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Douglas_Knight comments on Open Thread June 2010, Part 3 - Less Wrong
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I'm not sure if it meets the Ponzi scheme model, but the problem is this: lots of students are going deeper into debt to get an education that has less and less positive impact on their earning power. So the labor force will be saturated with people having useless skills (given lack of demand, government-driven or otherwise, for people with a standard academic education) and being deep in undischargeable debt.
The inertia of the conventional wisdom ("you've gotta go to college!") is further making the new generation slow to adapt to the reality, not to mention another example of Goodhart's Law.
On top of that, to the extent that people do pick up on this, the sciences will continue to be starved of the people who can bring about advances -- this past generation they were lured away to produce deceptive financial instruments that hid dangerous risk, and which (governments claim) put the global financial system at the brink of collapse.
My take? The system of go-to-college/get-a-job needs to collapse and be replaced, for the most part, by apprenticeships (or "internships" as we fine gentry call them) at a younger age, which will give people significantly more financial security and enhance the economy's productivity. But this will be bad news for academics.
And as for the future of science? The system is broken. Peer review has become pal review, and most working scientists lack serious understanding of rationality and the ability to appropriately analyze their data or know what heavy-duty algorithmic techniques to bring in.
So the slack will have to be picked up by people "outside the system". Yes, they'll be starved for funds and rely on rich people and donations to non-profits, but they'll mostly make up for it by their ability to get much more insight out of much less data: knowing what data-mining techniques to use, spotting parallels across different fields, avoiding the biases that infect academia, and generally automating the kind of inference currently believed to require a human expert to perform.
In short: this, too, shall pass -- the only question is how long we'll have to suffer until the transition is complete.
Sorry, [/rant].
If you're not happy with what they did in finance, why do you think they would have been useful in science?
They're smart. They're capable of figuring out a creative solution. And the financial instruments they designed were creative, for what they were intended, which was to hide risk and allow banks to offload mortgages to someone else. Someone benefited from the creativity, just not the average worker or consumer.
I recommend The Quants-- those guys weren't just hiding risk in mortages, and it's plausible that they were so hooked on competition and smugness that there was a lot of risk they were failing to see. They weren't just hiding it on purpose.
Yes, capable of figuring out a creative solution to maximizing their goals when faced with the incentive structure of science. You think that the people who remain fail to do science when faced with these incentives, so why do you expect these others be more altruistic?