Bad news for Fidelity analysts?

  A  swarm  of robots from the open-source micro-robotic project.

A swarm of robots from the open-source micro-robotic project.

Adapted from an item in Robert Whitcomb's "Digital Diary'' column in

The longest golden age on Wall Street –which began in the 1980s with Reagan era deregulation and tax changes – may be closing for many financial-industry denizens.

As with other industries,  computers and automation will wipe out many very high-paying jobs.  Consider BlackRock Inc., the world’s largest asset manager. It’s shifting resources away from human stock pickers running funds and charging big fees to lower-cost quantitative stock funds run, in effect, by robots. These analyze data and automatically make predictions and adjust investments accordingly.

While some “actively managed’’ (by real humans) investment funds have done well, in general, “passive investments’’ – e.g., money in index funds that reflect the performance of the stock and bond markets as a whole or industry sectors of them – have generally done better and with lower fees.

What this means is that there will be fewer jobs for stock analysts, stockbrokers and so on. This will slam New York City and its suburbs particularly hard after decades of vast wealth accruing to people on Wall Street. Employment in the financial districts of Boston and some other big U.S. cities will also take a hit.  Consider such big Boston financial-services firms as Fidelity and State Street. Of course, the senior executives of the likes of BlackRock, etc., will continue to make a mint.

This recalls the hollowing out of parts of some other white-collar occupations, such as lawyering, where much of the routine work can now be done by low-paid legal assistants (some working in India) using computers.

Ultimately this computerization may also devastate the tax-prep business; many taxpayers already use such programs as TurboTax. But Congress keeps changing the tax laws in response to lobbying from special-interest groups slows the process. Many of us will continue to need to talk to a human to keep up with the relentless fiddling on Capitol Hill.

It being tax time, I’ll slide in here my annual tribute to the underfunded and understaffed Internal Revenue Service. Taxpayers are always blaming the IRS for their tax problems, including the impossibility of understanding much of the tax-law swamp, which grows every year. But citizens blame the wrong people: It’s Congress, sometimes acting on the recommendation of the president, that has produced our abomination of a tax code as legislators respond to interest groups and overuse the tax code for social, economic and political engineering.  A prime example is how they create ever more tax credits instead of doing things in a straightforward way, such as directly appropriating federal money for desired programs.

Anyway, remember Oliver Wendell Holmes’s famous line: “Taxes are the price we pay for civilization.’’