Thursday, May 12, 2011

Conservatives Should Hate Wall Street

Conservatives deeply resent the fact that they are more numerous than liberals in the general population but a small minority of several different elites. They mix denunciation of affirmative action with (successful) demands for affirmative action for conservatives. They suggest that this pattern is due to discrimination or possibly a conspiracy.

They refuse to consider the obvious explanation and the solution to their problem. The solution is to regulate finance so tightly that it isn't highly profitable. Their problem is that, when people decide what career to seek, the first decision is whether to go for the big bucks.

I'm so old that I remember when people tried very hard to get into Medical school to get the big bucks. This was terrible for patients, but seems appealingly naive. For decades it has been clear that one goes to Wall Street for the big bucks. I can remember an article in Business Week in the 80s which presented a few young MBAs as practically saints because they were going off work in management of manufacturing corporations instead of heading to Wall Street.

Everyone knows that this helps explain the shortage of conservatives in academics, and journalism. To aim for such a career is to accept a lower income than possible. That attracts people who consider going for the big bucks to be selling out.

At some level, if a lot of people go into business you just have to expect those who don't to be less pro-business than average. But it depends on the business. Wall Street gives huge rewards to people who can convince others that they are very smart -- it skims the cream. Many people who consider plain old business to be socially useful think that Wall Street is parasitic (I raise my hand).

Conservative's main problem is a shortage of smart conservatives working outside of Wall Street. Wall Street is their deadly enemy.

Now one hope for conservative intellectuals is that Finance is moving towards rewarding people who beat the market and not people who convince super rich people that they are smart -- hedge fund managers not managers of investment banks. This means that the reward comes from actual measured (mark to market with a short time horizon peso problematic) performance and not sucking up to rich people (including especially older investment bankers). Notably, Hedge fund managers donated to Democrats, at least until Democrats decided it was necessary to regulate them.

There is a similar dynamic among lawyers. The main way to go for the big bucks is be an associate for a high powered corporate law firm. Basically to work for clients with deep pockets. Top lawyers who don't want to do that tend to be left of center. Many of them end up in politics. Some become flamboyant trial lawyers who move to politics, at least until their mistresses get pregnant.

Of course there is a deeper problem. Conservative ideology is nonsense and it is hard for smart people to fail to notice.

I don't have a very high opinion of IQ tests, but I would be interested in IQ as a function of declared ideology. I assume this would reflect the effects of formal education on declared ideology and measured IQ. The causal path is conservatism leads to low spending on schools which leads to low measured IQ. I may be falling into the ecological fallacy better knows as the David Brooks fallacy, as I am thinking of average ideology and IQ by state (the differences in both are dramatic).

But I would be much more interested if the same comparison was made among elites. What do you think is the average IQ of Republican and Democratic Senators ? How about representatives.

You can probably do Presidents in your head. Hmm lets see Obama genius, Bush II idiot, Clinton genius, Bush I average, Reagan idiot, Carter somewhat above average, Ford idiot, Nixon smart, Johnson smart, Kennedy very smart. I'm sure this is not Wall Street and corporate law selection. I think it is the cult of Reagan which causes one of the Republican party's principles to be "ignorance is strength."

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