Over the weekend, Elliot Gerson of the Rhodes Trust wrote about the trend over the last two decades of more and more Rhodes scholars going into business over supposedly more noble pursuits such as medicine, law, science and public service (HT: David Boaz). Although he never explicitly says it, Gerson strongly implies that the financial crisis should make bright young people question the value of business as a career, and maybe even reverse this trend among Rhodes scholars (although he's not hopeful):
Many thought a silver lining of last year's financial crisis -- or from the populist rage that flared against Wall Street excess and to profits born not from creativity but from leverage -- would be that earnings differentials would return from obscene to merely enormous levels, if not to the very generous multiples that had long been adequate to fuel a vibrant economy. Well, the hyper-bonuses are back -- astonishingly having been made even easier to achieve with taxpayers socializing the downside risks. And the crisis? What crisis?
So how many more of America's young and brightest will ask themselves what kind of chumps they are to give up the chance to earn 100 or 500 times as much as their mentors, their doctors, their favorite professors, their idols and heroes?
But Gerson should be careful what he wishes for. It's probably true that the Great Recession has made business a less desirable career. But when business loses its luster among those entering the workforce, we don't just lose Ken Lays or subprime mortgage lenders—we also lose the entrepreneurs who will start the next great businesses.
Babson College's Global Entrepreneurship Monitor was recently released, and it found that the average entrepreneur in America is getting older. While on the whole a higher percentage of Americans started a business in 2008 compared to 2007, there was a sharp decline in entrepreneurial activity among those in the 18-44 age range (see Jeff Cornwall for a more detailed breakdown.)
Of course, we can't say the financial crisis was wholly responsible for this shift. In 2008, many people still hadn't even heard of a subprime mortgage. But this is just another piece of evidence in a worrying trail. Many Americans, especially younger ones, are looking at the mistakes of some in the financial sector and letting those negative impressions bleed through to the business world as a whole.
It might take someone as smart as a Rhodes scholar to change these impressions.