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> 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
by golemotron 12y ago
> 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 to pledge.
The article doesn't explain the linkage. Why would poaching of high-skilled workers lead to investment in companies with collateral? Or, are they just saying that whenever finance becomes prominent it attempts to drive out risk ruthlessly?
- xdissent 12y agoI believe it's implied the finance sector knows they're draining the high-skilled worker pool, meaning R&D-heavy businesses won't be able to find the employees they need to succeed. So businesses with collateral are a better bet.
- rqebmm 12y agoI don't think they are saying that luring skilled workers _leads_ to lending to easily collateralizable businesses. Just positing that those two separate statements are true.
- eli_gottlieb 12y ago>Or, are they just saying that whenever finance becomes prominent it attempts to drive out risk ruthlessly? That's how I interpreted it. Finance would rather invest with high collateral or even rent-seek than accept the actual risks inherent in productive investment.