Do Our Industry's Problems Stem From Bad Parenting?

I will not hire someone until we can have a conversation about ethics. I define ethics in terms of "doing the right thing" and not -- as many people in my industry seem to -- as "complying with the letter of the law." This is why I usually end up having to recruit from outside my industry.

However, searching for a candidate is is harder than you think, especially when you consider that a "liberal education" is not the same as “educated to be a liberal." For instance, you would think that if the topic is ethics then I should find lots of qualified conversation partners among Liberal Arts graduates and, in particular, among Philosophy majors.

Fat chance.

Theory vs. Practice
Perhaps most people are ethical -- I wouldn't know -- but an ability to talk about ethics is so rare that I have to interview job candidates en masse, usually as many as 15 to 20 at a time. I tell the assembled crowd that a big problem in our industry has to do with the difference between theory and practice. I quote Einstein, "In theory, theory and practice are the same. In practice they are not." They love this. And the experimental physicists love it more then all the others, and say so with a certain smugness.

Then I tell a joke to illustrate the point:

An economist and a trader are walking down the street and they come upon a $20 bill. The economist says, "We know that bill is counterfeit because otherwise someone else would have picked it up." The trader says "You're right." and pockets the bill.

Then I say, "We're not doing economics here. We are doing trading. I need to know what you would do."

Everyone says they would pocket the bill.

Who Raised You?
I say, "Now that is very interesting because I lived in Japan for a few years where they raise their children to believe that the one thing you know about that bill is that it is not yours, and the one thing you cannot do is take it for yourself. I think a fundamental problem of our industry is that the concept of property has become so abstracted and ambiguous that it can become unclear who owns what. Some people think that if it isn't pinned down then it is OK to pocket something that does not belong to them. The problems in the financial markets boil down to spectacularly bad parenting.

The Right Words Have Gone Missing
Now all my job candidates are in shock. I think one reason is that, from kindergarten through college, and even in "job hunting" seminars run by career "experts," people have been trained not to think (or feel) for themselves. Instead they try to give the answer they imagine is expected. And before you philosophy professors get too smug, many of your students are the worst. One young woman said that she had taken two semesters of Morality and Ethics and came out more confused than going in. She knew her grandmother could have been the conversation partner I was looking for, but her schooling had swamped her common sense and she couldn't find the words.

People ask me for the secret to longevity and success on Wall Street. I answer: Be good, hire good people, do good things, and do not do bad things. Being good is not the same as making money; there are plenty of despicable ways of making money and honest ways of losing it.

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