'Math PhDs used to send people to the moon'
Reader Eric writes in about my comments about all the what-a-waste scientists on Wall Street:

Dear Hubblog, I have been reading you for a while, but had no time to write. But your latest post about the (science) guys reminded me of this audio from John Lanchester who wrote a piece in the New Yorker about postmodern finance. I don't think the written piece had much new in it, but in the conversation Lanchester recalls his father, a banker, proudly visiting factories that he had helped start through loans. Lanchester mentions how math PhDs used to send people to the moon, and now come up with investment algorithsms.

Eric adds that a 'key moment of changeover' was the 'collapse of the Bretton Woods standard which tied the dollar to gold.' I'm not prepared to go there. But I do agree that there was a shift, a major shift, in Wall Street's role in American capitalism. There's always been money-for-money's-sake scoundrels on Wall Street. Fred Sched's classic "Where Are the Customers' Yachts?" is being reissued these days for a reason. So I'm not going to idealize the good old days of financiers. But there has been an awesome expansion of the financing industry in America, as Kevin Phillips shows with plenty of charts and graphs in 'Bad Money.' (Think credit-cards, student loans, hedge funds, mutual-fund companies, mortgage brokers, investment bankers, etc.). The financial risks also correspondingly increased, thanks partly to the development of computers and recruitment of math geniuses etc. to run them. The money-for-money's-sake phenomenon on Wall Street was taken to a whole new and dangerous level. Rather than monitoring the trend more carefully, the political class actually bought into the notion that the geniuses couldn't be wrong.  ¶ 5:55 AM