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... and the problem I have with Occupy's "tax the rich" and similar sloganeering is this: Given the immense political connections of the financial class, it is

by api 15y ago

... and the problem I have with Occupy's "tax the rich" and similar sloganeering is this: Given the immense political connections of the financial class, it is a virtual certainty that any attempt to "level the playing field" would end up falling not on them but on the more productive rich and the upper middle class. In other words, the burden will fall on the people who actually earned it. If anything, the financial elites will find a way to benefit from it at the expense of the "lower rich." It's not the haves vs. the have-nots. It's the connecteds vs. the connected-nots. The connected-nots with high net worth are just peasants in fancy suits. Really... doctors, lawyers, engineers, business owners, and executives in productive industries ought to be marching in the streets too. This is not the 99% vs. the 1%. This is about a sophisticated, complex, deeply embedded system of financial con artistry vs. everyone else on the planet. What we have here is a worthless parasite class -- a decadent nobility -- that has buried itself into our civilization like a tick.

cynicalkane 15y ago
[EDIT: I may have misinterpreted the parent post as criticizing finance. I'd delete my comment but I'm leaving part of it here because it has already been replied to.] What we have here is a worthless parasite class -- a decadent nobility -- that has buried itself into our civilization like a tick The fact of the matter is you will have a very hard time finding a financial person who defends the current state of things. I never have. Nobody considers bailouts or too-big-to-fail optimal, and nobody likes the regulatory mud the financial industry swims in. And the financial industry, and probably my paycheck, would be smaller if none of this stuff existed. And I wouldn't mind because it'd be made up for by living in a more productive nation. Of course, you'll still see mega-rich financiers because the economies of scale are unbeatable in this industry. And calling the financial system "con artistry vs everyone else on the planet" is a worthless thing to say because trading, investing, credit, and risk management add value and to say otherwise puts you in a very flimsy position, a position by which you'd have to adopt a wildly heterodox economic view--such as classical Marxism--to reasonably defend yourself.
- veyron 15y ago
  I think you misinterpreted the original statement. Both the article and the parent post take a critical view on inherited wealth, which doesn't necessarily come from the financial industry per se.
  - mmsmatt 15y ago
    Article does claim much of the highest tier's wealth comes from investment as opposed to income. The products in which they invest have to come from financial services, including Cynicalkane's employer.
- _dps 15y ago
  I often play "defender" of the finance industry among my friends, but I think we should separate two claims: 1) finance, as a whole, is "bad" for whatever reason 2) separate from (1) the people and companies involved in finance are "bad" These are two entirely different claims. It's totally possible to believe that the finance industry provides valuable capital allocation and risk management services, but to also believe that the companies running these services have become corrupt (and that said corruption happens at the expense of the "99%"). I don't think one can reasonably blame the population at large for suspecting something fishy. Between bailouts of "clearing house counterparties" like AIG/Fannie/Freddie, below-inflation Fed Funds rate to which finance elites have exclusive access, a revolving door of GS alumni at Treasury, etc., one could easily be forgiven for suspecting systematic corruption. The only way to overcome this predisposition is an open commitment to transparency and "taking your lumps when you deserve them", which, in my opinion, has not been demonstrated by the finance community vis-a-vis the taxpayer.
  - cynicalkane 15y ago
    I agree with the attitude of this post, but I'm puzzled that you criticize the Fed Funds rate as below inflation. This is how you create an expansionary monetary policy which is the correct response to a credit-collapse recession. This enriches commerical banks, but all monetary policy is distortionary. A good alternative might be helicopter money. I wonder how well that would do, politically.
justincormack 15y ago
Very roughly the financial sector takes 1% per annum from financial assets, by various means (commissions, fees, spreads etc). The sector is so huge because financial assets, leverage and debt has grown so much. Moving back to a non bubble economy, where banks and other financial institutions, the shadow banking sector (and government, and individuals) are not hugely leveraged will resolve the profitability and size of the financial sector naturally. Currently banking regulation seems to be the most efefctive way of doing this; getting to a state where too big to fail does not exist would help. There is little political will and lots of lobbying though to not get to this point.
tonio09 15y ago
slaves vs slave owners. bourgeoisie vs proletariat. Class conflict has been here since the beginning of human history. Those who have power will always exploit those who don't have power. This will never change. It's human nature. You can either beat the system or game the system. But it's incredibly hard. Guess how much chance does an Ethiopian have to make it really rich. Not much. Just like you. You need to be born to the right family to get in there. The culture of yincubator seems to reinforce this. Sure, work your ass off, have no life, no health, just do 80 hours per week for your startup, and then the investment angels come in and take half of that, while they do no work. I know that this is how investment works, but I still find it unfair. Not even talking about all the exploitative economic processes that are created by the 0.1% without our knowledge and oversight.

by api 15y ago

cynicalkane 15y ago

[EDIT: I may have misinterpreted the parent post as criticizing finance. I'd delete my comment but I'm leaving part of it here because it has already been replied to.] What we have here is a worthless parasite class -- a decadent nobility -- that has buried itself into our civilization like a tick The fact of the matter is you will have a very hard time finding a financial person who defends the current state of things. I never have. Nobody considers bailouts or too-big-to-fail optimal, and nobody likes the regulatory mud the financial industry swims in. And the financial industry, and probably my paycheck, would be smaller if none of this stuff existed. And I wouldn't mind because it'd be made up for by living in a more productive nation. Of course, you'll still see mega-rich financiers because the economies of scale are unbeatable in this industry. And calling the financial system "con artistry vs everyone else on the planet" is a worthless thing to say because trading, investing, credit, and risk management add value and to say otherwise puts you in a very flimsy position, a position by which you'd have to adopt a wildly heterodox economic view--such as classical Marxism--to reasonably defend yourself.

veyron 15y ago
I think you misinterpreted the original statement. Both the article and the parent post take a critical view on inherited wealth, which doesn't necessarily come from the financial industry per se.
- mmsmatt 15y ago
  Article does claim much of the highest tier's wealth comes from investment as opposed to income. The products in which they invest have to come from financial services, including Cynicalkane's employer.
_dps 15y ago
I often play "defender" of the finance industry among my friends, but I think we should separate two claims: 1) finance, as a whole, is "bad" for whatever reason 2) separate from (1) the people and companies involved in finance are "bad" These are two entirely different claims. It's totally possible to believe that the finance industry provides valuable capital allocation and risk management services, but to also believe that the companies running these services have become corrupt (and that said corruption happens at the expense of the "99%"). I don't think one can reasonably blame the population at large for suspecting something fishy. Between bailouts of "clearing house counterparties" like AIG/Fannie/Freddie, below-inflation Fed Funds rate to which finance elites have exclusive access, a revolving door of GS alumni at Treasury, etc., one could easily be forgiven for suspecting systematic corruption. The only way to overcome this predisposition is an open commitment to transparency and "taking your lumps when you deserve them", which, in my opinion, has not been demonstrated by the finance community vis-a-vis the taxpayer.
- cynicalkane 15y ago
  I agree with the attitude of this post, but I'm puzzled that you criticize the Fed Funds rate as below inflation. This is how you create an expansionary monetary policy which is the correct response to a credit-collapse recession. This enriches commerical banks, but all monetary policy is distortionary. A good alternative might be helicopter money. I wonder how well that would do, politically.

justincormack 15y ago

Very roughly the financial sector takes 1% per annum from financial assets, by various means (commissions, fees, spreads etc). The sector is so huge because financial assets, leverage and debt has grown so much. Moving back to a non bubble economy, where banks and other financial institutions, the shadow banking sector (and government, and individuals) are not hugely leveraged will resolve the profitability and size of the financial sector naturally. Currently banking regulation seems to be the most efefctive way of doing this; getting to a state where too big to fail does not exist would help. There is little political will and lots of lobbying though to not get to this point.

tonio09 15y ago

slaves vs slave owners. bourgeoisie vs proletariat. Class conflict has been here since the beginning of human history. Those who have power will always exploit those who don't have power. This will never change. It's human nature. You can either beat the system or game the system. But it's incredibly hard. Guess how much chance does an Ethiopian have to make it really rich. Not much. Just like you. You need to be born to the right family to get in there. The culture of yincubator seems to reinforce this. Sure, work your ass off, have no life, no health, just do 80 hours per week for your startup, and then the investment angels come in and take half of that, while they do no work. I know that this is how investment works, but I still find it unfair. Not even talking about all the exploitative economic processes that are created by the 0.1% without our knowledge and oversight.