Wall Street Is Robbing Us Blind

In my article from last year titled "The Undoing of the Great American Economy," I mentioned that a good portion of our best and brightest are ending up in the world of finance rather than in more productive areas of the economy.

I got thinking about the issue again after a list from CNNMoney showed the most favored employers among MBA students. Grabbing a top spot in a list like this is no small matter for major employers. Google (Nasdaq: GOOG), for example, appears to have its pick from a deep pool of very talented applicants who would be excited to work for the search giant: 22.4% of MBA grads placed Big G among their top five hoped-for employers.

But even though the list included names from a number of industries, finance companies accounted for more than a quarter of the top 25 employers on MBA grads' lists.

Source: CNNMoney.

Got rocks?
Some might wonder what the problem is. After all, grads go into finance because that career path comes with a hefty salary. The preference toward finance is simply market-driven.

But here's how I see it. In his 2005 letter to Berkshire Hathaway shareholders, Warren Buffett told a parable about the Gotrocks family. This family owned all American corporations and collected all of the income from those corporations. But when individual family members became unsatisfied with their share of the income, they engaged "Helpers" to attempt to snag a bigger piece of pie.

Eventually, the family members end up hiring Helpers on top of Helpers to try to get that extra little bit of advantage over the rest of the family. Meanwhile, the Gotrocks family as a whole ended up with a diminishing share of the total income, while the Helpers were skimming off an increasingly large portion.

Like the Helpers, the folks on Wall Street make little in the way of additive contribution to the American economy. Instead, they focus largely on skimming off the top as they sell the dream of greed to productive members of society. Sure, the investment banks do also help real, productive companies raise capital to build and expand their businesses, but let's be real: That is an extremely small portion of most large investment banks' businesses these days.

Flush with its massive earnings, Wall Street can then turn around and offer America's best and brightest hefty paychecks to join the club and help the banks devise new ways to suck the marrow out of the U.S. economy.

How to dismantle a Wall Street bomb
If you're on board with me thus far, then the next logical question is how we turn the tide and get more of our talent pool to eschew the sweet siren song of Wall Street in favor of more productive paths.

Ideally, we'd pull the problem up by the roots by getting the youth of America to increasingly follow dreams and passions rather than huge paychecks. And sure, that could happen, but it would take a philosophical sea change that could take decades to unfold. Meanwhile, our economy will continue to be sucked dry by Goldman Sachs -- which Matt Taibbi so eloquently called the "great vampire squid" -- and its ilk.

My suggestion? Taxes.

Simply raising income taxes on high earners could have unintended consequences, such as whacking small businesses. But instead of taxing personal income broadly, we could focus the taxes on the kind of Wall Street trading that does little if anything for the U.S. economy.

They're skimming off of the economy, so let's go ahead and skim right back.

The taxes collected could help get the government's budget back in shape and at the same time make certain Wall Street business lines less profitable. The Street would then have less money to lure the country's talent.

Option B: Sit back and do nothing
Of course, maybe we shouldn't do anything. Wall Street thrives because greed is alive and well in our society and people are willing to pay big money to win at the money game. Despite the toll on our economy, we allow people to eat heart-attack-inducing fast food and let them smoke -- so why not just let them be greedy, too?

I want to know what you think. Head to the comments section below and chime in on whether the government should be doing something drastic to curtail Wall Street's business and its claim on our talented individuals.

Sick of Goldman Sachs? Anand Chokkavelu has a stock that blows Goldman out of the water.