Is this really the moment where Wall Street and the City go out of style?

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Thus writeth Willem “Maverecon” Buiter of the London School of Economics and

From the point of view of the efficient allocation of resources in the medium and long term, the relative (probably even absolute in the short run) contraction in the size of the financial sectors of the advanced industrial countries is a desirable development, as for a number of years now, the private returns in the financial sector have exceeded the social returns by an ever-growing margin. Too much scarce analytical and entrepreneurial talent has been attracted into activities that, while privately profitable and lucrative, were socially zero-sum at best. In the short run, this cutting down to size of ‘Wall Street’ and ‘the City’ will inevitably have some negative side effects for Main Street also. However, the entire financial sector in the UK accounts for only about 7.5 percent of GDP, and the banking sector for no more than five percent of GDP. A sectoral depression will be painful, but of limited macroeconomic significance. In the medium and long term, moreover, a more balanced sectoral allocation of the best and the brightest will be beneficial.

There was a lot of similar talk in the late 1980s/early 1990s, and I guess for a while there in the late 1990s the best and the brightest did start or join online purveyors of pet accessories (and the like) instead of taking jobs at Blackstone or Goldman Sachs. But then the financial sector came roaring back. I want to think Buiter’s right. But I just can’t quite bring myself to believe it.