Human capital transfer

Fareed Zakaria has an intelligent article on the silver lining of the crisis: "A More Disciplined America." Among other things, here's one major benefit: As the financial sector reels, a lot of math and science degree-holders who would otherwise be inventing incredibly complicated ways to lose money are now going to be doing something way more productive.

The financial industry itself is likely to shrink, and that's not a bad thing, either. It has ballooned dramatically in size. Curry points out that "30 percent of S&P 500 profits last year were earned by financial firms, and U.S. consumers were spending $800 billion more than they earned every year. As a result, most of our top math Ph.D.s were being pulled into nonproductive financial engineering instead of biotech research and fuel technology. Capital expenditures went into retail construction instead of critical infrastructure." The crisis will stop the misallocation of human and financial resources and redirect them in more-productive ways. If some of the smart people now on Wall Street end up building better models of energy usage and efficiency, that would be a net gain for the economy.

I suspect some of them are also going to do some real rocket science.