Creativity are the HR jargons then fills the box. For all of these there could be many ways to define in the books. But out of my experience I would say, “Just do it” – Nike’s way. () In the process, enjoy doing it in different ways to figure out the best way.
I remember a Banker in 1980s, my school days or the movies of that time typically stereotyped with 9 to 5 job, a white safari suit, a scooter and a suitcase. Working with the bank was so boring I guess. I suspect quite a few bankers are frustrated in their jobs and I suspect them of being almost ashamed of what they do; they comfort themselves with better salaries, housing quarters and guesthouses, luxurious holidays claimable as LTA annually. This is the compensation for working in giant financial powerhouse, highly regulated corporations that have no end-product except money.

Then comes the story of the fall of Merrill Lynch, obliteration of AIG, and Lehmans filing for bankruptcy - it was taxpayers who had to fork out hundreds of billions to deal with the mess. The mess created in Wall Street hit the Nariman Point in 24 hours and the pain walks through our main door in terms of Job losses, Salary cuts, Increment cuts all of them very suddenly. (Along with them the insurance companies ads creates flutters in the stomach)

Banks should not be left under the supervision of gunslingers whose sole objective is money; they should be managed by conservative stewards who are prudent rather than adventurous. This is a different topic altogether and as I write these lines, thoughts like tornadoes hitting me.
Secretly, I’m sure many of the highly educated, would rather be spending their career in something more constructive – perhaps making bridges or cars or writing software. But, sadly, post 2000 era real engineering does not pay as good as financial engineering.
We should all hope that the pendulum has now swung away from high finance, and that in the present day campus interviews after a decade, brightest degree holders do not want to apprentice at Goldman Sachs or HSBC securities.

No doubt the rewards are still better there, but the reputation of the Masters of the Universe is not as glorious as it was.
Of course we still need banks and stock markets and the other elements of the financial system. I don’t want to demonize the Nariman Point or Wall Street.
But we must ensure that not too many of the best young talents end up there. This would be a welcome sign when a wholesale rebalancing towards other occupations – mainstream industry, in particular –is taken by the management of our education system.