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I think the appeal of finance is the intellectual leverage one gets there. If I am really bright and I can develop a profitable arbitrage trade in the marketpla

I think the appeal of finance is the intellectual leverage one gets there. If I am really bright and I can develop a profitable arbitrage trade in the marketplace I can turn it near instantly into millions of dollars (if I'm right, obviously the market does not give points for effort). If I'm in a start up, which we would probably consider to be very high cleverness to reward leverage, it can take a long time and have lots of randomness to get the big payoff, e.g. Kiko. Now, compare that to being an employee, where to get enormous payoff you have to climb the ladder into stock options land. The article's point is that this is not how the world should be, but markets cause this by construction: If I'm stranded on an island with a bunch of Robinson Crusoes I'm going to try swapping coconuts for mangoes across the island before I start experimenting with cross breeding them. From a welfare perspective it even makes sense to do the easy things first (trade) and the hard stuff next (R&D) because effort is more likely to be rewarded in the former than the latter. One could also complain about how all the socially well connected are lobbyists instead of high school teachers and the beautiful are in pharmaceutical sales rather than portrait modeling. Sure it's sad, but also mostly inevitable.

yafujifide 17y ago
> if I'm right, obviously the market does not give points for effort But the market does give points for effort. How else do you explain the bonuses awarded to bankers who damaged the economy? They were rewarded despite their antisuccess.
- mseebach 17y ago
  It's a very perverted market, where banks that would have been bankrupt if not for billions in taxpayer funds, even gets to pay their employees salary. On the other hand, bankers in the banks that actually lived through the crisis because they didn't jump on all the fancy derivatives, actually deserves a bit fat bonus.
- bdr 17y ago
  You're blatantly taking that out of context. GP's idea was to "develop a profitable arbitrage trade" using one's intelligence, not to go work for a bank.

yafujifide 17y ago

> if I'm right, obviously the market does not give points for effort But the market does give points for effort. How else do you explain the bonuses awarded to bankers who damaged the economy? They were rewarded despite their antisuccess.

mseebach 17y ago
It's a very perverted market, where banks that would have been bankrupt if not for billions in taxpayer funds, even gets to pay their employees salary. On the other hand, bankers in the banks that actually lived through the crisis because they didn't jump on all the fancy derivatives, actually deserves a bit fat bonus.
bdr 17y ago
You're blatantly taking that out of context. GP's idea was to "develop a profitable arbitrage trade" using one's intelligence, not to go work for a bank.