Richard Dawkins recently released his latest book, “The Greatest Show on Earth: The Evidence for Evolution”, which sparked two related stories from the world of finance.
Last month Bloomberg reported that the Bank of Japan had resorted to counting brothels in order to help ascertain demand for the services sectors of the economy. What a novel idea, and one perhaps that should be added to the hack index. Pity the technique was already pioneered by Elliot Spitzer, but his ignominious fall from grace overshadowed the boost he was giving to NYC’s service sector. Given the number of stories of bankers’ drunken encounters with high class escort rings in west London I have encountered recently, I think it nicely encaptures the levels of exuberence amongst today’s city workers. Moreover, the methods used (proactively sourcing customers via a network of illegal cab drivers, as opposed to “laying in wait” for punters to get in contact) suggests that the economic crisis has induced a process of creative destruction.
Schumpeter’s creative destruction is also evident in a darwinian form amongst London’s junior bankers. Lord Turner’s recent comments reignited the debate about bright graduates being wasted in the city. Its a highly relevant point, as illustrated by the droves of fired workers who subsequently revelled in their freedom to set up new age farms or home made pesto companies. If you prefer washing basil leaves to working in one of the most dynamic sectors of the global economy, you shouldn’t be in the city in the first place. Let the weak depart and allow the strong to prosper. Those who stayed the course are now reaping the reward of a v-shaped recovery in financial activity as the jobs market gets tighter and pay pressures return (Morgan Stanley recently announced the intention to hire 400 sales/traders for fixed income, amongst others). The “greatest show on earth” continues.