38 ms·

First of all, I disagree with the entire premise of the question. Why does the intelligent have an obligation to dedicate his or her life to the creation of max

by xxzz 17y ago

First of all, I disagree with the entire premise of the question. Why does the intelligent have an obligation to dedicate his or her life to the creation of maximal value for society? Sounds like Nietzsche's slave morality to me. Why does the attractive/tall/healthy not have a similar special moral obligation? Second of all, providing liquidity is very important. Sure, you are only shaving off a few basis points, but multiply that by a few trillion and you are creating serious value. How much value does a silly time-wasting video game provide relative to the efficient allocation of the world's capital? Finance is an extremely exciting field, where machine learning, econometrics, physics, and just about everything else converge. Imagine a world without car insurance, where startups cannot offer equity, where there are no IPOs. Finance facilitates co-operation, trade, and, yes it is cliche, but world peace. If you are interested, please don't let the media and finger-pointing politicians turn you away from this exciting line of work.

peyton 17y ago
When you talk about creating serious value, you're not talking about value in general, but the value derived from the money supply. Not that there's anything dirty about money. But value can come from other places. For some people, it's hard to escape the soul-sucking nature of working in finance. The super-high salaries are a kind of anti-filter: they attract people who really don't "love what they do." And eventually money isn't enough to keep such people working. That's why i-banking has such a high burnout rate. Speaking of Nietzsche, I know someone who quit i-banking to teach philosophy, of all things.
benmathes 17y ago
First of all, I disagree with the entire premise of the question. Why does the intelligent have an obligation to dedicate his or her life to the creation of maximal value for society? Sounds like Nietzsche's slave morality to me. Why does the attractive/tall/healthy not have a similar special moral obligation? I might be projecting, but having hung out with Carter (the author) a few times while he spent this past summer out here in Palo Alto, I can probably assure you that it's just an un-stated assumption that's causing you guys to differ. The reason he's asking that question of "what value do you add?" is because it leads to personal fulfillment. Some people are personally fulfilled by shaving basis points. Hell, I could be one of them if not for the the lost forests of entry-level finance work. Carter is talking to people that want to have huge impact on society. They dream to be Rockefellers, Jobs's, Brins, and so on. In those cases, it's always worth stepping back and thinking about what overall impact you're having. If all you're doing is shaving basis points you're probably not changing the nature of society. And no, this doesn't rule out finance; J.P. Morgan diverted the vast holdings of Europe into the burgeoning economy of these United States (http://en.wikipedia.org/wiki/J._P._Morgan#Treasury_gold http://en.wikipedia.org/wiki/J._P._Morgan#Treasury_gold) during a crisis.
- jimbokun 17y ago
  "They dream to be Rockefellers, Jobs's, Brins, and so on." In other words: "Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?" http://www.pbs.org/wgbh/pages/frontline/president/players/sculley.html http://www.pbs.org/wgbh/pages/frontline/president/players/sc...
albertsun 17y ago
The intelligent don't have an obligation to create maximal value. But if you're making money without creating value for society, then what you're doing is rent seeking and "cheating" people who do create value. http://en.wikipedia.org/wiki/Rent_seeking http://en.wikipedia.org/wiki/Rent_seeking I definitely agree that finance is an exciting field where a lot of interesting topics converge. However, the examples you give are way exaggerated. The full complexity of the modern financial system isn't really needed to facilitate trade/provide insurance/provide financing/whatever else. Those things don't go away if fewer people are trading inside spreads. Yes, liquidity is important for a market. But it's not an end in and of itself. There is no value in liquidity. There's only value in what liquidity enables. It's like what Paul Graham always talks about, you have to make something people want. Liquidity is kind of like ball bearings. No one really wants ball bearings, but they're useful because of what they enable. Liquidity is the same way. Edit: I'm also not suggesting that there's no value in making ball bearings or intermediate products, just that they are not the ultimate goal.
- lrm242 17y ago
  You're wrong about liquidity. By providing liquidity to a market you are providing immediacy to someone else. Market participants seeking immediacy place a specific value on it and are willing to pay someone for the privilege. As a market participant, if you want to buy or sell at the market, you're directly benefiting from the liquidity being provided by other participants.
  - cwp 17y ago
    Yeah liquidity is great, but only up to a point. If it takes me six months to sell my house at "market price" that really sucks. I'd welcome a little real estate speculation, and the liquidity it brings. But if bond traders shave 600 milliseconds off the time it takes to sell my bond holdings, so what? People may be willing to pay for that, but society doesn't benefit.
    - lrm242 17y ago
      Because while they shaved 600ms of your execution time they also lowered your spread by 50 basis points, making it cheaper for you to unload your bond holdings on the market.
Qz 17y ago
Considering how many people in the world are starving, ill, undereducated, and unemployed, I'd say we're doing a piss-poor job of 'efficiently allocating the world's capital'.
- xxzz 17y ago
  * Seems like all the more reason to try harder * Financial innovation does help here, such as micro-lending, although admittedly not something done by Wall Street * It's a complicated issue. Maybe the best solution we can hope for at the moment is to not keep funneling resources to corrupt regimes, where the most starving happens to be in. For the record, foreign investment has been a huge part of China and India's recent success.
- lionhearted 17y ago
  > Considering how many people in the world are starving, ill, undereducated, and unemployed, I'd say we're doing a piss-poor job of 'efficiently allocating the world's capital'. Considering how many in the world aren't starving, ill, undereducated, and unemployed, I'd say we're doing an utterly frigging amazing job of 'efficiently allocating the world's capital'. Seriously - the question isn't, "Why are some people poor?" It's, "Why AREN'T some people poor?" Poverty is the natural state of humanity - we evolved from being apes and crawled out of forests, jungles, and caves. The fact that there's any literacy, lifespan over 30 years, immunization from disease, infrastructure, and knowledge is marvelous in and of itself. The rate that those things are growing lately is astounding. Humanity is doing a pretty amazing job lately.
  - jsankey 17y ago
    Agreed, we've done a pretty amazing job to become so productive. But we've done a terrible job of distributing this among the world's population. It's pretty appalling that with our current levels of productivity there are still so many people whose basic needs are not being met. I guess it depends what you mean by efficiently allocating capital. What's the end goal? Just to produce as much as we can?
    - 17y ago
billybob 17y ago
"Why does the intelligent have an obligation to dedicate his or her life to the creation of maximal value for society?" What does intelligence have to do with it? Sweeping the streets is an honorable job and makes the world a little nicer. Writing a botnet for spammers isn't and doesn't.
tullius 17y ago
I personally don't see any harm in asking the question "How much value does my job create?" While finance is an exciting field that does provide significant benefit in certain areas (i.e., liquidity, efficient pricing) the majority of the field is engaged in enormous zero-sum games, much like a casino. I think it's no wonder so many people get burned out in finance while entrepreneurs stay active and excited in what they are doing.

by xxzz 17y ago

peyton 17y ago

When you talk about creating serious value, you're not talking about value in general, but the value derived from the money supply. Not that there's anything dirty about money. But value can come from other places. For some people, it's hard to escape the soul-sucking nature of working in finance. The super-high salaries are a kind of anti-filter: they attract people who really don't "love what they do." And eventually money isn't enough to keep such people working. That's why i-banking has such a high burnout rate. Speaking of Nietzsche, I know someone who quit i-banking to teach philosophy, of all things.

benmathes 17y ago

First of all, I disagree with the entire premise of the question. Why does the intelligent have an obligation to dedicate his or her life to the creation of maximal value for society? Sounds like Nietzsche's slave morality to me. Why does the attractive/tall/healthy not have a similar special moral obligation? I might be projecting, but having hung out with Carter (the author) a few times while he spent this past summer out here in Palo Alto, I can probably assure you that it's just an un-stated assumption that's causing you guys to differ. The reason he's asking that question of "what value do you add?" is because it leads to personal fulfillment. Some people are personally fulfilled by shaving basis points. Hell, I could be one of them if not for the the lost forests of entry-level finance work. Carter is talking to people that want to have huge impact on society. They dream to be Rockefellers, Jobs's, Brins, and so on. In those cases, it's always worth stepping back and thinking about what overall impact you're having. If all you're doing is shaving basis points you're probably not changing the nature of society. And no, this doesn't rule out finance; J.P. Morgan diverted the vast holdings of Europe into the burgeoning economy of these United States (http://en.wikipedia.org/wiki/J._P._Morgan#Treasury_gold http://en.wikipedia.org/wiki/J._P._Morgan#Treasury_gold) during a crisis.

jimbokun 17y ago
"They dream to be Rockefellers, Jobs's, Brins, and so on." In other words: "Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?" http://www.pbs.org/wgbh/pages/frontline/president/players/sculley.html http://www.pbs.org/wgbh/pages/frontline/president/players/sc...

albertsun 17y ago

The intelligent don't have an obligation to create maximal value. But if you're making money without creating value for society, then what you're doing is rent seeking and "cheating" people who do create value. http://en.wikipedia.org/wiki/Rent_seeking http://en.wikipedia.org/wiki/Rent_seeking I definitely agree that finance is an exciting field where a lot of interesting topics converge. However, the examples you give are way exaggerated. The full complexity of the modern financial system isn't really needed to facilitate trade/provide insurance/provide financing/whatever else. Those things don't go away if fewer people are trading inside spreads. Yes, liquidity is important for a market. But it's not an end in and of itself. There is no value in liquidity. There's only value in what liquidity enables. It's like what Paul Graham always talks about, you have to make something people want. Liquidity is kind of like ball bearings. No one really wants ball bearings, but they're useful because of what they enable. Liquidity is the same way. Edit: I'm also not suggesting that there's no value in making ball bearings or intermediate products, just that they are not the ultimate goal.

lrm242 17y ago
You're wrong about liquidity. By providing liquidity to a market you are providing immediacy to someone else. Market participants seeking immediacy place a specific value on it and are willing to pay someone for the privilege. As a market participant, if you want to buy or sell at the market, you're directly benefiting from the liquidity being provided by other participants.
- cwp 17y ago
  Yeah liquidity is great, but only up to a point. If it takes me six months to sell my house at "market price" that really sucks. I'd welcome a little real estate speculation, and the liquidity it brings. But if bond traders shave 600 milliseconds off the time it takes to sell my bond holdings, so what? People may be willing to pay for that, but society doesn't benefit.
  - lrm242 17y ago
    Because while they shaved 600ms of your execution time they also lowered your spread by 50 basis points, making it cheaper for you to unload your bond holdings on the market.

Qz 17y ago

Considering how many people in the world are starving, ill, undereducated, and unemployed, I'd say we're doing a piss-poor job of 'efficiently allocating the world's capital'.

xxzz 17y ago
* Seems like all the more reason to try harder * Financial innovation does help here, such as micro-lending, although admittedly not something done by Wall Street * It's a complicated issue. Maybe the best solution we can hope for at the moment is to not keep funneling resources to corrupt regimes, where the most starving happens to be in. For the record, foreign investment has been a huge part of China and India's recent success.
lionhearted 17y ago
> Considering how many people in the world are starving, ill, undereducated, and unemployed, I'd say we're doing a piss-poor job of 'efficiently allocating the world's capital'. Considering how many in the world aren't starving, ill, undereducated, and unemployed, I'd say we're doing an utterly frigging amazing job of 'efficiently allocating the world's capital'. Seriously - the question isn't, "Why are some people poor?" It's, "Why AREN'T some people poor?" Poverty is the natural state of humanity - we evolved from being apes and crawled out of forests, jungles, and caves. The fact that there's any literacy, lifespan over 30 years, immunization from disease, infrastructure, and knowledge is marvelous in and of itself. The rate that those things are growing lately is astounding. Humanity is doing a pretty amazing job lately.
- jsankey 17y ago
  Agreed, we've done a pretty amazing job to become so productive. But we've done a terrible job of distributing this among the world's population. It's pretty appalling that with our current levels of productivity there are still so many people whose basic needs are not being met. I guess it depends what you mean by efficiently allocating capital. What's the end goal? Just to produce as much as we can?
  - 17y ago

billybob 17y ago

"Why does the intelligent have an obligation to dedicate his or her life to the creation of maximal value for society?" What does intelligence have to do with it? Sweeping the streets is an honorable job and makes the world a little nicer. Writing a botnet for spammers isn't and doesn't.

tullius 17y ago

I personally don't see any harm in asking the question "How much value does my job create?" While finance is an exciting field that does provide significant benefit in certain areas (i.e., liquidity, efficient pricing) the majority of the field is engaged in enormous zero-sum games, much like a casino. I think it's no wonder so many people get burned out in finance while entrepreneurs stay active and excited in what they are doing.