Opinion Banking isn’t all bad…

Likewise,the attacks on private equity seem over the top. Private equity firms like Bain Capital aren’t about destroying companies and picking over the carcasses. Rather,the aim is to acquire poorly managed companies,make them more efficient and then resell them at a profit. That’s the merciless,rugged nature of capitalism.

Liberals should also be wary of self-selecting out of certain occupations. After Vietnam and revelations of CIA abuses in the 1970s,many university students avoided the military and the intelligence agencies. So slots were filled disproportionately by ideological conservatives in a way that undermined everyone’s interests. We would have been better off if more idealists had become generals and CIA officers — and we may be better off if some idealists become bankers as well.

When young people go into finance,I hope they’ll show judgement,balance and principles.

A Pew Research Centre poll in December found that only 50 per cent of Americans reacted positively to the term “capitalism,” while 40 per cent reacted negatively. Among Americans ages 18 to 29,more had a negative view of capitalism. Those young Americans actually viewed socialism more positively than capitalism. In other words,America’s grasping capitalists are turning young Americans into socialists.

Public scepticism is warranted,in my view. Corporations have vastly overpaid CEOs,handsomely rewarding not only success but also failure. Banks that helped cause today’s financial mess lobbied successfully for bailouts for themselves; they privatised profits and socialised losses.

Meanwhile,more than four million families have lost their homes to foreclosure. Bankers and shareholders found a safety net,but not working-class families. One reason is that the campaign finance system allows financiers to buy access and special favours. The last few years have been a showcase not of capitalism itself,but of crony capitalism. Romney’s average tax rate,which he says is probably about 15 per cent,exemplifies the problem. The Romneys benefit because capital gains tax rates have been slashed to just 15 per cent,much lower than rates paid on labour income. Then there’s the most egregious tax loophole of all,for “carried interest.” A triumph of lobbying,it allows private equity and hedge fund managers to pretend that their labour income is a capital gain. So they sometimes pay a tax rate of just 15 per cent,compared with up to 35 per cent for almost everyone else.

Granted,young people haven’t been pouring into finance in recent years out of eagerness to reform this rigged system but to milk it. However well-meaning these new graduates are initially,they often end up caught up in the scramble at the trough.

In the postwar years,labour unions became greedy and rewarded themselves with feather-bedding and rigid work rules — turning much of the public against them. Likewise,Wall Street feather-bedding is tarnishing the public image of banks and business and undermining confidence in capitalism itself.

When financiers rig the system,they should remember the warning of John Maynard Keynes: “The businessman is only tolerable so long as his gains can be held to bear some relation to what,roughly and in some sense,his activities have contributed to society.”

So university students would be wrong to mock their classmates who choose Citigroup over CARE. Banking and private equity aren’t evil,and I would never urge college students to stay away. Maybe today’s young socialist sympathisers,along with healthy regulation and a loud public outcry,can help rescue capitalism from the crony capitalists. Nicholas D. Kristof