Stolen by the Street

Last week, 32 young Americans won Rhodes Scholarships. Their tenures at Oxford are funded by the legacy of the British imperialist Cecil Rhodes, a man whose life would not be honored today were it not for his scholarships—and specifically his vision that young people of outstanding intellect, leadership, and ambition could make the world a better place.

For over a century Rhodes Scholars have left Oxford to begin their careers. Given their records, virtually any jobs have been available to them. For most of that history, they have overwhelmingly chosen paths in scholarship, teaching, writing, medicine, scientific research, law, and military and public service. They have reached the highest levels in virtually all fields, from prize-winning novelists to a U.S. president.

But in the ’80s, the pattern of career choices began to change. Until then, even though business ambitions and management degrees have not been disfavored in our competition, business careers attracted relatively few Rhodes Scholars, and it was the rare scholar who went to Wall Street or to finance. No one argued this an unfit or unworthy domain for Rhodes Scholars; it was simply on few scholars’ radar. And those who did make such a choice, including myself, usually did so after beginning a different career. Only three of the 320 American Rhodes Scholars in the ’70s went directly into business from Oxford; by the late ’80s the number grew to that many each year. And, recently, more than twice as many entered that field in just one year as did in the entire decade of the ’70s.

This break in an almost century-old pattern coincided with great increases in occupational earnings differentials, which have continued to grow, seemingly exponentially. It seems quaint, if not unfathomable, that just three decades ago the differentials that then existed—generally two- to fivefold in earnings between business leaders and doctors and lawyers, or five- to tenfold with professors, scientists, and public servants—were often rationalized by the country’s highest-ranking graduates as reasonable additional compensation to balance the lower standing of business jobs among their peers.

When differentials could become a hundredfold or even far more—and as investment banking and similar firms started actively to recruit young Rhodes Scholars who earned degrees in math, physics, and even history, English, and theology—the yawning prospective-wealth chasm became impossible for many to ignore. Even for a few of those most deeply committed to other, more public-spirited pursuits—whether in laboratories, classrooms, poor neighborhoods, charter schools, the media, or state legislatures—the lure of such rewards, especially as they are reasonably attainable for people of such high abilities, became hard to resist. Most Rhodes Scholars who don’t have a passion for the most remunerative careers (when one cannot fairly quarrel) still do resist, but they tell me it gets harder every year.

So what is the matter with this picture?

Nothing—if one believes that such differentials are necessary for our economic system to thrive. But do many believe that differentials need be this grotesquely large to incentivize and reward people adequately, if not richly? No; they are that large today simply because they can be that large, not because of some virtuous working of the market. This is not Adam Smith’s capitalism. Just as he decried the inevitable greed and corruption of monopoly, he would surely rail against today’s self-serving and closed systems of compensation review.

Nothing—if one believes that changed career paths of a few privileged people is of no larger significance. But some have gifts that realistically could be expected to lead to world-changing breakthroughs, cures, or innovations; greater respect for politics; even to hundreds of profoundly moved and inspired students. Moreover, this reflects something far more pervasive. Consider President Drew G. Faust’s recent laments for the increasingly material, instrumental ambitions of so many of her students. She has noted the steep national decline in the percentage of students majoring in liberal arts and sciences since the 1970s, with a dramatic rise in undergraduate interest in business. At Harvard, economics attracts a higher percentage of students than any other field.

Does anyone seriously believe that the social benefits, macroeconomic included, that can be expected as a collective consequence of radically more remunerative paths taken will be as great or greater than would have followed from those, mentioned above, not taken? Isn’t the innovation that the country needs most for continued prosperity likely to come from scientists and engineers, not leaders of financial institutions?

And there is nothing wrong if one believes the rules and practices of corporate governance are adequate to assure reasonable compensation practices. But can anyone maintain they do, given the undemocratic ways in which corporate directors are chosen and elected, and the myriad examples of executive compensation perversely related to shareholder return?

Or perhaps if one believes the fabric of our democracy might not be frayed by a steadily widening gap between the very rich and the middle class—a gap that could become as cavernous as it currently appears in some of the world’s least harmonious and most dispiriting countries.

And the last explanation: if one believes that 10 or 20 years down business career tracks, when going back to earlier ambitions is rarely possible, those choices will be the ones that have created the greatest happiness for those individuals.

Many thought a silver lining of last year’s financial crisis—or from the populist rage that flared against Wall Street excess and profits from leverage, not creativity—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 more than their mentors, their doctors, their favorite professors, their idols and heroes?

Elliot F. Gerson ’74 is American secretary of the Rhodes Trust and executive vice president of the Aspen Institute. A version of this article previously appeared in the Washington Post.