Are we overfinanced?

Two weeks back I started a job search to hire a new quant.  I was looking for a C++/C#/.NET programmer with a good understanding of financial models to work on risk models.  We put a single advertisement out on a finance website and within a week I had over 60 candidates to choose from.  While I am happy that I have so many candidates to choose from, I began thinking if this was really socially optimal.

Almost all of the candidates had undergraduate degrees in the hard sciences (applied math, physics, electrical engineering, mechanical engineering, computer science) a few had economics degrees.  Over half of them had advanced degrees (MA, MS, PhD) in hard sciences.  Over 75% of them had recently completed or were about to complete Masters in Financial Engineering programs.  MFE is a relatively new degree but already a number of very good schools have offerings (see here).   They probably turn out 1000+ such graduates per year. The focus of such programs is derivatives modeling.

So my question is - is it really socially optimal to turn out so many graduates focused on financial engineering?  Certainly finance serves a social good in allocating capital from savers to investors but it is not clear to me that we need an army of financial engineers to do this.  The vast majority of them have moved from hard sciences into finance.  I speculate that you would be hard pressed to find anyone who has moved from studying financial engineering into one of the hard sciences - say physics.

One would assume that such flows should eventually be equilibrated by wage rates but that does not seem to happen.  If there is an army of people moving from hard sciences to finance that should in theory drive down the wages in finance and drive up the wages in the hard sciences.  But there still seem to be people migrating in the direction of hard science to finance - so maybe not.  Is the problem that it is difficult to monetize discoveries in basic science while it is easy to do so in finance?  Still I would think that the wage equilization argument should hold at some level.

Does this migration have negative social consequences?  I suggest that it may.  Basic hard science research has positive externalities in expanding society's overall store of scientific knowledge.  Additional financial engineers may add to the profits of one particular firm's trading department but do they really contribute to society's overall knowledge base?  Perhaps those persons who are migrating would never have made meaningful scientific contributions anyways.  Still it is something to think about. 

In the meantime I have a bunch of interviews to conduct.