In the US, the brightest are said to join AI firms. In Britain, they sign up to be quantitative analysts. The Financial Times reports that the City is becoming one of the world’s leading “quant” centres. An Oxford don in charge of mathematical finance told its reporters that almost all his students ended up working at quant trading firms, on salaries from £250,000 to £800,000. “If you get offered a salary less than £250K, you’re kind of the sad guy,” he said, adding that “nobody I know interviews for JPMorgan, Goldman Sachs … not once do I hear anybody entertain any of these traditional investment banking jobs.”
The lure is obvious: 45-year-old billionaire trader Alex Gerko earned £682m from his City quant firm XTX Markets last year. Harder to grasp is that modest salaries in once respectable professions now function to deter people from the very graduate careers they once defined. On the FT’s front page, employers warned that graduate entrants to City bluechips earn a median yearly salary of £33,000, not much more than the new £26,400 minimum wage. Executives cautioned that university debt no longer yields a wage premium. To preserve profits, firms said they would look to using more AI or offshore roles.
This ought to be warning for the professions that have provided the backbone of the British middle class. What is emerging is a world in which a tiny sliver at the top captures rents from financial capital, and a great many credentialed professionals earn a little above the legal salary floor. While London lags behind New York as the quant capital of global finance, the US is a larger and more variegated economy with other industries – notably AI – attracting top graduates. The war for “talent” across the pond is so ridiculous that Mr Gerko’s XTX New York office offers interns $35,000 a month in compensation.
Both AI and quantitative investing need huge amounts of cash to build data centres. Intuitively it feels like machine learning will probably add something to society though few can say what exactly. Finance by comparison is useless. Its quantitative version adds no real value: it’s clever people betting against other clever people, shuffling wealth a little faster between them. The theory is that the best mathematical models put investors on the right side of trades.
After the crash of 2008, the financial sector was fingered for being responsible for inequality rising faster in the UK than its rich world peers. But that knowledge did little to reorient the British economy and steer talent toward socially useful sectors. Today the UK’s exchange-rate and interest‑rate regimes still privilege financial assets over productive investment. The result is a misallocation of human capital: with a surplus in finance and a scarcity almost anywhere else.
Financialised economies no longer translate innovation into productivity. The gains end up in concentrated ownership and shareholder…
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