The Financial Sector Is the Greatest Parasite in Human History

>The rule of thumb is that hedge funds charge a 2% per year management fee and keep 20% of all profits,

>All returns shown are net of fees

So, subtract 20% from the 3 positive numbers, and that's about 6% in fees (this may be off by a bit, I'm quickly approximating the math in my head). Subtract another ~8% for 4 years of fees, and that's about 14% combined fees. 26% - 14% = 12%. Seems to be about right.

The author could have made the way he calculated the fees more clear, but his point stands that a huge % of hedge fund profits go to fees.

It really depends. Traditionally, the US navy was to stop pirates from screwing with US exports. IMHO it was a pretty effective policy. we pay taxes, our stuff gets to new markets.

Iraqi oil is apparently doing nice things for XOM, not sure if they payoff will be worth the price. Afghanistan seems like a loser. There's nothing there we can take to pay for the war.

"What has DARPA done for me lately?"

How about the internet?

If that's too last-century for you, you can look forward to the benefits of DARPA funding the development of the basic tech and Open Source software that's driving the rapid development of robots right now.

"All right, but apart from the sanitation, the medicine, education, wine, public order, irrigation, roads, the fresh-water system, and public health, what have the Romans ever done for us?"

You can provide a service that is a net loss overall, but still a benefit to a few. It's the tragedy of the commons.

Let's make it simple and say there are two villages. Some people in village A decide to start raiding crops from village B, because they find they can steal crops more easily than growing them, so stealing is a net benefit to village A.

Village B, noticing the theft, decides to start paying some farmers to defend the village instead of farming. This is a positive outcome for Village B, because the cost of their new security force is less than the cost of the stolen crops.

Ostensibly there are two positive outcomes; both sides now maintain a security service and find themselves at an equilibrium.

But if you look at Village A and B together, you'd see that they'd both be better off if there were no raiders and no defenders and could concentrate on farming. The overall drain on society gets worse as the situation escalates.

Imagine that Village A decides to create more thieves to overwhelm B's security, and that turns out to be profitable.

Now imagine that this exact thing is taking place, at every scale, millions of times a day.

Let's say I'm competing with Dave to buy a house we both want. The only thing holding that price down is our collective willingness not to borrow huge sums of money to outbid each other. Let's say the bank starts to offer a 60 year mortgage, so that Dave can outbid me by shackling himself to a loan he probably won't pay off in his lifetime. Dave is a moron, so he does that. It's a free country.

Dave, in this circumstance, is acting like Village B, where he shoots himself and the rest of society in the foot by dedicating most of his future income to paying a bank in order to get a short term gain and win a house bid with me.

But the real winner in the scenario is the bank, not Dave.

Edit to add: I believe the article was talking about "service" in terms of the overall gain to society, not the individual services that a bank typically provides, many of which are completely legitimate like helping you sell a business.