5 ms·

Wall Street’s Brain Drain Defense

9 points by peter123 18y ago

rayvega 18y ago
>> If some Wall Streeters move on, perhaps other, more innovative professionals will take their place and build something a bit more durable..."You might get down to the core group that actually likes finance, and lose people who are coming just for the money,".. Is this not precisely what happened when the last big bubble burst, the dot com era? People who had no real business being in technology or had no passion about programming left the industry leaving behind the ones that actually cared and were much more motivated and driven leading to greater innovation. Taking a page from history, I say this is a good thing for Wall Street in the long run.
RiderOfGiraffes 18y ago
Quoting: > Up and down Wall Street, financial types are grumbling that their industry’s highest highflyers are getting their pay capped. Many Wall Streeters say this would be disastrous. The sharpest financial minds will up and quit, the argument goes, and take their smarts with them at the very moment they’re needed to re-engineer their companies and restart the economy. If they're really good, and they go into industry, won't that actually be better for the economy? It's hard to see what Wall St types actually contribute to the economy.
- nsrivast 18y ago
  http://en.wikipedia.org/wiki/Finance http://en.wikipedia.org/wiki/Finance An interesting comparison about various industry contributions to the economy: the highly-debated $20 billion bailout for auto companies versus the quickly-resolved $800 billion bailout for financial companies.
- colins_pride 18y ago
  There are a few issues here. When you get paid, that money probably gets deposited into a bank. When you start a family, you probably take out life insurance to make sure that if something happens to you, your family will be financially stable. When mortgage rates fall, you can refinance the mortgage on your house. Those are all financial services provided to you by private industry, and since people use them extensively, I think its fair to say that they are real contributions to the economy. Now you can argue that Wall St. guys are overpaid, have bad incentives, etc. But it is much tougher to argue that politicians should be arbitrarily limiting pay in certain currently-unpopular industries. That introduces distortions, and it does it at the worst possible time. Can you imagine if there were legal limits on startup profits in response to the dot com bubble? Do you think we'd have all of these great enterprises like Facebook, Twitter & YC? And the idea that it was done through a late night ammendment to the stimulus bill by an ethically challenged senator such that congressmen and congresswoman didn't even know that they were voting for these limits is just terrible. Don't get me wrong: It is also terrible that for the last two decades a lot of our best engineers have gone into finance, rather than building cool stuff, but it sure looks like that is unwinding on its own.
  - nradov 18y ago
    Let's keep a sense of perspective here. The pay limits only apply to companies that accept government aid. He who pays the piper calls the tune; there's nothing wrong with that. You also need to understand that these policies are set based on factors beyond pure economics. The various financial sector bailouts are hugely unpopular among US citizens. If ordinary people don't see bankers sharing some of the pain then we could actually see riots in the streets at some point. Look at what has already happened in some parts of Europe.
- byrneseyeview 18y ago
  It's hard to see what Wall St types actually contribute to the economy. It's really unfortunate that people see things this way. Somehow, the fact that I can -- in seconds -- convert money I earned at my job into a stake in one of thousands of businesses, many of them operating in multiple countries and offering multiple product lines (and the fact that the cost of converting my dollars into this stake costs less than, well, a good steak) is incredible. It's jaw-dropping. It's stunning that someone in Florida can live off of the profits of mines in Madagascar, fast-food restaurants in California, steel mills in South Korea, and insurance companies in Connecticut, all without spending more than half an hour a week reading brokerage statements. It's astounding that an entrepreneur can take a business whose future profits can't be estimated to within an order of magnitude, and sell a portion of that business for a specific amount. Finance is an incredibly valuable industry. Getting even some of this stuff slightly right creates a lot of wealth, and helps other industries create a lot more wealth. There have been excesses and there has been incompetence, but that doesn't change the fact that finance, in the aggregate, has been very beneficial.
  - swombat 18y ago
    It's really unfortunate that people see things this way. It's also quite unfortunate that the wave of anti-banker populism seems quite lively on HN too. I thought we were better than that.
    - jsteele 18y ago
      Its not anti-banker populism. Its the bailout mentality that these bankers have that's disconcerting. A startup that fails disappears the way its supposed to, but when a big bank fails we all pitch in the bail them out. That's the problem.
      - swombat 18y ago
        It's not anti-black racism. It's the welfare mentality that these black people have that's disconcerting. White people work for their success like they're supposed to, but when black people want to succeed we have to help them out with minority protection laws and quotas and such. That's the problem. Whenever you generalise something to a large number of people, you commit some sort of anti-? ?ism. "Bankers" are not a singular entity that can have a "mentality".
gaius 18y ago
And where will they go, exactly? Corporate America isn't hiring either.
pxlpshr 18y ago
My dad always wanted me to be a finance geek, "he who manages the money, makes the money" as he would say. In my eyes, it's a self-serving statement and a prime example of the economy taking a left turn into the deep end. When 'managing' is valued higher than creation, we have problems. Big problems.
- swombat 18y ago
  This argument is terribly fallacious. "Managing" is extremely important to value creation. A fundamental principle of capitalism is that you can use existing wealth ("capital") to invest in ways to create more wealth. Capitalism relies on people's self-interest to ensure that each investor will invest in the opportunity that has the most value-creation potential with the lowest risk. Investors, people "managing money", aren't just sitting on the sidelines cashing in on everyone else's good ideas. Their essential purpose is to move available capital to wherever it will produce the highest returns - i.e. wherever it will produce the most wealth. The total wealth of a nation impacts the wealth of everyone in that nation. I don't like the way republicans use the idea of "trickle-down economics", but the fact is, if you create lots of value (by putting money in the right place at the right time), that value inevitably spreads to many other people in the economy. Managing money is not "taking a left turn into the deep end". Creation will happen in hundreds of different forms. Picking the one that works best and giving it life is extremely valuable.
  - nazgulnarsil 18y ago
    I wish we didn't seem to have a spcies wide blind spot when it comes to adopting risk. when people rail against successful money managers they are never looking at all the failed ones, thus ignoring the amount of personal risk involved. sure there are a few winners, but why do you want to penalize them for their success?
  - pxlpshr 18y ago
    Good argument and I agree with you, but by my point is more focused on recent actions in regard to the socialization of risk and privatization of reward. My comment aside, I definitely appreciate the value of honest financial gurus. To your point re: the principles of capitalism, US is still very young and most institutional investments funds are not top performers longer than a few years. They are NOT the best for picking long-term winners, ultimately their criteria is governed by a 5-10 year exit. Let's not carelessly forget where capitalism can get it wrong — self-interest has done plenty of harm in man's time. What concerns me is that many of these "managers" are now on the 'creation' end of the "solution".

9 points by peter123 18y ago

>> If some Wall Streeters move on, perhaps other, more innovative professionals will take their place and build something a bit more durable..."You might get down to the core group that actually likes finance, and lose people who are coming just for the money,".. Is this not precisely what happened when the last big bubble burst, the dot com era? People who had no real business being in technology or had no passion about programming left the industry leaving behind the ones that actually cared and were much more motivated and driven leading to greater innovation. Taking a page from history, I say this is a good thing for Wall Street in the long run.

RiderOfGiraffes 18y ago

Quoting: > Up and down Wall Street, financial types are grumbling that their industry’s highest highflyers are getting their pay capped. Many Wall Streeters say this would be disastrous. The sharpest financial minds will up and quit, the argument goes, and take their smarts with them at the very moment they’re needed to re-engineer their companies and restart the economy. If they're really good, and they go into industry, won't that actually be better for the economy? It's hard to see what Wall St types actually contribute to the economy.

nsrivast 18y ago
http://en.wikipedia.org/wiki/Finance http://en.wikipedia.org/wiki/Finance An interesting comparison about various industry contributions to the economy: the highly-debated $20 billion bailout for auto companies versus the quickly-resolved $800 billion bailout for financial companies.
colins_pride 18y ago
There are a few issues here. When you get paid, that money probably gets deposited into a bank. When you start a family, you probably take out life insurance to make sure that if something happens to you, your family will be financially stable. When mortgage rates fall, you can refinance the mortgage on your house. Those are all financial services provided to you by private industry, and since people use them extensively, I think its fair to say that they are real contributions to the economy. Now you can argue that Wall St. guys are overpaid, have bad incentives, etc. But it is much tougher to argue that politicians should be arbitrarily limiting pay in certain currently-unpopular industries. That introduces distortions, and it does it at the worst possible time. Can you imagine if there were legal limits on startup profits in response to the dot com bubble? Do you think we'd have all of these great enterprises like Facebook, Twitter & YC? And the idea that it was done through a late night ammendment to the stimulus bill by an ethically challenged senator such that congressmen and congresswoman didn't even know that they were voting for these limits is just terrible. Don't get me wrong: It is also terrible that for the last two decades a lot of our best engineers have gone into finance, rather than building cool stuff, but it sure looks like that is unwinding on its own.
- nradov 18y ago
  Let's keep a sense of perspective here. The pay limits only apply to companies that accept government aid. He who pays the piper calls the tune; there's nothing wrong with that. You also need to understand that these policies are set based on factors beyond pure economics. The various financial sector bailouts are hugely unpopular among US citizens. If ordinary people don't see bankers sharing some of the pain then we could actually see riots in the streets at some point. Look at what has already happened in some parts of Europe.
byrneseyeview 18y ago
It's hard to see what Wall St types actually contribute to the economy. It's really unfortunate that people see things this way. Somehow, the fact that I can -- in seconds -- convert money I earned at my job into a stake in one of thousands of businesses, many of them operating in multiple countries and offering multiple product lines (and the fact that the cost of converting my dollars into this stake costs less than, well, a good steak) is incredible. It's jaw-dropping. It's stunning that someone in Florida can live off of the profits of mines in Madagascar, fast-food restaurants in California, steel mills in South Korea, and insurance companies in Connecticut, all without spending more than half an hour a week reading brokerage statements. It's astounding that an entrepreneur can take a business whose future profits can't be estimated to within an order of magnitude, and sell a portion of that business for a specific amount. Finance is an incredibly valuable industry. Getting even some of this stuff slightly right creates a lot of wealth, and helps other industries create a lot more wealth. There have been excesses and there has been incompetence, but that doesn't change the fact that finance, in the aggregate, has been very beneficial.
- swombat 18y ago
  It's really unfortunate that people see things this way. It's also quite unfortunate that the wave of anti-banker populism seems quite lively on HN too. I thought we were better than that.
  - jsteele 18y ago
    Its not anti-banker populism. Its the bailout mentality that these bankers have that's disconcerting. A startup that fails disappears the way its supposed to, but when a big bank fails we all pitch in the bail them out. That's the problem.
    - swombat 18y ago
      It's not anti-black racism. It's the welfare mentality that these black people have that's disconcerting. White people work for their success like they're supposed to, but when black people want to succeed we have to help them out with minority protection laws and quotas and such. That's the problem. Whenever you generalise something to a large number of people, you commit some sort of anti-? ?ism. "Bankers" are not a singular entity that can have a "mentality".

gaius 18y ago

And where will they go, exactly? Corporate America isn't hiring either.

pxlpshr 18y ago

My dad always wanted me to be a finance geek, "he who manages the money, makes the money" as he would say. In my eyes, it's a self-serving statement and a prime example of the economy taking a left turn into the deep end. When 'managing' is valued higher than creation, we have problems. Big problems.

swombat 18y ago
This argument is terribly fallacious. "Managing" is extremely important to value creation. A fundamental principle of capitalism is that you can use existing wealth ("capital") to invest in ways to create more wealth. Capitalism relies on people's self-interest to ensure that each investor will invest in the opportunity that has the most value-creation potential with the lowest risk. Investors, people "managing money", aren't just sitting on the sidelines cashing in on everyone else's good ideas. Their essential purpose is to move available capital to wherever it will produce the highest returns - i.e. wherever it will produce the most wealth. The total wealth of a nation impacts the wealth of everyone in that nation. I don't like the way republicans use the idea of "trickle-down economics", but the fact is, if you create lots of value (by putting money in the right place at the right time), that value inevitably spreads to many other people in the economy. Managing money is not "taking a left turn into the deep end". Creation will happen in hundreds of different forms. Picking the one that works best and giving it life is extremely valuable.
- nazgulnarsil 18y ago
  I wish we didn't seem to have a spcies wide blind spot when it comes to adopting risk. when people rail against successful money managers they are never looking at all the failed ones, thus ignoring the amount of personal risk involved. sure there are a few winners, but why do you want to penalize them for their success?
- pxlpshr 18y ago
  Good argument and I agree with you, but by my point is more focused on recent actions in regard to the socialization of risk and privatization of reward. My comment aside, I definitely appreciate the value of honest financial gurus. To your point re: the principles of capitalism, US is still very young and most institutional investments funds are not top performers longer than a few years. They are NOT the best for picking long-term winners, ultimately their criteria is governed by a 5-10 year exit. Let's not carelessly forget where capitalism can get it wrong — self-interest has done plenty of harm in man's time. What concerns me is that many of these "managers" are now on the 'creation' end of the "solution".