Historically the idea of war having rules has had a very unfortunate past. In WW1, Germany began unrestricted submarine warfare in 1915 and torpedoed the passenger liner Lusitania (filled with neutral civilians). There's a long list [1] of hospital ships deliberately sunk in WW1.
Then in WW2, aside from even more unrestricted submarine warfare and sinkings of hospital ships [2], we also have the firebombings of Dresden, Tokyo, and every other major axis city; machine-gunning of shipwreck survivors in the water; the atom bombs; the impressment of Koreans into service as "comfort women" for Japanese servicemen; forced labor at both axis & allied prisoner camps; the internment of Japanese-Americans in concentration camps; and of course the Holocaust.
Modern-day, there's the My Lai massacre and Obama's attack on a Doctors Without Borders hospital [3]. Probably more too, but you don't hear about them.
The author cites that war has rules because rules are written down, but rules are written down for Wall Street as well. They're just not enforced. And similarly, the laws of war are only enforced on the losing side, or on scapegoats that the actual decision-makers make available as a token sacrifice. When it comes to actually conducting a war, belligerents usually follow just one rule: win.
Wallstreet has rules. They're just not enforced. People would be shocked if they knew, for instance, how many hedge funds simply operate on a model of "black edge" insider trading.
People would be shocked if they knew how frequently soldiers put themselves in grave danger (and die) to avoid violating their command's ROI and the laws of land warfare.
Specially related to insider trading, the enforcement of the rules you mention is made more complicated by the fact that there are actually no laws (rules) on the books that make insider trading illegal (as well as there being no SEC rule against insider trading). When people get in trouble for insider trading, they normally point to it being securities fraud. That leaves the interpretation of what is insider trading up to the courts. I agree there are plenty of people in Wall Street that would do just about anything (including breaking a black and white rule of law) to make a buck, but there is also a pretty significant grey area for what constitutes insider trading. If you are interested, just google "Matt Levine insider trading" and a number of his daily columns with updates on various cases (and his much better explanations of the nuances of insider trading) will come up.
I'd be interested in hearing more about how these firms get away with this kind of thing. I interned at an investment firm last year and the lawyer who worked in their compliance department told me how detailed, thorough, and stringent the audit that was done by the SEC the year before I got there was. Keep in mind, this was a small firm. Do larger firms have some way of keeping those kinds of things secret? Sorry if I'm misinterpreting something here, I have almost no financial knowledge as I worked in the tech department as a programmer.
This is an interesting and broad analogy which I hadn't heard of before.
The military, at the end of the day, is a tool (famously, another tool of diplomacy). Either it's useful or not. Likewise finance is a tool (fundamentally a service industry like gardening or medicine). We support it because it helps finance business, helps people manage their pensions etc. Sometimes sidelines are useful too (DARPA, gun hobbyists, weird financial instruments that increase liquidity for everyone).
Yet lately the ends have been forgotten and the means elevated. The recent US proposed budget suggests increasing expenditures but there is no discussion as to whether that would be useful or not (and thus whether the increase is unnecessary, too big to even too small). The same problem has emerged in Finance: the point of an financial instrument is the instrument itself. HFT that skims a bit out of the transaction (thus is worse for the fundamental buyer and seller) is considered good. etc.
People who have memorized the "marketmaking is essential" arguments for HFT may disagree with you. People who dislike arguments from "does this serve its stated purpose for society" may reject your argumentation style. I think you've got a hell of a point on both sides.
If a teeny-tiny fraction of a percentage or a penny flat tax would cause a trade to not be profitable in expectation, then that trade probably never had anything to do with the real economy in the first place.
Frankly I don't see the point of these meaningless articles. You have a financial system which is akin to a police force whose commanders are chosen by the drug dealers, and the police employ former drug dealers on the grounds that haven been drug dealers, they know more about the drug business and they can turn their knowledge to fighting the drug war.
After a few years in drug enforcement the ex drug dealers return to work for their gangs, taking all the knowledge from working in drug enforcement with them, not to mention that they were still receiving dividends and profits from the the drug dealers who previously employed them during their stint in drug enforcement.
I really can't comprehend why any intelligent people can expect this depraved, corrupt farcical system to work. Now you have Trump, unashamedly pro-business (ie leaving the inmates in control of the asylum) and people seriously expect things to get better.
Here are your brave American presidents who can bravely and patriotically authorize the executions (ie murder) of alleged terrorists in Yemen and Afghanistan who have done diddly squat to Americans, but can't/won't a lift a finger against corrupt predatory malign financiers whose actions leave Americans indebted, dying prematurely because they can't afford good housing and good health care. Compare the deaths of Americans due to terrorism by Yemenis or Somalis, and the premature deaths of Americans due to poverty and ill-health which these banksters frauds have worsened, and tell me who Trump should be executing without any meaningful evidence or even a trial.
I am sorry but due to their corrupt financial system the politicians of the Western world are becoming more and more of a joke.
I disagree with the author's premise: "Nearly a decade after one of the most devastating financial collapses in modern history, Wall Street appears as corrupt as ever."
Considering the size of 'Wall Street' the size of the ethics violations that he uses as an example are miniscule. In addition, due to the increased scrutiny that financial institutions face and the potential damage that scandals can cause, legitimate organizations seem less willing to risk ethics violations.
Also, unlike in war, ethics violations on Wall Street can be reported and prosecuted relatively easily.
As mentioned in many comments above - Wall Street has ethics, one can only hope that the current administration doesn't take steps to weaken threaten these.
In war, there is a benefit to treating your enemy with dignity. Treatment of prisoners, morale("we are the good guys"), etc. In Wall Street there isn't with white collar crime only getting a slap on the risk when they put millions of people on the street.
The system is broken when corruption and misdirection is not punished with the weight of their crimes.
And yet it is internationally recognized to exist. Here's a video that goes into how war has more formalized ethics than, say romance. https://www.youtube.com/watch?v=oThh3_Srxtc
> Of course, the Just War Ethic suffers from a problem: The normative ideal in this case is the absence of war, yet the reality of war precludes that ideal. Therefore, any applied ethics of war are by definition morally flawed. The question for the ethicist then is this: Is it more ethical to make continued (and often ignored) normative pronouncements against the existence of war, or to engage with the temporal reality of war with ethics that seek to limit the cases in which war is undertaken, to moderate its effects, and to guide it toward the normative goal, with the understanding that this goal is not immediately or fully achievable? Obviously, advocates of the Just War Ethic, myself included, come to the latter conclusion.
As a defender one is a partaker in a war. As partaker in a war one can choose to either take or not take prisoners and one can choose to torture said prisoners or not. These choices represent different levels of ethicality.
The vast majority of "wall street's" corruption is its relationship to the rent seeking opportunities that the US government makes available for them. And what's hilarious is that its the same bleeding heart liberals who demand things like the government provide low interest home loans who are shocked and outraged to learn that "wall street" commits "frauds" around them (i.e. bankers are doing what they're asked to, and when it blows up in the government's face, get scapegoated).
This seems like a reasonable place to start a discussion, but hard to assess without real proposals. If I had to guess at what he is suggesting it seems to argue for all risk to be borne by the company, which really seems like an argument for less risk taking and more consolidation, not too surprising from a military man, but pretty anathema to technologists.
Standard ignorant and hyperbolic discourse about Wall Street.
> When faced with illegal or immoral orders, it is the duty of professional soldiers to refuse such orders. When such a refusal occurs, it is followed by thorough investigations, and potentially courts-martial or war crimes prosecutions for those who issue such orders. In the case of the former Wells Fargo employees, the opposite occurred. Imagine the moral and societal hazard if the military permitted such retaliation against those who reported illegal and immoral behaviors.
Well's Fargo is a bank that makes money by selling financial products to people including bank accounts and credit cards. To do this they employ salespeople. These salespeople are tasked with selling these products, as much as they can. They have a compliance department that explicitly says "don't lie to people when you sell to them". The salespeople broke those rules in order to meet the sales goals, so they were fired. The way the author writes this article, it's as if they think it is immoral to be a salesman and that the executives of Wells Fargo should be court marshaled for requiring them to sell a lot of things. The analogy, and to equate selling things with war crimes on the battlefield is absurd.
> Hedge funds and investment banks utilize high-speed trading to place the individual investor at an insurmountable disadvantage.
It's unclear what the author mean's by "high-speed" trading here, I assume they mean high-frequency market making, but most hedge funds are not in high frequency market making business. Does the author know what they are talking about? Probably not. High frequency market-makers like Virtu and Hudson River are in the high-frequency market making business. And it's unclear how high-frequency market making hurts the individual investor, it's much more concrete how high frequency market makers hurt the banks (old-school market makers) and help the individual investor by closing down the bid-ask spread.
Even if hedge funds were employing techniques to put an individual investor at a disadvantage, isn't that their job? Hedge funds are in the business because they can presumably make better trades than average, and so anyone who is on the other side of the trades they are making is presumably going to be losing out. This would be like challenging an NFL team to a football game and complaining that their wide receivers are too good athletes. And why should we prioritize the "individual investor" over institutional investors? A pension fund handles money for retired pensioners, while an individual investor might be some dentist day-trader - why should we prioritize his well being over the pensioners? He presumably has enough disposable income already.
If someone trains for 5-10 years in a career, and then a company retaliates by putting a hidden, un-removable "black mark" on their record preventing them from employment in said career is despicable. It's not a war crime, but it's pretty close.
Your statements suggest that the "immoral" behavior of Wall Street is inevitable and therefore ridiculous to fuss about and I have to agree with you about that. -But there's an underlying question which you're avoiding here.
Should society, invested with the power to regulate and control behavior, regulate and control this behavior?.
At the end of the day you can still think about if the world be a better place if things were different and, if you think it would be, take action to enact that difference.
They have a compliance department that explicitly says "don't lie to people when you sell to them".
Except that's not quite what goes on.
What happens is, compliance says that. Then the salespeople's managers put them into a situation where they're required to make quota and the only way to do so is lying/fraud, they willingly turn a blind eye to anyone who lies/commits fraud, they punish people who don't make quota and hold up the liars/fraudsters as exemplars, and punish anyone who tries to blow the whistle on the whole thing.
Which is, by the way, what actually happened at Wells Fargo.
Honestly, the bank probably should've been dissolved for that one, pour encourager les autres.
The article's premise is that war is vicious yet moral, so something less vicious like wall street has no right to complain that morality is a second level concern.
A king not killing another king is moral between kings, but those that followed the loser can suffer greatly. The closer you get to becoming god, the more callous the hands gambled.
The definition of being god here is how effective you are at controlling perceptions, how your followers perceive reality, your personal religion in a way.
So from the peasants view, the kings and gods are corrupt, removed from reality. That is because the god of peasants has always been the god of livelihood, while the elites worship the god of power. The greater god ignores the lesser god.
It saddens me that we've gotten to the point of comparing Wall Street ethics to war ethics and even entertaining the idea that war has better ethics than Wall Street.
In war, morality is a propaganda technique to convince mothers to let their sons die hero's deaths, and to convince the young and foolhardy to join a crusade that is likely to result in their death. Periods of the biggest moral clarity in war are the periods where the propaganda is the thickest and human rationality the weakest.
To believe otherwise one must believe in forces of evil that animate one side and forces of good that animate another, which is a profoundly supernatural view.
Similarly, this article suggests that Wall Street lacks morality and uses as an example a VC considering layoffs that would occur if she fails to fund a round.
If there is a finite amount of money, an investor will invest in the firm that shows the most promise. Many teams of hard working people are seeking investment, but only some will get it. The investor must use the available information to decide where to place her bet.
If the investor is wrong, she will not be able to afford to bet again in the future. Should we all fell sorry if the investor makes a bad decision and a team of people spent several years getting paid to pursue an ill-fated idea? Arguably, the cost to society for this misstep is great, so perhaps we ought to appoint a wise investment minister to make the choices judiciously on behalf of investors? Why not also appoint a hiring minister to direct job-seekers only toward the most promising startups? For that matter, why not also appoint a business strategy minister to help startups make good decisions and avoid bad ones?
While these ministerial posts sound absurd in the context of startups, this is our reality in the world of banking and housing. Ministers tell our banks how much reserve capital they ought to carry, they tell our housing market what a reasonable rate is for a 30 year mortgage, etc.
Fannie and Freddie flew under the radar for years without revealing their balance sheet, drastically altering the US (and world) economy all at the behest of a small number of officials. I think the reason this was allowed to occur was (ironically enough) to avoid financial bad news when our leaders were trying to sell a war.
When you introduce socialized risk the market cannot be counted on to prevent socialized losses. The game is changed. The normal incentives and disincentives do not apply.
After 9/11 for example, the government became the insurer of last resort for terrorism related claims. This came as a relief to anyone building a skyscraper or running an airline, but at what cost? It eliminated much of the incentive that would have existed in the economy to prevent terrorism.
We let our ministers create very bad policy. Rather than just writing poor people a check to help them get a mortgage, they create artificial demand for high risk housing loans, which creates a broad incentive for reckless expansion of a whole sector of the economy. They keep much of this risk on the government's books, making taxpayers accountable not for a simple payment to the poor person to allow him/her to get housing, but for the entire house of cards built upon those loans.
We cannot allow our government to try to address so-called "market failures" by creating infrastructure that distorts and hides information from the market. Not only is it paternalistic, but it also creates a tremendous amount of risk for the whole economy.
This is not an argument against welfare. We have two options for how we can think about giving welfare, either as a cash payment (with or without strings attached, fwiw) or by greasing the core infrastructure of the economy to slip in some subprime loans among the many non-subprime loans, figuring that the risk won't really be discernible by financial markets and all will be well.
When capitalism contains a lot of incentives imposed by various government ministers, "free" economic behavior adapts to exploit those incentives. This is what the author of the article disagrees with. He thinks that we should all act genteel and avoid transactions that have moral consequences. The problem is that such transactions rarely occur, finance creates abstracted transactions that are rarely correlated with a desirable or undesirable social outcome.
In many industries (healthcare, finance, automotive, solar, etc.) government-sponsored incentives dominate free-market incentives. When we allow this to happen, we are effectively saying that we do not want individuals to have free economic choice, we instead want a select group of ministers to create a socially responsible landscape.
Welfare is distortionary, but few would argue that it is unnecessary. What is very harmful is when welfare programs corrupt the infrastructure of markets and lead to widespread behavior that exploits the programs.
The goal of every industry, and of every firm is to become "essential" or "too big to fail"... in other words, to be declared to be worthy of the guaranteed support of taxpayers.
Think about it this way, if issued a credit card with very low interest and a very high limit, most people could easily become billionaires simply by using low risk investment strategies. The problem is that if for even a day, the strategy requires more of a limit than is available, the whole plan comes crashing down. Even with low-risk endeavors, losses must be covered. Without forcing firms to cover their own downside risk, they of course will leverage to the max. This is what has happened in our modern finance industry, the growth since the 1990s has been due to consolidation and increased leveraging.
FWIW I think that what is needed is a new financial statement to be added to GAAP which is a statement of risk, which recursively points to all assets and liabilities whose market risks correlate with solvency risk of other firms, so that a broad, a view of the risk a company faces (market, and systemic) that can be viewed in aggregate, so that we can more easily understand the factors that impact an entire portfolio.
Ironically, such a statement would allow Wall Street to invest most heavily in firms with socialized risk (for those are the lowest risk bets), but at least then, regulators could impose a limit on the amount of socialized risk firms were allowed to invest in, which is one of the few things that can be done to actually stop the cycle of exploitation. Firms should have an incentive not to be classified as "too big to fail" and not to attempt reclassification if things go worse than expected.
[+] [-] nostrademons|9 years ago|reply
Then in WW2, aside from even more unrestricted submarine warfare and sinkings of hospital ships [2], we also have the firebombings of Dresden, Tokyo, and every other major axis city; machine-gunning of shipwreck survivors in the water; the atom bombs; the impressment of Koreans into service as "comfort women" for Japanese servicemen; forced labor at both axis & allied prisoner camps; the internment of Japanese-Americans in concentration camps; and of course the Holocaust.
Modern-day, there's the My Lai massacre and Obama's attack on a Doctors Without Borders hospital [3]. Probably more too, but you don't hear about them.
The author cites that war has rules because rules are written down, but rules are written down for Wall Street as well. They're just not enforced. And similarly, the laws of war are only enforced on the losing side, or on scapegoats that the actual decision-makers make available as a token sacrifice. When it comes to actually conducting a war, belligerents usually follow just one rule: win.
[1] https://en.wikipedia.org/wiki/List_of_hospital_ships_sunk_in...
[2] https://en.wikipedia.org/wiki/List_of_hospital_ships_sunk_in...
[3] https://en.wikipedia.org/wiki/Kunduz_hospital_airstrike
[+] [-] sfard|9 years ago|reply
[+] [-] ryanmarsh|9 years ago|reply
[+] [-] fitchjo|9 years ago|reply
[+] [-] jswny|9 years ago|reply
[+] [-] smhost|9 years ago|reply
[+] [-] M_Grey|9 years ago|reply
If you replaced "Wallstreet" with "War", your statement would be no less true.
[+] [-] kolbe|9 years ago|reply
[+] [-] dickbasedregex|9 years ago|reply
[+] [-] gumby|9 years ago|reply
The military, at the end of the day, is a tool (famously, another tool of diplomacy). Either it's useful or not. Likewise finance is a tool (fundamentally a service industry like gardening or medicine). We support it because it helps finance business, helps people manage their pensions etc. Sometimes sidelines are useful too (DARPA, gun hobbyists, weird financial instruments that increase liquidity for everyone).
Yet lately the ends have been forgotten and the means elevated. The recent US proposed budget suggests increasing expenditures but there is no discussion as to whether that would be useful or not (and thus whether the increase is unnecessary, too big to even too small). The same problem has emerged in Finance: the point of an financial instrument is the instrument itself. HFT that skims a bit out of the transaction (thus is worse for the fundamental buyer and seller) is considered good. etc.
[+] [-] ikeboy|9 years ago|reply
The individual investor is unaffected by whether a trade takes a millisecond or 10 seconds. HFT skims from slower market makers, and reduces spreads.
[+] [-] ble|9 years ago|reply
If a teeny-tiny fraction of a percentage or a penny flat tax would cause a trade to not be profitable in expectation, then that trade probably never had anything to do with the real economy in the first place.
[+] [-] vfclists|9 years ago|reply
After a few years in drug enforcement the ex drug dealers return to work for their gangs, taking all the knowledge from working in drug enforcement with them, not to mention that they were still receiving dividends and profits from the the drug dealers who previously employed them during their stint in drug enforcement.
I really can't comprehend why any intelligent people can expect this depraved, corrupt farcical system to work. Now you have Trump, unashamedly pro-business (ie leaving the inmates in control of the asylum) and people seriously expect things to get better.
Here are your brave American presidents who can bravely and patriotically authorize the executions (ie murder) of alleged terrorists in Yemen and Afghanistan who have done diddly squat to Americans, but can't/won't a lift a finger against corrupt predatory malign financiers whose actions leave Americans indebted, dying prematurely because they can't afford good housing and good health care. Compare the deaths of Americans due to terrorism by Yemenis or Somalis, and the premature deaths of Americans due to poverty and ill-health which these banksters frauds have worsened, and tell me who Trump should be executing without any meaningful evidence or even a trial.
I am sorry but due to their corrupt financial system the politicians of the Western world are becoming more and more of a joke.
[+] [-] fennecfoxen|9 years ago|reply
https://www.nytimes.com/2017/03/16/us/international-students...
for this study?
http://www.aacrao.org/docs/default-source/TrendTopic/Immigra...
(see bottom of page 1 in particular.)
Sigh.
[+] [-] ryandrake|9 years ago|reply
Study: 39% of responding instituions reported a decline in international applicatons
Are you complaining about a 1% difference, or the difference between "colleges" and "responding institutions"?
[+] [-] cowpig|9 years ago|reply
[+] [-] erikig|9 years ago|reply
Considering the size of 'Wall Street' the size of the ethics violations that he uses as an example are miniscule. In addition, due to the increased scrutiny that financial institutions face and the potential damage that scandals can cause, legitimate organizations seem less willing to risk ethics violations.
Also, unlike in war, ethics violations on Wall Street can be reported and prosecuted relatively easily.
As mentioned in many comments above - Wall Street has ethics, one can only hope that the current administration doesn't take steps to weaken threaten these.
[+] [-] rallycarre|9 years ago|reply
The system is broken when corruption and misdirection is not punished with the weight of their crimes.
[+] [-] titraprutr|9 years ago|reply
[+] [-] wolfram74|9 years ago|reply
[+] [-] sgift|9 years ago|reply
Sure, in a perfect world there wouldn't be any war, but that won't happen as long as there are humans.
[+] [-] smhost|9 years ago|reply
> Of course, the Just War Ethic suffers from a problem: The normative ideal in this case is the absence of war, yet the reality of war precludes that ideal. Therefore, any applied ethics of war are by definition morally flawed. The question for the ethicist then is this: Is it more ethical to make continued (and often ignored) normative pronouncements against the existence of war, or to engage with the temporal reality of war with ethics that seek to limit the cases in which war is undertaken, to moderate its effects, and to guide it toward the normative goal, with the understanding that this goal is not immediately or fully achievable? Obviously, advocates of the Just War Ethic, myself included, come to the latter conclusion.
[+] [-] teekert|9 years ago|reply
[+] [-] dickbasedregex|9 years ago|reply
[+] [-] angersock|9 years ago|reply
[+] [-] kolbe|9 years ago|reply
[+] [-] Eridrus|9 years ago|reply
[+] [-] mjfl|9 years ago|reply
> When faced with illegal or immoral orders, it is the duty of professional soldiers to refuse such orders. When such a refusal occurs, it is followed by thorough investigations, and potentially courts-martial or war crimes prosecutions for those who issue such orders. In the case of the former Wells Fargo employees, the opposite occurred. Imagine the moral and societal hazard if the military permitted such retaliation against those who reported illegal and immoral behaviors.
Well's Fargo is a bank that makes money by selling financial products to people including bank accounts and credit cards. To do this they employ salespeople. These salespeople are tasked with selling these products, as much as they can. They have a compliance department that explicitly says "don't lie to people when you sell to them". The salespeople broke those rules in order to meet the sales goals, so they were fired. The way the author writes this article, it's as if they think it is immoral to be a salesman and that the executives of Wells Fargo should be court marshaled for requiring them to sell a lot of things. The analogy, and to equate selling things with war crimes on the battlefield is absurd.
> Hedge funds and investment banks utilize high-speed trading to place the individual investor at an insurmountable disadvantage.
It's unclear what the author mean's by "high-speed" trading here, I assume they mean high-frequency market making, but most hedge funds are not in high frequency market making business. Does the author know what they are talking about? Probably not. High frequency market-makers like Virtu and Hudson River are in the high-frequency market making business. And it's unclear how high-frequency market making hurts the individual investor, it's much more concrete how high frequency market makers hurt the banks (old-school market makers) and help the individual investor by closing down the bid-ask spread.
Even if hedge funds were employing techniques to put an individual investor at a disadvantage, isn't that their job? Hedge funds are in the business because they can presumably make better trades than average, and so anyone who is on the other side of the trades they are making is presumably going to be losing out. This would be like challenging an NFL team to a football game and complaining that their wide receivers are too good athletes. And why should we prioritize the "individual investor" over institutional investors? A pension fund handles money for retired pensioners, while an individual investor might be some dentist day-trader - why should we prioritize his well being over the pensioners? He presumably has enough disposable income already.
[+] [-] chadgeidel|9 years ago|reply
If someone trains for 5-10 years in a career, and then a company retaliates by putting a hidden, un-removable "black mark" on their record preventing them from employment in said career is despicable. It's not a war crime, but it's pretty close.
[+] [-] AbrahamParangi|9 years ago|reply
Should society, invested with the power to regulate and control behavior, regulate and control this behavior?.
At the end of the day you can still think about if the world be a better place if things were different and, if you think it would be, take action to enact that difference.
[+] [-] ubernostrum|9 years ago|reply
Except that's not quite what goes on.
What happens is, compliance says that. Then the salespeople's managers put them into a situation where they're required to make quota and the only way to do so is lying/fraud, they willingly turn a blind eye to anyone who lies/commits fraud, they punish people who don't make quota and hold up the liars/fraudsters as exemplars, and punish anyone who tries to blow the whistle on the whole thing.
Which is, by the way, what actually happened at Wells Fargo.
Honestly, the bank probably should've been dissolved for that one, pour encourager les autres.
[+] [-] unknown|9 years ago|reply
[deleted]
[+] [-] eip|9 years ago|reply
[+] [-] dlwdlw|9 years ago|reply
A king not killing another king is moral between kings, but those that followed the loser can suffer greatly. The closer you get to becoming god, the more callous the hands gambled.
The definition of being god here is how effective you are at controlling perceptions, how your followers perceive reality, your personal religion in a way.
So from the peasants view, the kings and gods are corrupt, removed from reality. That is because the god of peasants has always been the god of livelihood, while the elites worship the god of power. The greater god ignores the lesser god.
[+] [-] randyrand|9 years ago|reply
The amount of moral policing these days is way too much. It seems to have grown significantly these past couple decades.
[+] [-] econner|9 years ago|reply
[+] [-] muninn_|9 years ago|reply
[+] [-] dickbasedregex|9 years ago|reply
[+] [-] jamisteven|9 years ago|reply
[+] [-] etjossem|9 years ago|reply
[1] https://en.wikipedia.org/wiki/Geneva_Conventions
[+] [-] grandalf|9 years ago|reply
To believe otherwise one must believe in forces of evil that animate one side and forces of good that animate another, which is a profoundly supernatural view.
Similarly, this article suggests that Wall Street lacks morality and uses as an example a VC considering layoffs that would occur if she fails to fund a round.
If there is a finite amount of money, an investor will invest in the firm that shows the most promise. Many teams of hard working people are seeking investment, but only some will get it. The investor must use the available information to decide where to place her bet.
If the investor is wrong, she will not be able to afford to bet again in the future. Should we all fell sorry if the investor makes a bad decision and a team of people spent several years getting paid to pursue an ill-fated idea? Arguably, the cost to society for this misstep is great, so perhaps we ought to appoint a wise investment minister to make the choices judiciously on behalf of investors? Why not also appoint a hiring minister to direct job-seekers only toward the most promising startups? For that matter, why not also appoint a business strategy minister to help startups make good decisions and avoid bad ones?
While these ministerial posts sound absurd in the context of startups, this is our reality in the world of banking and housing. Ministers tell our banks how much reserve capital they ought to carry, they tell our housing market what a reasonable rate is for a 30 year mortgage, etc.
Fannie and Freddie flew under the radar for years without revealing their balance sheet, drastically altering the US (and world) economy all at the behest of a small number of officials. I think the reason this was allowed to occur was (ironically enough) to avoid financial bad news when our leaders were trying to sell a war.
When you introduce socialized risk the market cannot be counted on to prevent socialized losses. The game is changed. The normal incentives and disincentives do not apply.
After 9/11 for example, the government became the insurer of last resort for terrorism related claims. This came as a relief to anyone building a skyscraper or running an airline, but at what cost? It eliminated much of the incentive that would have existed in the economy to prevent terrorism.
We let our ministers create very bad policy. Rather than just writing poor people a check to help them get a mortgage, they create artificial demand for high risk housing loans, which creates a broad incentive for reckless expansion of a whole sector of the economy. They keep much of this risk on the government's books, making taxpayers accountable not for a simple payment to the poor person to allow him/her to get housing, but for the entire house of cards built upon those loans.
We cannot allow our government to try to address so-called "market failures" by creating infrastructure that distorts and hides information from the market. Not only is it paternalistic, but it also creates a tremendous amount of risk for the whole economy.
This is not an argument against welfare. We have two options for how we can think about giving welfare, either as a cash payment (with or without strings attached, fwiw) or by greasing the core infrastructure of the economy to slip in some subprime loans among the many non-subprime loans, figuring that the risk won't really be discernible by financial markets and all will be well.
When capitalism contains a lot of incentives imposed by various government ministers, "free" economic behavior adapts to exploit those incentives. This is what the author of the article disagrees with. He thinks that we should all act genteel and avoid transactions that have moral consequences. The problem is that such transactions rarely occur, finance creates abstracted transactions that are rarely correlated with a desirable or undesirable social outcome.
In many industries (healthcare, finance, automotive, solar, etc.) government-sponsored incentives dominate free-market incentives. When we allow this to happen, we are effectively saying that we do not want individuals to have free economic choice, we instead want a select group of ministers to create a socially responsible landscape.
Welfare is distortionary, but few would argue that it is unnecessary. What is very harmful is when welfare programs corrupt the infrastructure of markets and lead to widespread behavior that exploits the programs.
The goal of every industry, and of every firm is to become "essential" or "too big to fail"... in other words, to be declared to be worthy of the guaranteed support of taxpayers.
Think about it this way, if issued a credit card with very low interest and a very high limit, most people could easily become billionaires simply by using low risk investment strategies. The problem is that if for even a day, the strategy requires more of a limit than is available, the whole plan comes crashing down. Even with low-risk endeavors, losses must be covered. Without forcing firms to cover their own downside risk, they of course will leverage to the max. This is what has happened in our modern finance industry, the growth since the 1990s has been due to consolidation and increased leveraging.
FWIW I think that what is needed is a new financial statement to be added to GAAP which is a statement of risk, which recursively points to all assets and liabilities whose market risks correlate with solvency risk of other firms, so that a broad, a view of the risk a company faces (market, and systemic) that can be viewed in aggregate, so that we can more easily understand the factors that impact an entire portfolio.
Ironically, such a statement would allow Wall Street to invest most heavily in firms with socialized risk (for those are the lowest risk bets), but at least then, regulators could impose a limit on the amount of socialized risk firms were allowed to invest in, which is one of the few things that can be done to actually stop the cycle of exploitation. Firms should have an incentive not to be classified as "too big to fail" and not to attempt reclassification if things go worse than expected.
[+] [-] linkmotif|9 years ago|reply