When Kevin Roose first met Samson White and Jeremy Miller-Reed, they were ambitious, fresh-faced college graduates from Princeton and Columbia who had just landed prestigious jobs as sales and trading analysts at Goldman Sachs. Armed with privileged backgrounds, they were looking to impress their bosses and cultivate skills that they could leverage in any industry. Their pursuit of Wall Street success got off to a flying start—but within a year, they were both floundering, suffering existential crises, escaping into shroom-induced hallucinations, and finding comfort in “countdown clocks” that ticked down how much time was left in their stints at Goldman.
“[Y]ou’re not going to get there unless you stop making stupid mistakes,” Samson’s boss told him after a slipup involving an important project. Meanwhile, Jeremy was subjected to a screaming tirade from his managing director when he inadvertently left out a chart in a report he prepared. That night, Jeremy went up to the roof of his apartment building, “lit up a joint, and broke down.” With rain pouring down his head and “tears streaming down his face,” he had hit his first of many breaking points: “I can’t do this anymore,” he thought. “No one deserves to be treated like this.”
Little did they know when they first started that there were few lines their bosses weren’t willing to cross, no baseline protocol for workplace interactions. At a moment’s notice, a string of invectives and personal attacks could be leveled at you in front of your entire group—all for a typo. This surreal mismatch between action and punishment—the subjection to “random freak-outs and blow-ups” for minor offenses—undermined the very foundation of their workplace, opening every interaction to confidence-sapping suspicion. It is no surprise that both Samson and Jeremy spiraled into depression and quoted endlessly from The Shawshank Redemption and Harry Potter movies as they fantasized about escaping the prison of Wall Street (which they dubbed Azkaban).
These are the kinds of stories that punctuate Kevin Roose’s Young Money, which follows the lives of eight young Wall Street recruits over the course of three years, interweaving their experiences with larger insights into the financial industry. Before their descent into disillusionment, Samson and Jeremy viewed themselves as champions of Wall Street’s goals and practices. Samson started out passionately defending Goldman Sachs’s mortgage trading desk to his own mother.
Jeremy’s answer to friends’ skeptical queries was that “there was a lot of economic value” on his commodities trading desk. Of course, this rationale began to sound thin a few months into the job, as he heard from associates and bosses that he should not be motivated by such factors as productivity or the larger socioeconomic good, which they saw as mere distractions. In fact, his group head warned him: “[I]f money is not your main concern here, you should leave.”
In more ways than one, Young Money reminded me of Liquidated, my own ethnography of Wall Street that came out in 2009. Although the impetus for my research was to make sense of how and why Wall Street helped to catalyze and justify massive restructuring and downsizing throughout corporate America from the 1980s through the 2000s, I realized that in order to understand how Wall Streeters did what they did—how short-term shareholder primacy took hold—I first had to examine these investment bankers and their cosmologies.
To become a Wall Street financier or a corporate executive at a Fortune 500 company, one must acquire a certain kind of predisposition and worldview. While explanations of Wall Street culture often gravitate toward factors like self-selection, Roose and I both demonstrate that if one investigates an early enough part of the pipeline to Wall Street—in particular, elite universities and the training of young recruits—one can witness pronounced changes in how people think and behave as they become immersed in the culture.
According to my observations, analysts who avoid Samson-and-Jeremy-style meltdowns begin, within just a few months, to think of themselves as the smartest guys in the room, a separate class of rarified workers in stark contrast to run-of-the-mill nine-to-five employees. Because one of the perks of working at financial institutions is the ability to travel and move through society with ease, many young recruits begin to snap at everyday inconveniences like long lines, wait times, and slow service. The ramifications include not only social distance from the riffraff, but a presumption that their newfound superiority demands special attention and deference. Meanwhile, in the office, they are immersed in a professional financial culture practiced in the arts of interpreting financial numbers, conjuring (or bluffing) balance-sheet growth, and projecting authority.
By focusing on values, moralities, and practices, I sought to understand the process by which the Wall Street ethos seeped into and was emulated by other industries—a crucial development in the financialization of the economy. What I found was that the financial sector’s particular ethics and practices were often obscured by taken-for-granted “marketspeak.” In other words, although “financial culture” is very much a construction—formed by institutional contexts, university pedigrees, and relationships with market actors—it is often mistaken for or conflated with “the market” itself. Wall Street’s specific local culture has come to be understood as simply the way the world is, the way the economy “naturally” works. Needless to say, this does not encourage introspection on Wall Street.
Young Money gets at this ingrained ethos by focusing on young analysts new to finance, who are placed into two-year positions. That built-in expiration date feeds into the intensity and insecurity of their work, not to mention the potential for exploitation. Once analysts are “trained,” so the thinking goes, they obtain a cultural and economic cachet that they can parlay into admission at elite business schools. They may then return to finance at a more senior level, or go into related industries such as private equity or hedge funds. By exploring the processes of socialization, Roose challenges the hackneyed “few bad apples” or “greed-as-human-nature” explanations for Wall Street’s behavior, which can result in absolving the larger institutional culture. He offers a more systemic look at what many Wall Streeters are learning about their role in the world and how they come to believe that they are deserving of their place in it.
Roose doesn’t just track his eight subjects during their stints on the Street. For good measure, he also indulges in a bit of undercover journalism, crashing an exclusive induction ceremony to Wall Street’s elite secret society, Kappa Beta Phi, which only the most powerful financiers are invited to join. Having dusted off an old tuxedo and walked with conviction straight into the St. Regis Hotel, Roose witnesses how the top .01 percent “laugh[ed] off the entire financial crisis in private.” Surprised by his ability to get in unnoticed (as a young, clean-cut white male, he blends in with the crowd), he spends much of his time trying not to get caught. While the nature of the covert operation limits his reporting, he listens to enough of the speeches and skits to find a common sentiment among those in the room: an absolute lack of remorse or recognition. As Roose says, it was as if the crisis “were a long-forgotten lark,” as if these executives saw “nothing morally wrong” with the role that Wall Street decision-makers played in “collectively wreck[ing] the global economy in 2008 and 2009…[which] resulted in the loss of hundreds of thousands of jobs, tore apart lives and families, and made billions of dollars in middle-class savings simply disappear.”
Roose gets thrown out of the bacchanal after he is caught attempting to record one of the outrageous skits on his phone. Reflecting on the spectacle, he concludes that the upper echelons of Wall Street have become “completely divorced from reality” in their inability to recognize their moral responsibility for instigating “real harm,” retreating instead to a “haughty, uncaring worldview” where they laugh and make light of their foibles. And he wonders what such an outlook portends for his young sources—many of whom had become his friends—and for the world at large.
Roose is right to recognize that Wall Street hyper-elitism is made, not born. But while he criticizes the upper echelons of Wall Street for their detachment from Main Street morality—or for lacking morality altogether—I wish he would have lingered longer on the subject. In my experience, Wall Street’s actions are based not so much on moral distance or immorality but rather on a different kind of morality, based on a different reality. And our criticisms will have more teeth if they are informed by Wall Street’s particular understanding of morality, rather than focusing only on how it emptily falls short of ours.
Wall Streeters are socialized into seeing themselves as smart and superior—better educated and harder-working than other people—and therefore as members of a wholly meritocratic culture. They are also socialized into a particular way of viewing the roles of corporations, government, and society. The prevailing beliefs are that corporations should be run solely for the (short-term) profits of shareholders, that corporations “belong” to their shareholders, that government and the economy are “separate” domains, and that regulators need to “get out of the way” to “let markets work”—except, of course, when they don’t.
Many of these ideas and imperatives have been shown to be myths. Corporate law has never required directors or executives to maximize shareholder value at the expense of all other constituents; shareholders do not “own” the entirety of the institution, but rather exchangeable residual claims that were created for tradability and liquidity in the secondary markets. Adherence to the Wall Street ethos has led to short-termism, extractive cost-cutting rather than investment in productivity, expedient restructurings, and the demise of an industrial (and public) commons. Over the past two decades, as these values have set in, research has found that American corporations and communities have now “lost or [are] in the process of losing the knowledge, skilled people, and supplier infrastructure” needed to maintain competitiveness, as Gary P. Pisano and Willy C. Shih write in the Harvard Business Review.
I raise these issues of meritocracy and ideology to demonstrate that Wall Street’s elite helped to crash the economy not because they are “distanced” from Main Street, but because they were morally empowered to do so. They believed—and continue to believe—that greed, short-termism, the constant buying and selling of companies, the circumvention of rules and regulations, and even inequality are all necessary evils, inescapable byproducts of a system geared for greater innovation, heightened competitiveness, and ever more efficient markets. They also believe—though oftentimes unconsciously—that they possess a brand of unassailable meritocratic credibility that makes them deserving “expert” advisers on the economy, no matter that their economic ideas and practices are so prone to failure, implosion, and contradiction.
On these questions of morality and meritocracy, Roose stays within the confines of received wisdom, though his insights and interventions are important. For example, reflecting on the moral compass of the young Wall Streeters, as opposed to senior executives who have “built a self-reinforcing moral framework that allowed them to feel no compunction whatsoever about working in finance,” Roose recalls something Jeremy once asked: “There’s kind of an inherent conflict between ethical business practice and fiduciary duty. As a person working for a public company, your duty is making money for your shareholders, but what if that means doing wrong?” Roose shares this important story to show how young analysts are much more “open” about their workplace doubts than senior executives, whose socialization has inured them to Wall Street’s transgressions. But Roose’s engagement with the young analysts does not quite go far enough. He takes their quandaries at face value and, in so doing, analyzes the symptoms of the problem without always getting at the underlying ethos and culture.
Roose devotes a substantial portion of Young Money to an examination of the elite universities that develop these budding capitalists. These campuses have become the training grounds for Wall Street—which raises the question of the obligation of our universities to serve a broader purpose. Roose’s critique of top universities focuses on their central role in equating success with a job on Wall Street and in establishing money and elite status as among the few acceptable measures of “making it” after college. In fact, he cautions that the current practice of “sending huge numbers of our most promising college graduates into finance”—who then internalize a financial ethos and “form an elite class that will go on to become influential in the top ranks of government, technology, and culture”—produces a “cultural contagion” by which “Wall Street’s culture” enters into “our national bloodstream” through its influential young recruits.
Roose’s focus on elite education as a finishing school for Wall Street, however, also invites us to question how business, finance, and economics are being taught in the first place. In fact, an important internal critique is brewing within universities, where many argue that the financial formulas passed on to MBA students and undergraduates are not simply acultural, neutral models enacted by rational actors, but value-laden programs designed with particular effects in mind. For example, Harvard Business School professors Clayton Christensen, Derek van Bever, and Gautam Mukunda (in separate papers) have recently asserted that financial education fixates on, in Christensen and van Bever’s words, the “efficiency of capital” and the speediness of returns, with little recognition that such an emphasis might actually undermine market innovation and building a long-term business. In other words, the investment metrics themselves—designed by financiers and financial economists—promote companies with the most returns on the least assets over the shortest amount of time. This approach misleads students and practitioners into assuming that they are abiding by their fiduciary duty when in fact they are using tools that essentially judge the long-term perspective as irrational and inefficient.
Indeed, we should not relegate a serious rethinking of values and socioeconomic consequences to largely ignored “ethics” classes. It’s critical that these institutions teach students what finance has wrought and how finance can serve a beneficial social function by enhancing the economy and increasing employment with long-term investments—that is, how finance can actually become what finance imagines itself to be. As it currently stands, there exists a problematic relationship between finance as it is taught and finance as it is practiced. The actual effects of the financial sector on society include the staggering transfer of wealth to financial intermediaries and corporate executives; the leveraging of financial products for unsustainable profits; the outsourcing of risk to the public; the capture of previously untapped income streams (such as mortgages) for speculation; the exacerbation of knowledge gaps in the market; and the prominence of “insider” market information. While finance undoubtedly achieves some of its ostensible goals—“making markets,” collecting savings for investment purposes, increasing retirement portfolios (though in highly volatile and unstable ways) for the upper-middle class—the lessons of 2008 have amply demonstrated that financial institutions take advantage of the commons to line their own pockets and create inefficiencies and problems that could lead to future crisis.
There is reason for hope by the end of Roose’s book. As Roose concludes, many of the biggest banks have been “knocked from [their] pedestal,” no longer immune from critique or assured of a monopoly of young talent from elite universities. But our problems have by no means been solved. Wall Street—and Wall Street culture—was by and large bailed out, and its powerful influence over our larger economy has barely waned.
In a sense, Roose’s work—in line with Occupy Wall Street and the myriad other interventions and analyses in the wake of 2008—shows the necessity of reframing the role of finance in society. Over the past 30 years, we have outsourced our safety net, our retirement plans, the funding of public projects, and even government itself to the financial markets. The more the world bought into Wall Street, the more leverage Wall Street had to demand subsidies and advantages. Our complicity in these developments—the higher the Dow went, the cushier our imagined retirement became—hinders our ability to critique and reform Wall Street. What cushioned Wall Street’s hard landing after 2008 was not the bankers’ much-touted forecasting and risk-management skills but the deliberate tethering of their fortunes to those of the global economy so that they could command state support and bailouts.
It is in this light that the much-discussed phenomena of privatized gains and socialized losses make sense. It is because of protection from the consequences of their actions that Wall Street financiers and economists came to believe that they had moved beyond boom and bust, that they had outsmarted crisis. What they did not see was that they themselves were seduced by their own practices, and that they held many of the toxic instruments they peddled to others while claiming that their risk exposure was zero, or at least adequately hedged. When unsustainable practices imploded, they took down the economy with them.
A piecemeal approach to “hyper-financialization” will not solve this systemic problem. At the very least, we need root-and-branch reform, perhaps beginning on elite campuses as Roose suggests, to ensure that young recruits into the world of finance are equipped with a much broader ethical and social outlook. We shouldn’t just throw them—and our economy—to the wolves of Wall Street.