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Too much finance is bad for the economy

economist.com

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Re: Too much finance is bad for the economy

#101

Post by Retra »

sebastianconcpt wrote: post #80
nawitus wrote: post #31

Earlier quoted context omitted.

Why is the current standard of living the ideal? Why not 10 years ago, or 10 years into the future? How about 20? 30?

As long as there is violence, we will not be able to say we actually achieved Civilisation. So, no. We are quite far from the ideal standard of living. We are more in a semi-spherical ball of water and continental psychiatric hospitals

Sorry, but that is nonsense. Nobody cares if you can say you "achieved civilization," because that's not a term anybody has every used to qualify human achievement.

You're painting a portrait that nobody cares to look at.

That, and what you've said is just patently false by any definition in circulation.

Re: Too much finance is bad for the economy

#102

Post by ahomescu1 »

copsarebastards wrote: post #74
nightski wrote: post #52

Earlier quoted context omitted.

In a way this is partly a good thing. If everyone focused on going to space or curing cancer and were unsuccessful for quite some time we'd be in trouble. While there is a place for these endeavors and they are very important we have to be careful not to allocate too much focus to them.

> In a way this is partly a good thing. If everyone focused on going to space or curing cancer and were unsuccessful for quite some time we'd be in trouble. Implicit in this claim is the idea that somehow we need someone to own things. Why is that exactly? In fact, employee-owned cooperatives demonstrate that when the doers own what they're doing, it can have some benefits for all involved.

> Implicit in this claim is the idea that somehow we need someone to own things. Why is that exactly?

Tragedy of the commons. When scarce resources are communally owned, they tend to get exploited even worse than when they're privately owned.

Re: Too much finance is bad for the economy

#103

Post by dagw »

tanderson92 wrote: post #92
kqr2 wrote: post #89

Earlier quoted context omitted.

In a somewhat related issue, many of these financial firms will recruit top science & engineering talent at competitive universities. In some sense, it would have been better if these people had just studied finance to begin with since that would have opened a spot for someone who really wanted to practice science and engineering as a profession.

While what you say is true, I would draw a different conclusion. It seems more likely that the students would prefer working in a field closer to what they studied, but the lack of positions means they had to look elsewhere. Finance knows they can find people with highly transferable skills in sci/engineering at competitive schools, so the brain drain is really the fault of the job market in the sciences and engineer…

That's like a friend of mine with a math degree. He didn't want to work in finance, but despite his best efforts he could not find anyone offering him a job where he would get to use his degree. So he ended up in finance after all and gets paid lots of money and works on interesting math problems.

Re: Too much finance is bad for the economy

#104

Post by danbruc »

Retra wrote: post #101
sebastianconcpt wrote: post #80

Earlier quoted context omitted.

As long as there is violence, we will not be able to say we actually achieved Civilisation. So, no. We are quite far from the ideal standard of living. We are more in a semi-spherical ball of water and continental psychiatric hospitals

Sorry, but that is nonsense. Nobody cares if you can say you "achieved civilization," because that's not a term anybody has every used to qualify human achievement. You're painting a portrait that nobody cares to look at. That, and what you've said is just patently false by any definition in circulation.

I actually have to agree. Everybody is easily able to imagine what the world should be like - no war, no crime, no starving, no destroying the planet. And what are we actually doing? We are so incredible far off. And there are zero real obstacles, only human stupidity and evilness. Everybody on its own is only a bit stupid, evil, egoistic or what not, but all off us combined are anything but good. We are making little baby steps, ridiculous tiny baby steps.

Re: Too much finance is bad for the economy

#105

Post by gaius »

bhouston wrote: post #3

Summary: > In short, the finance sector lures away high-skilled workers from other industries. The finance sector then lends the money to businesses, but tends to favour those firms that have collateral they can pledge against the loan. This usually means builders and property developers. Businessmen are lured into this sector rather than into riskier projects that require high R&D spending and have less collateral t…

In short, the finance sector lures away high-skilled workers from other industries

LOL. When other industries aren't run by chinless public schoolboys where engineers are second class citizens, call me.

Re: Too much finance is bad for the economy

#106

Post by robrenaud »

gaius wrote: post #105
bhouston wrote: post #3

Summary: > In short, the finance sector lures away high-skilled workers from other industries. The finance sector then lends the money to businesses, but tends to favour those firms that have collateral they can pledge against the loan. This usually means builders and property developers. Businessmen are lured into this sector rather than into riskier projects that require high R&D spending and have less collateral t…

In short, the finance sector lures away high-skilled workers from other industries LOL. When other industries aren't run by chinless public schoolboys where engineers are second class citizens, call me.

What's your number?

Re: Too much finance is bad for the economy

#107

Post by Retra »

danbruc wrote: post #104
Retra wrote: post #101

Earlier quoted context omitted.

Sorry, but that is nonsense. Nobody cares if you can say you "achieved civilization," because that's not a term anybody has every used to qualify human achievement. You're painting a portrait that nobody cares to look at. That, and what you've said is just patently false by any definition in circulation.

I actually have to agree. Everybody is easily able to imagine what the world should be like - no war, no crime, no starving, no destroying the planet. And what are we actually doing? We are so incredible far off. And there are zero real obstacles, only human stupidity and evilness. Everybody on its own is only a bit stupid, evil, egoistic or what not, but all off us combined are anything but good. We are making littl…

Oh, I agree that there is work to be done. I don't see the value in framing that in terms of "calling ourselves a civilization."

"A civilization (or civilisation in British English) is any complex state society characterized by urban development, social stratification, symbolic communication forms (typically, writing systems), and a perceived separation from and domination over the natural environment." -- Wikipedia

Re: Too much finance is bad for the economy

#108

Post by dagw »

maximuscoolimus wrote: post #60
puranjay wrote: post #24

Earlier quoted context omitted.

"Or, don't pay us and get used to getting your news/op-eds in GIF form through Buzzfeed" What would you rather have?

It's never quite that extreme. I've yet to see a respected publisher devolve into GIF-delivered content out of financial constraints. That said, there are plenty of free publications with quality writing. Paying for an article hardly correlates with its excellence.

I've yet to see a respected publisher devolve into GIF-delivered content out of financial constraints.

Check in with The New Republic in a year or so.

Re: Too much finance is bad for the economy

#109

Post by lordnacho »

True story coming up.

I did my undergrad/master's at Oxford. The course title was "Engineering, Economics, and Management". Supposedly it was roughly 2/3rds of the Engineering course, and 2/3 of the "Economics and Management" course, but when you put it all together it seemed like 3/4 Engineering.

In the last year, there was a 6-month placement, which you were to use as experience to write a thesis. You could choose from anything that fit under any of the three rubrics (Eng, Econ, Mgt), and someone would find you an appropriate advisor, ie a prof from the Engineering School, the Econ department, or the Business school.

The kind of companies we got to show up were mainly banks. There was the occasional engineering company as well as a few household industrials.

I didn't get any of the coveted bank jobs. I did manage to show up very late (thank you Great Western railways) to an engineering interview, and got offered the job anyway. The money on offer was £11K/year, which didn't seem enticing at all, even for an internship. I ended up taking a marketing job at a major chip manufacturer, which was happy to pay 15K. So I rented a place in this little industrial town and got to work on powerpoint for half a year. (I should say I had a great social life, and I know friends who are still there 13 years later.)

So of course one day, I go to visit a coursemate who did manage to get a bank job, at a place that would later be called the giant vampire squid (not sure I agree with the epithet). So, what does he get? £26K a year. Free apartment within walking distance of work, on the South Bank. Gym and pool included. That one bedroom apartment, at that time, was probably 250/week. So basically he's making £38/year.

It's little wonder people want to work in finance when the numbers are that skewed.

How many of my ~30 EEM coursemates went into engineering? I can think of one. Just about everyone else went into finance.

I remember meeting a guy early on who'd started in Engineering. I asked him why he'd quit. He said "One day, I accidentally saw what my manager was making".

Is it a brain drain? Quite possibly. A lot of the brains in finance are fighting a zero sum game with each other. How can I price this derivative a little more smartly than the next guy? How do I grab the arb before another guy does it? How do I get a guy to trade with me and not someone else? How do I get my firm's name on this tombstone?

Re: Too much finance is bad for the economy

#110

Post by chongli »

Chinjut wrote: post #99
rayiner wrote: post #93

Earlier quoted context omitted.

I hate it when people complain about bright kids going into finance instead of STEM. My brother went to an Ivy and majored in physics. He asked me sometime junior year what he should do with his life. He'd already worked in research labs on nanotech, and was seriously considering getting a PhD. I told him to apply for finance and consulting jobs instead. He's glad he went into finance. He gets a ton of responsibility…

The complaints are not necessarily directed at individual people who rationally choose careers in finance over other vocations, given the system they live in. The complaints are to a large extent over the fact that our society has been set up this way, with the goal of perhaps trying to change that so that people would feel less incentive/need to abandon science, mathematics, etc., for finance (in multiple senses!).

It hasn't really been set up this way. It didn't even evolve to be this way. It's ultimately a law of nature: ownership of capital yields exponential growth. The more you start with, the faster you grow. Most other sorts of vocations yield linear growth.
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