The innocence of youth ...

Just read an interesting piece on a thesis written by recent Harvard grad, A.K. Barnett-Hart.

Though I enjoyed the article, one of the most interesting parts for me was the cynicism exhibited in the last five words of the piece (to give the proper context, I preface these words with the paragraph preceding them):

“After writing my thesis, it became clear to me that the culture at these investment banks needed to change and that incentives needed to be realigned to reward more than just short-term profit seeking,” [Barnett-Hart] wrote in an email. “And how would Wall Street ever change, I thought, if the people that work there do not change? What these banks needed is for outsiders to come in with a fresh perspective, question the way business was done, and bring a new appreciation for the true purpose of an investment bank - providing necessary financial services, not creating unnecessary products to bolster their own profits.”

Ah, the innocence of youth.

This ideal-crushing, five-word jab represents one of the fundamental roadblocks preventing any real, productive change on Wall Street: Disbelief.

The world's financial players (and those who write about their exploits) frequently exhibit disbelief that anything can change ... and, what's worse, sometimes they exhibit disbelief that anything should change.

For instance, look at how quickly the financial institutions have returned to "business as usual" in the wake of the financial crisis. These "movers and shakers" of markets and economies seem to have no problem pushing the world to the brink of chaos and then, after complete disaster is averted, start the merry-go-round over again.

The fact is, Barnett-Hart slammed her hammer down in exactly the right spot: The culture of the Street needs to change. The devil-may-care, recklessness must be removed (and possibly penalized) and a new culture of personal, moral, and ethical accountability must take its place.

An important question, of course, is how that change should be accomplished. Should we simply rely on Big Brother to come in with its newly-minted regulations? Or, should we seek to help the players develop stronger self-regulation skills? In a prior post, I wrote that

[T]he effectiveness of a free market model depends not on an unbreakable tome of rules and regulations ... but instead on a system of internal ethical and moral controls that must be imbued into the very nature of the people who work within the market.

Thus, I tend to stand in the latter of those two camps. Perhaps, though, a third possibility exists ... replacing the current players with newbies looking to "provid[e] necessary financial services" rather than create "unnecessary products to bolster their own profits."

But whether we believe in change through an external regulatory clamp-down (the easy fix), an internal ethical overhaul (the more difficult, more lasting fix), or some combination of the two, we should believe in change (both it's need and it's possibilty).

And we should applaud those who earnestly seek it.

Indeed, what right do we have to denigrate or mock someone who, seeing the moral mess on Wall Street, wants to bring the Street "a fresh perspective" and "a new appreciation for the true purpose of an investment bank"?

Answer: None.

So I say, go get 'em A.K.