[burgers]

> Economics, conversely, is as popular as beer, topping all majors at Harvard, Dartmouth, Princeton and Penn. In what Deresiewicz calls “a stunning convergence,” it was the top major at 26 of the nation’s top 40 universities and colleges.

In a society that sets up severe and aggressive punishments for having less money than someone else, why would anyone go into any other field? Only the masochists and the selfless will be outside the world of finance soon.

[rayiner]

The majority of the Ivy league comes from one particular demographic: the upper middle class. These families might have an HHI of $100-500k; very comfortable, but not so much that the kids don't have to work for a living. There is a strong risk aversion in this demographic, because falling out of this class has really significant quality of life repercussions.

And it's not just the money. For ambitious kids, it's a fear of hitting artificial limits on career progression. Working your way up in a corporation isn't a common career trajectory anymore. Instead, companies hire executives from a particular track, which starts with an Ivy-league school, involves a stint at an investment bank or consulting firm, perhaps an Ivy-league MBA, and from then forward a series of management and executive positions.

The tech industry is somewhat of an exception to this rule, but only somewhat. Elon Musk has a bachelors degree in Economics from Penn's Wharton School (in addition to his degree in Physics); Peter Thiel majored in Philosophy at Stanford, and so went to law school like the other English/Philosophy majors, and then did a stint in investment banking.

And even in entrepreneurship, you'll spend a lot of your time pitching VC's, and guess what's the easiest way to become a VC: Ivy-league, stint at an investment bank or consulting company, then an MBA. If you as an entrepreneur have that same background, that removes one level of insulation between you and the people you need to fund your company.

Considering all of these things, if you're smart enough to get into an Ivy-leaguge school, why wouldn't you major in economics?

[foobarqux]

Thiel was a derivatives trader, not an investment banker.

[rayiner]

You're right, and it's relevant to the narrative. Thiel jumped into finance from a legal career, which can be difficult to do unless you capitalize on a market shift (e.g. bankruptcy lawyers jumping to distressed asset funds in the most recent recession). Derivatives was a growing area in the early 1990's, which presumably made it easier for him. Which was fortuitous, because since he didn't come from money, he might not have been in a position to start his first fund without his Wall Street connections.

This aspect of finance, the difficulty of getting into the field later on in one's career, is a major reason why so many Ivy-leaugers pursue it right out of school.

[foobarqux]

I agree it's relevant, but not because it supports the argument. While investment banking is, at least today, seen as prestigious and a pathway to executive management, trading is viewed as boarish and generally does not carry over to anything outside of trading. So Thiel may have gained access to capital from connections he made in finance but not substantial leadership-related prestige.

(Also I don't think jumping from super-elite-law to finance is particularly difficult, it seems pretty common).

[rayiner]

My point is that Thiel probably wouldn't have been able to raise a million dollars to start his own fund if he hadn't worked at Credit Suisse, and it wasn't a "gimme" for him to get that job having started outside of finance originally. That's relevant to any entrepreneurial Ivy-student who contemplates starting his career outside of finance or consulting.

[foobarqux]

I agree with you, I just wanted to make the important distinction between investment banking and trading careers, which are often conflated. The difference isn't whether trading is as hard to get into but what are the "exit ops" and how they compare to those in IB. Trading has few, investment banking has many, especially in business-analyst/management-track roles in industry. The upshot of trading is that it is potentially more lucrative.

[josephschmoe]

Engineers have better outcomes at the start of their career and have better odds of starting their own company successfully. If you're a good economist, you'll go into economics. If you're a great economist, you'll go into engineering.

[watwut]

Great economist would optimize the money at the start of their career? I would expect him to optimize lifetime earnings.

[j2kun]

How does this make any sense considering that most people don't choose a career in finance and get by without "severe and aggressive punishments"?

[burgers]

You may want to read what I wrote one more time. I did not say that those outside of finance deal with lack of food, safety and health. I stated that if one has less money than someone else, they are much more likely to have to deal with things like being assaulted or killed or going without enough to eat etc.

So it just seems obvious that if you don't want to deal with these punishments for finding yourself with less money than 50 to 60 percent of the population, you would go into finance as it gives you the best chances of having more money than most and therefore dealing with less, if any, of the punishments US society hands out for having less money than others.

[afafsd]

>I stated that if one has less money than someone else, they are much more likely to have to deal with things like being assaulted or killed or going without enough to eat etc.

So just to clarify, there's a lot of Harvard and Dartmouth graduates (in non-economics) going without enough to eat, are there?

[burgers]

Well, if you read the article, you would have read about two students, 1 went to Dartmouth and the other went to Yale. The former worked at a bar, if I remember correctly and the latter worked at the airport. Neither graduated with economic degrees. ;)

All jokes aside, indeed when you live in a country that hands our very severe punishments(just look up the murder rate in less expensive neighborhoods etc) for having less money than someone else. Real estate is directly tied to the amount of money you have compared to others so could explain how that analogy is that far off?

If someone lived in New York City, they might have to trade quite a bit of safety in neighborhood for having a less profitable degree than someone who graduated with an economics degree. So indeed US society hands out a weighted lottery about getting murdered based upon how much money you make, even at middle class levels.

[j2kun]

Being a graduate student who is paid just under the living wage for the city I live in, I probably have less money than you. In fact, I probably have less money than 60 percent of the population.

I am not more likely than you to be assaulted, killed, or go hungry. Here is a more extreme example to show how misguided your statement is: a millionaire has less money than a billionaire, but that does not imply the millionaire is more likely to deal with being assaulted or killed or going hungry either.

You should really go reevaluate what you think you know about finance and how money affects life. Go read some papers about how money changes quality of life, and you'll see that above a certain (relatively small) threshold, more money doesn't make much of a difference. There is certainly no "aggressive" punishment for deciding to have a lucrative career in, say, medicine, as opposed to having a more lucrative career in finance.

[melling]

Well, there will probably still be an abundant number of indie developers willing to make $40k/year. They'll move to Alaska so they can live the dream. I should have kept a list of all the recent podcasts and links. Anyway, here's one from today.

http://www.developereconomics.com/indie-app-opportunity-gone...

[otakucode]

It always amazes me when a future where everyone can make a good living, but where there may be reduced opportunities for insanely extravagant wealth concentration, makes people scoff, but I see it often. Since technology has solved the problem of distribution - the main product that companies were invented to solve - it only seems natural for centralized companies to dissolve entirely. Aside from solving distribution (both of work and of product), everything companies provide can be provided for nearly no cost by software. And companies today have tremendous overhead, doing unwise things like maintaining offices. They do nothing but drain resources and subtract value. Physical co-location of workers is worthless thanks to technology in most every industry.

And it always seems to be the people who are most dedicated to economic ideals and capitalism who refuse to see that capitalism dictates that the current system of megacorps will be defeated by capitalism itself because they are radically inefficient when compared to swarms of freelancers coordinated by and through software. Simply because we may never see another 'Goldman Sachs' strangling the wealth out of millions and putting it into the pockets of a handful who did nothing to earn it, they ignore the fact that most people only need $72k/yr to get to a point where more money won't even make them happier.

[humanrebar]

> everything companies provide can be provided for nearly no cost by software

Good software is more expensive than you seem to think.

> [megacorps] are radically inefficient when compared to swarms of freelancers coordinated by and through software

That may be true. Or not. It's a big assertion. Lots of projects are more efficient if they have a stable set of maintainers. Could you swap out Linus and his lieutenants in favor of swarms of freelancers and still produce quality Linux kernels? I doubt it.

This whole line of thought (why firms and not markets?) is a branch of economics. If you haven't, read up on http://en.wikipedia.org/wiki/Theory_of_the_firm.

"According to Ronald Coase, people begin to organise their production in firms when the transaction cost of coordinating production through the market exchange, given imperfect information, is greater than within the firm."

That seems plausible to me. If we're truly interested in deprecating megacorps, we should reduce transaction costs for laypeople, including by making rules, regulations, and laws easier to grok if they are needed at all.

[mahyarm]

Tell that to software companies that love having everyone in the same place in the same office if possible. Like Google.

If a company is going to have remote workers, they need a culture of supporting remote workers, and they need to be writing things down a lot more, which does have it's own overhead compared to talking to someone beside you.

As peoplesoft said, when you add more programmers to a project, you increase communication overhead. Working in the same office probably has something to do with that overhead.

Also you want to make more than $72k/yr (which is about $120-150k pre-tax btw) on a savings and investment aspect. And to fund projects that matter to you.

[melling]

That's less than a first year salary for a first year junior banker.

http://www.bloomberg.com/news/2014-08-20/goldman-sachs-said-...

People with kids need to pay $1000/month for day care in the NYC area. The price for an average 3 bedroom home that's commutable to NYC has to be over $500,000.

Yes, $72k/year will go a long way in Alaska.

[mbrameld]

I think you underestimate the cost of living in Alaska. I live in Juneau and it is very expensive. Maybe not NYC or SF expensive, but in 2012 the median value of a single family home was $332,000. Food and gas are also very expensive. Things might be slightly cheaper in Anchorage or Fairbanks. You might be able to find some cheap land somewhere undesirable and build a house or a cabin, but it's going to be very expensive to get building materials shipped there.

[hudibras]

Median household income in Alaska is $61,000/year, so there are definitely lots of Alaskans who can scrimp by on $72k.

https://www.census.gov/hhes/www/income/data/statemedian/

[monknomo]

$72k/year is above average in Alaska; it is above average in every state. If you look at the census data you cite, you can see that Alaska is #7 in terms of median household in the US. I doubt that means that Alaskans are significantly richer than average Americans, it probably means that Alaska is more expensive.

It looks like melling is using Alaska as an example of a cheap place; somewhere your dollar goes farther. If you look at the "Real Value of $100" maps you see floating around[0] you'll see it is not a particularly cheap state. It might be cheaper than New York City, but I'm not at all sure it's cheaper than New York State. In fact, New York looks like it has a median income of 53k, so plenty of New Yorkers scrimp by on $72k. Based purely on maximizing the difference between their income and their neighbors, the hypothetical indie dev should go to Mississippi.

I think looking at the cost of living in a state is a better guide than median income. This cost of living chart[2] says that the cheapest states are Mississippi, Tennessee, Kentucky, Oklahoma, and Indiana, whereas the most expensive states are Hawaii, DC, New York, Alaska (ha!), and New Jersey. Based purely on minimizing their cost of living, the hypothetical indie dev should still go to Mississippi.

I am a little surprised to see that the median income of New York is so low compared to its cost of living, so a New Yorker, on average, might be better off moving to Alaska, but not by as much as some other state, I'd wager.

My surprise got me thinking, so I did a tiny bit of excel analysis, where I normalized median wages[0] based on the value of a dollar data[1], then sorted states based on normalized median wage / cost of living[2]. Utah, Nebraska, Virginia, Iowa, and Wyoming are the top 5 with that ratio, while Hawaii, New York, DC, California and Oregon (Oregon pips Alaska here, by one rank, but my point stands, Alaska is many things, but cheap isn't one of them) are the bottom 5. I think that maps roughly with my intuition that big coastal places are sort of expensive for their average salaries and that boring, but not poor places are cheap for their salaries. I'm not sure this is relevant to the indie dev who doesn't have an employer, but for those of us who work in the flesh, I guess we should go to Utah?

[0] https://www.census.gov/hhes/www/income/data/statemedian/ [1] http://taxfoundation.org/blog/real-value-100-each-state [2] http://www.missourieconomy.org/indicators/cost_of_living/ind...

[monknomo]

I think you're thinking of Nebraska or other cheap states. Alaska, Hawaii and other remote places have never been cheap to live in

[burgers]

That's kind of my point. How is forcing that indie developer in live in Alaska, much different from the Soviets shipping someone off to Siberia because they didn't get with the plan?

Finance will continue to grow as the preferred choice of those who want to avoid being punished by US society and forced live in Alaska or not have enough to eat or a safe place to live.

[barry-cotter]

>How is forcing that indie developer in live in Alaska, much different from the Soviets shipping someone off to Siberia because they didn't get with the plan?

Because one of them involves the choice between the gulag and death and the other involves the choice between being a poverty-stricken artist and anything else you might decide to do once you get over your art and quit.

[burgers]

But maybe people who ended up in the Gulag were because they chose not to go along with what the state wanted them to do? It seems quite obvious that the United States strongly discourages going into any other field outside of economics. That is by far the easiest low risk high income path a person can take in the US. So by becoming an artist, you are going against the framework set up by US society to convince you to go into finance. That's why there are so many punishments and risks involved. Just like the Gulag was set up to convince people to follow the framework set up by the Soviets.

14,000+ people were murdered in the US. Many of those people died simply because they had a low enough ratio of money to others to force them to live in a dangerous place. Not because of any other reason than having less money that others.

[judk]

Stalin murdered how many million people?

[seanflyon]

"forcing"

[burgers]

So were political activists and other people "forced" to go to the Gulag? Or, like US citizens who live in poverty for being artists, did they "choose" to do something the government did not want and faced a punishment for it?

[seanflyon]

When force is used someone is being forced. No one in this country is forced to be an artist nor are they punished for making that choice. Having to support yourself is not punishment, it's just part of being an adult.

[melling]

Do you really need someone to explain this to you? The Endless September:

user: burgers created: 8 days ago karma: 91

Have fun. I'm outta here...

[shamney]

the strange thing about this is that economics is a very academic subject with little practical application

[eli_gottlieb]

Get back to us on that when you find some place to live after we automated your trading position. ~~ software industry