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Show The Salt Lake Tribune OPINION Sunday, January 24,1999 Lure of Making Easy Money Irresistible to Young Talent BY DAVID IGNATIUS Assume you start a fund that WASHINGTON POST WASHINGTON — Recall the famous children’s story “The Pied Piper of Hamelin.” Angry that he hadn't been paid for rid- ding the town ofrats, the piper took revengeby playing a seduc- tive tune on his flute and leading the town’s children away forever. A similar moment ofbewitchment seems to have arrived in American business, as our best and brightest (and greediest) young peoplestart to walk away from traditional jobs to seek the instant wealth promised by today's booming stock market. This is the bull market's revenge — that it’s sucking talent away from boring but essential work such as jaw and banking toward Millionaire Acres. The evidenceofthis talent shift is mostly anecdotal,butit’s pretty persuasive. Here's a set of recent snapshots The head of a New Yorkinvestment bank was complaining last weekthat he had just lost several of his brightest young colleagues to what’s knownasa “private equity” fund. These firms — the best-knownaregiants like KKR, Blackstone Group and the Carlyle Group — arethe hottest thing on Wall Street these days, because they promise a kind of wealth that makes even investment bankers go weakin the knees. At some investment banks, a partner can look forward to making $10 million or moreannually. But that doesn’t cut it anymore — comparedwiththelureofprivate equity. These firms typically take 20 percent of the profits they make on their investment deals (which are similar to the leveraged buyoutsof the 1980s) Taises $500 million in capital — and you doublethat over the next two years, which is a fairly common return. That means your share of the profits is $100 mil- lion — and you'll be taxed only at the 20 percent capital gains rate, instead of the roughly 40 percent rate on ordinary income. Jeez, who wouldn’t jumpatthat? My investment banking friend worriesthathehaslost a dozen of his best young people to privateequityfirmsover the past year. “I guess being an investment banker bidding war for this young man’s talents, with offers nearing $100,000. But as of the moment, can make more moneyjoining an Theultimate case of bull-mar- ket fever is to quit normal work altogether and stay hometrading stocks by computer. Of all the roads out of Hamelin,this one has to be the giddiest — and most dangerous. A Portrait of these “day traders,” as they're known, comes from a former journalist in his early 30s. He left a job with a big Internet companylast summerto set up as a daytrader at home. He claims to make between $3,000 and $5,000 on a good day, for about 90 minutes of work. This day trader gets up at 7, slowly nowadays,” he says wistfully. Lawfirms, too, are hearing the siren song of the new wealth. To online stock-market chat groups and message boards, wheretipsters and touts gather electronically each day. By the time the market opens at 9:30, he has a tentative list of what to buy and sell. He usually knocksofffor the sociates in their late 20s now make about $110,000 at some of these firms — which sounds mighty handsome until you com- pareit with the $250,000 or more their college roommatesare making at private equity firms. The talk among young associates at several big D.C. firms is all about the greener pastures over the horizon. Ambitious youngsters whogut it out and become partners at these big firms can look forward to making $450,000 or more by the time they're in their 40s. But that looks like peanuts, compared with what Pied Piper LLC is promising. Still not convinced? Consider the case of a young man whois graduating from a top college this spring. He’s something of an Internet whiz, having started a Web site that brought in revenues of more than $100,000 last year. Top consulting firms have been in a alton LI BY SUSAN E. LINN and ALVIN F. POUSSAINT FOR THE LOS ANGELES TIMES Therecentdeal between Micro- Internetstart-up company. watches CNBCandchecks out the cently gave associates up to a 20 percent pay raise. Third-year as- Spare Babies From Watching Television he plans to say no; he thinks he is considered getting rich too head off the talent raid, some of Washington’s top law firms re- AA7 dayat 11. Interestingly, he doesn’t care much about the fundamentals of companies, like how much money they're likely to make next quar- ter. That’s old-fashioned. Instead, he looks at volume. If lots of people are rushing to buya stock, he reckons, it’s likely to be higher still in an hour — andthat’sall the time a day trader needs to jump in and out ata profit. Trading on volume sounds crazy to me. But my young informant explains that it’s like going to a crowded bar. If there’s a lot of traffic, your chance of meeting someone good-looking is much higherthan at a quiet spot with a few peoplesitting on bar stools. Hey, that makes sense! Why to millions of children. Recently, the American Pediatric Association issued a strong statement urging parents to keep children under 2 from watching any television. Citing early brain research and the importance of the first three years of life for emotional, social and cognitive development, the association soft, Ragdoll Productions and itsy bitsy EntertainmentCo. to develop interactive toys based on the hit television series “Teletubbies” highlights our concerns about the unsettling alliance between chil- United States as well. Toy industry watchers predict that “Teletubbies” merchandise could generate up to $2 billion worth of sales within a year The “Teletubbies” track record for selling merchandise, coupled with its unproved educational val- ue, has led countries such as Norwayto refuseto air the show. Last March,at an international children’s television conference in called for research to determine exactly whateffect programs like dren’s television and merchandising. “Teletubbies” might have on the London, dren. Watchingtelevision can be habituating, and studies show that market-oriented children’s program she had ever seen. Proponents of “Teletubbies” point to how much babies like poor school performance and childhood obesity. Yet, American children watch an average of four hoursof television a day and are subjected to about 20,000 commercials a year. Fifty-four per- gressive, controversial campaign to market the program as educa- tional for children as young as 12 months. viewing the show. That babies enjoy something does not mean it is good for them. The argument that babies are already watchingtelevision and that “Teletubbies” was created especially for themis also flawed. Would the government encourage 12-month-olds to eat cent have a TVset in their rooms. Featuring a band of huggable, babbling space tots, “Teletubbies” has the distinction of being the first program ever designed to capture an audience of babies. PBS promotes the series as ‘‘created for children as young as 1.” One of the mostdifficult tasks today’s parents face is to moderate the time their children spend in front of the tube. Struggles with children overlimiting television viewingandthe consumerism it fosters are probably inevitable. But they don’t have to begin in babyhood Whythen would PBS promote a program that encourages 1-year- But a lack of substantive research on whatbabies learn from “Teletubbies” makesits presence on public television troubling PBSserves as a beacon to parents makingdecisions about television and their growing children. When the federal government, through PBS, pioneers programming like “Teletubbies,” it is sending parents a strong message that watching television is good for babies. Lackingsupporting research, this message is potentially damaging Norway's called “Teletubbies” the most excessive viewing is linked to lic broadcasting service. PBS imported the program from Britain last spring, embarking on an ag- Haug, We already knowthat too much television can be harmfulforchil- nation’s federally supported pub- Ada head of preschool programming, very young. Ragdoll Productions and itsy bitsy Entertainmentare the creators and distributors of “Teletubbies,”’ which airs on PBS, the snacks with no proved nutritional value even if they were created especially to appeal to this age group? Of coursenot. Twelve-month-olds don't have to be imprinted with “Teletub- bies” or any othertelevision icon. If babies are not exposedto television, they won't miss it or the imagesit popularizes. Protecting our youngest, most olds to watchtelevision? Part of the answer is the economics of vulnerable children from being survival in a society increasingly driven by the bottom line. “Tele- seduced bytie-in toy marketing is as simple as flicking a switch. the show beganairing in the Unit- Susan Linn and Alvin Poussaint are directors of the media center at the Judge Baker Children’s Center in Boston. tubbies”’ sells merchandise. When ed States, Teletubbies were al- ready the hottest-selling toys in Britain. Sales are booming in the didn’t Warren Buffett thinkofit? Watching the bright-eyed chil- dren marchout of town, you have to smile — and hope they don’t get destroyed when the bubble bursts. UTAH’S LARGESTAT&T WIRELESS SERVICES RETAILER! 50 STATES ONE RATE LONG DISTANCE ) ROAMING | } atte) ae Everycall is like Digital PCS features inch Ti)ed eeatl) * Caller ID * Voice mail * Text messaging em TeyTy Pelad CHARGES! | | Foster Faculty Lounge PTa AS LOW AS 3¢ PER MINUTE! a LESSe e 530 MALIN99 $£099 Services 99 | professional terminal | degree. Andtheir focus is teaching and Tearning, not research and | | | | | years running. 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