Forum Post: Nassim Taleb - a 1%er who gets it - concerned about OWS and the possible result of ignoring the injustices it highlights / bankers today are civil servants and should be paid as such
Posted 12 years ago on Jan. 16, 2012, 10:36 p.m. EST by opensociety4us
(914)
from Norwalk, CT
This content is user submitted and not an official statement
Does he have anything to say about the concentration of wealth he represents or the negative effect had on economic and social stability? Is he willing to concentrate less wealth for the good of society?
No?
THATS WHAT I THOUGHT.
do you know what taleb has to say about all of this - i do not - i am not sure you are right about what he thinks - let me know
So this will solve all problems, eh? Then again, when I look at Royal Bank of Scotland, part of the RBS Group in which the UK govt has a 84% stake and where bonuses are capped severely compared to any other private bank of that size, and it's past and present trouble and performance, I kind of come to the conclusion that you are bonkers.
If banks made the salaries constant irrespective of performance, then you will not have any performance. The kind of hours that most M&A guys put in are crazy and no public servant in history has ever worked that hard. Besides, if the deals I do have no impact on my salary I would not be doing that kind of hard work to get the best deals for my clients. Similarly, if a trader's salary does not depend on the money he makes, he can simply report to work 2 hours after the markets open, leave an hour early and invest in the most predictable stocks that will low risks but also low gain. Therefore, these traders will not even bother to look at other potential investments where a calculated risk could be taken to earn good money. A trader usually tries and make money and the extreme end of a fluctuation, why? Because it helps my client, me and my firm make more money. If you remove my incentive, I would not bother, and just make bare minimum profits. Traders don't even take a crap when they are holding a position, but remove my incentive and I will take 90 mins lunch breaks and coffee break every 2 hours.
I don't understand why someone like Taleb is making such comments. May be because it makes for good public reading. I am no Taleb but if I were to give an opinion to stop unnecessary risk taking (you need to take some risks always) I would say that one could do what Goldman did before it went public. The partners of Goldman had to put most of their earning back into the firm and their stakes grew as the overall firm grew. It make them take calculated risks because everyone's financial health was directly tied to the financial health of the overall firm. Something similar can be done with Wall St firms, not necessarily a partnership but rather a delayed compensation.
Just my two cents
"I don't understand why someone like Taleb is making such comments. May be because it makes for good public reading"
That's all you got? You don't understand and then you whine by using a lame assertion about Nassim's motives.
It's very simple. If a banker wants private level compensation, then they shouldn't work for a government entity - an entity that requires the government (explicitly or implicitly) to finance its business. They should work for an entity that does not require the government (explicitly or implicitly) to finance its business and collect all the compensation they can convince the private capital (the financial risk-takers) to pay them.
you are right about bankers - the german bankers were not paid well at all and were mostly the last ones into the bubble - having said that i am not sure you should beat up on taleb too quickly - "fooled by randomness" is a very good book and although i don't know his views on this subject it would not surprise me if he is with you here
I respect Taleb. But I just don't understand how he, of all people, can suggest this.
And take Japan, bank salaried are very limited but their economy still is not doing well, they also had their horrible time a decade ago and even now their financial industry is unable to attract top talent because the compensation sucks.
not sure exactly what he said or thinks but i do agree with him that bankers should be civil servants and paid as such - i think (not so sure here) that much of the crisis was driven by the salaries of our top banking people - the rest followed the "smart money" - for sure if we had old fashioned banking (like 1964 in my small home town) we would not have had this bubble
"the crisis was driven by the salaries of our top banking people"
partially correct. the crisis was driven by the salaries of our top banking people who had NO DOWNSIDE.
yes - playing with other peoples money - ruining their own companies and profiting from it - makes no sense except for those few people at the top!
Investment Bankers and Traders don't do public work, they work for their clients who are typically other companies and institutional investors and sometime govt bodies. Therefore, they arent civil servants, not by any stretch.
Well you could nationalize retail banks but that too would be a bad idea. For one, retail banks have corporate clients as much as they have individual middle class depositors. Now while middle class depositors may (and just may be) benefit from a govt owned banks there are the usual pitfalls. For one, there is no historical precedent that govt owned banks are anyway better than private ones. For another, as govt entity it will be plagued by the same issues of poor performance that other govt bodies have. And finally, with low salaries they would not be able to attract top talent. And remember, great depression happened despite govt banks.
I agree, however, that short term-ism is bad at times. And the solution that I suggested would take care of that. It did well for Goldman when it was a private firm before it went public. However, not all short term thinking is bad.
"Investment Bankers and Traders don't do public work, they work for their clients who are typically other companies and institutional investors and sometime govt bodies. Therefore, they arent civil servants, not by any stretch."
If the financial capital of the firm that the "Investment Bankers and Traders" work for is provided by the taxpayer, then the "Investment Bankers and Traders" are civil servants.
Oh they aren't sir. The average tax payer is NOT a client of I-Banks
It has nothing to do with the firm's clients. If the FINANCIAL CAPITAL OF THE FIRM that the "Investment Bankers and Traders" work for is provided by the taxpayer, then the "Investment Bankers and Traders" ARE civil servants. You really don't understand capitalism.
Yes you are right. I dont have the slightest clue about this thing called 'capitalism'? So enlighten me, what particular financial capital are we talking about here?
Try these:
The financial capital that allows the firm, that the "Investment Bankers and Traders" work for, to operate and take risk.
The shareholders, bondholders, etc. of the firm that the "Investment Bankers and Traders" work for and receive their paychecks from.
Ah, great. So you are telling me that because a ibank has shareholders who are members of the civil society, therefore all ibanks employees are civil servants?
I'll try to make this as easy as possible for you. However, I suspect you are a banker and your fear and bias are preventing you from getting it:
If your business is directly financed in majority part by the government (especially to keep it from failing, which makes it 100% financed by the govt), then that means your business is effectively a govt agency, which means those who work for said business are civil servants (such as the members of our military, the president, etc) and should be paid as such.
"all ibanks employees are civil servants?"
If one works for a bank that is being kept alive thru govt financing, then yes, one is a civil servant.
Actually the bank gave loans, which were subsequently paid back. So do you mean to say if the banks give loan to any entity then the entity become government owned?
And the loans were returned back. With a profit of 47 billion if I am not wrong.
you're grasping at straws. people are waking up and discovering the charlatans and...
you can't stop it.
Please continue your waking up while I get back to work.
i think we mostly agree - i don't agree that gov't bodies have poor performance - sometimes and sometimes not - just like the private sector! my father ran 2 counties for the education dept in ny state and it performed well. built vocational schools and ran the system. the gov't should do things that are in the public good and not for profit -national parks and schools and mail etc. i would send goldman back to a private partnership and banks back to 1960 - that would be a good start. from there we could talk about what is next and what would work best but we are quite a way off from that so what's the point! i do believe in production for use and not for profit. i am a capitalist and have my own small business for 40 yrs - some form of grassroots capitalism (mom and pop hardware store and shoe store etc) can be good but again that is a long way off. i do not believe in the free market according to milton friedman and neither do the people who have run our country for the last 100 yrs!
There is no textbook free market (certainly not for every goods) just as there is no perfectly round shape. Similarly there are no examples of ideal capitalism, socialism or communism.
agreed but we just saw what one might call the really existing free market at work - privatized profit - socialized losses - no? that free market i am against - free market for education and health care i am against - free markets for tennis teachers i am for!
And once the so-called bailout money was returned with a nice profit the money again went back to the society.
There are ample examples where govt provides assistance to private corporations at the expense of the tax payer. Examples would be any kind of subsidies (like those given to agri products), tax breaks, tariff and non tariff barriers to protect domestic industries. Nothing new there.
"govt provides assistance to private corporations"
providing assistance to and rescuing failed entities are two different things that require two very different compensation schemes to society.
"returned with a nice profit"
Ha! Are you serious? - the bailout continues to this very day and more importantly, returns from short term loans are hardly requisite for the risk the taxpayer took in bailing out the failed banks. The taxpayer should own these entities. Anything short of ownership with all of the gains associated with ownership is a scam on the taxpayer - and guess what? the people are waking up to it.
well some of the money was returned - should we talk about aig? or the secret fed loans or the free money still in play? that is not how the free market is supposed to work even if the money is paid back! if you want to go on we can talk about the mexican peso crisis where clinton bailed out mexico with taxpayer dollars and the money never left new york banks - or foreign aid where we (the taxpayer) pay lockheed or some other weapons company to give weapons to egypt or some such repressive country to use against their own people again the money never leaving new york. the poor people of a rich country giving aid to the rich people of another country to attack the poor people of the poor country! i could go on but i won't - i am sure you got the idea.
Lets take one at a time. What secret fed loans are we talking about?
By Bill McGuire Nov 28, 2011 11:59am Fed Loaned Banks Trillions in Bailout, Bloomberg Reports Email 64 Smaller Font Text Larger Text | Print
In a story that sheds new light on the extent of the country’s financial crisis, Bloomberg Markets magazine reported today that the Federal Reserve lent trillions of dollars to beleaguered financial institutions, with $1.2 trillion going out on just one day in 2008.
“The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy,” Bloomberg reported today. ”And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates.”
ah..oh that...I thought u were talking about those trillion figures that someone picked up from the GAO report
Yes ! Private Bankers have way too many Perverse Incentives & far too little self-control and they should be Civil Servants working for The Public Utility, which 'Banking' is !! We should also Nationalise The Central Bank and democratically reclaim the Power to Issue Money and decide its Quantity and Price (interest rates) and this should be done by All Nations Everywhere - NOT just in China and Iran !!!
radix malorum est cupiditas ...
i am with you on most of this - until you made me nervous sounding like a ron paul person - democratic control over the central bank is a top priority but ron is off base on the economy so please don't go there
IF we are in agreement re. "democratic control over the central bank is a top priority", then don't go where ?!
to ron paul looney land - the place where free markets and free men exist along side the gold standard - should i go on?
You could but I'd probably agree with you, PDQ !!! I see what you mean - but maybe a little slower than most as I live in England !! pax et lux !
and how is life in jolly old england - seems to me it is better for the masses on the continent! the united states and england seem to me to be mostly backward in the socio economic sphere - compared to japan and france for instance.
@ 'flip' : In The UK, life is getting harder - especially for the young. The Bastard Tories are in Government and are continuously degrading and eroding The British Social Fabric and The NHS is NOT Safe in their hands !
The youth are restive and with the advent of onerous student fees (introduced by people who had a free education!) they are increasingly aware of the concept of "Debt-Bondage" on top of the existing "Wage Slavery" !!
Like The U$A, The UK bailed out private Banks, who had private contracts and private commercial positions which became unsustainable and which The 99% Public had to and still does, pick up the tab to the mass detriment of all of us. The current Austerity and Cut-backs are somehow sold as inevitable and NO mention of The Bank Bailouts & their Impact On Public Finances, is made by The Political Class or The MSM. The Labour Party, having embraced 'Free Market Fundamentalism' with That Utter Bastard and WAR-Criminal - Tony "His Soul Is Forfeit" BLIAR, has emasculated itself and merely simpers in opposition. No damn wonder, that the Scots are planning on much more autonomy if not leaving The UK altogether !!!
'Struggle' is the name of the game and Agitation, Education and Organisation are The Way Forward for us all IF we are to avoid Totally Succumbing to Unfettered Corporatism !!
a) http://www.occupybritain.co.uk/ ;
b) http://occupylondon.org.uk/ ;
c) http://www.ukuncut.org.uk/ ;
d) http://www.resist.org.uk/ &
e) http://www.newint.org/ .
I could go on but I may pop a gasket but in conclusion I'd say that predominantly due to the millions of avowed Socialists and Leftists here, I couldn't dream of living anywhere else ;-)
et dum spiro, spero !
i was in scotland in the 90's and the sheep farmers were complaining that it used to take 300 head to make a living and now it was 700 - not sure what it is today but that is what is happening everywhere - have you read orwell's "homage to catalonia" or seen "land and freedom" - the movie based on the book - the book was really good - you made me think of it with this line - due to the millions of avowed Socialists and Leftists here, I couldn't dream of living anywhere else ;-)
No. I haven't read it tho' it's been one of those books I always intended to. Here's the 'wiki' article : http://en.wikipedia.org/wiki/Homage_to_Catalonia & I shall get the book soon - thanx to your post here ! Stay well and aware !! ;-)
The Central is just about as government as it needs to be. Yes, private banks are 'members' of the Federal Reserve but there are fine legal distinctions. Remember, the Fed board is decided by the government.
Power to issue money: The treasury issues Tbonds, bills which the Fed buys. And the treasury is also a govt body
As for interest rates read this http://www.investopedia.com/terms/r/risk-freerate.asp#axzz1jjTHX0Kv . Interest rates cannot just be 'decided'. They depend on a host of factors. At the very basic level, repo rates determine interest rates but then there are other factors too.
Economics my friend. It's all economics.
Please don't fall into The Trap of presuming that, a) Economics is some kind of Pure Science & b) That 'Chicago School, Free Market Fundamentalism' is the only theory in town !! 'Anthropology' may well be a far better 'science' and prism through which to view economic activity and relations.
Further "my friend", would you be be able to share with us any cogent and clarifying thoughts that you may have, on the matter of "Capitalist Market Externalities" &/or 'Opportunity Cost' ?
fiat lux ...
"smartcapitalist" is blinded by models. for these types, it doesn't matter how many times the model fails. it just matters that the model is elegant in one's mind, not empirically relevant.
Hmmm. I think that that was quite profound !!!
Further, I offer 2 links to my own personal favourite 'SmartKaputalist' !!
a) http://maxkeiser.com/ &
b) http://rt.com/programs/keiser-report/ !
ad iudicium ...
And I dont think even economists consider economics a 'pure science'. Last time I checked, my profs considered it a social science.
what about externalities and opportunity cost?
Re. 'Opportunity Costs' ; as 'money' is actually only a figment of our collective imagination, the only 'real' costs of doing anything is NOT doing something else and The Time Taken and perhaps We will need to more fully realise and embrace this in future IF we are to progress as a species.
More importantly and immediately, re. "Externalities" ( http://en.wikipedia.org/wiki/Externality ) ; Mass Austerity, Food Price Inflation and The Erosion Of The Social Fabric right across The World (& in 'The West' in particular) are just some of The Externalities of Banksterism and are responsible for the 'Hoover-Up' (as opposed to "Trickle-Down"!!) Kaputalism as well as 'The Degradation of Democracy'. In Industrial Capitalism, perhaps some of the main Externalities are Environmental Degradation, Pollution and Urbanisation.
'Externalities' are off balance sheet liabilities utterly unaccounted for in standard accounting thought and practice throughout 'Capitalism', whose risks and costs are off loaded to 'Other People' and 'Society At Large'. The Continued Privatisation of Gain, Opportunity and Profit and the simultaneous 'Socialisation' of Cost, Loss, Risk and Liability is an unsustainable, unfair and unconscionable state of affairs wherever we are on This Good Earth ; Our Beautiful and Fragile, Shared Home !!!
radix malorum est cupiditas ...
I think we understand the concept of opportunity cost pretty well, thank you very much.
Well, there are good reasons for not accounting every possible negative externalities. In some cases govt impose penalties for these.
Most of your post is a lot of rhetoric like 'kaputalism'. I abhor rhetoric. It's a waste of time. I take decisions based on hard facts not rhetoric. I leave that to politicians.
Tch !! Ergo, spero meliora ...
Oh goddie, you know latin. liberal arts degree?
smartcapitalist is on a 'slam Liberal Arts' obsession...which is to say that this poster despises Philosophy, History, Language Studies, Literature, and the broadest spectrum of Cultural Literacy an educated person is capable of...the alternative being little better than cow-towing to Business and Corporate interests and abandoning Critical Thinking on the most important issues of Humanity.
Liberal Arts gave us Higher Education and birthed ALL of the Sciences as a mother does her children...he even slams 'women studies' as somehow reprehensible...an assertion only an oppressor can make.
What women can learn from studying the history of Western Civilization and their role in it is that men are aggressors and ultimately wired to self-service and psychopathic egotism...especially the Alpha type males, which it would be in their best interests to breed-out of existence by a more informed, selective breeding. The sooner men become more like women, the sooner Mankind will find Peace...that's a Fact even Science affirms. You don't have to be a feminist to comprehend the lessons of History...but you DO have to be a Liberal Arts student.
It is, in fact, typical among fascist regimes and personalities to despise higher learning, especially in the Liberal Arts where critical thinking is sharpest...which is why such regimes always attack the Intellectual Class first when seeking to undermine a Society and throw the rest of citizens under the yoke of Totalitarianism...and perhaps explains why Education in America is so dismal as it serves the interests of the fascist personality (male aggression/egotism) by disabling the independant thinking of the People.
And what was the 'science' major of that Republican Congressman from the south in the news so much lately...Economics?...oh...I remember: Home Economics...a fine bit of Technical Education and worthy stepping stool for that class of political hack who covet the reputation of being Educated without the hard work it involves, especially in the Liberal Arts.
True, you can't do much with a Liberal Arts major, because they refuse to be led about by the nose, they think for themselves, and are critical of irrational forms of authority and traditional definitions of Roles in society, understanding them to be mostly power games played to the advantage of paracitical types.
btw...it's spelled: goody...not goddie...though the German gott is the root of the English God, as the German word for good is gut.
Guter Gott, mein Freund, du bist ein Spektakel der Unwissenheit.
The uneducated have no appreciation for education, only for money.
Well I don't much of a use of these subjects and I think they should all be just electives or minors. Critical thinking is what people of science do, not liberal arts who are, how shall I put it, a bunch of namby pambies.
And 'birthed' really? After all that drama about my typo in 'goodie'. 'Birthed'?
And there is a huge difference between despising women and women studies, I would hate men studies just as much. But I do not hate women or men.
And for all you talk of weeding out alpha males, women do fall for the alpha males. In fact, it does seem to me that OWS is filled with these softer 'beta males'. The ones who are too afraid and incapable of competing.
And now I am a fascist? Seriously? Because I like maths and not history or philosophy? Seriously, liberal arts and critical thinking? Are you kidding me? What critical thinking is there is reading Shakespeare and learning about kings and queens in history. Yuck. Boring. Critical thinking is what you do in maths, physics, chemistry (not much in biology). Critical thinking is what you do when you write cool code. It is critical thinking when you structure complex derivatives for clients to suit their specific needs. There is no thinking in Liberal Arts, it boring and sleep inducing. It's what the ones with low IQ study.
As for Economics, I like that subject. It's useful and makes way more sense to learn than anything else in Liberal Arts. And no I am not a Republican btw. Not that I am too happy with Obama's performance either.
And the ones who think are the science and math guys. The liberal arts people are, how shall I put it mildly, stupid.
I too like Taleb ideas and found "The Black Swan" to be a fascinating read but Taleb is also part of the system he so cleverly critiques (cf the fawning idiot interviewer's "He is the Distinguished Professor of Risk Engineering at NYU"). Taleb is still representative of his class and the most revealing thing is that he fears "Class War" ie. an Awakening and Mobilisation of The 99% !
Taleb should reflect That The Only "Class War" is the one that has been waged by a Truly Parasitic 0.01%, using a 1% against The 99%. The Capitalist Halcyon Days of mere Wage Slavery have now morphed into 'Wage Slave (if you're lucky) IN Permanent, Generational Debt-Bondage' !!
Its "Jubilee Year" in The UK (Mrs. Queen, 60 years in situ, etc.) and perhaps all of us - throughout the world, would be well advised to research and re-discover, just what the original Old Testament "Jubilee" was and what it entailed !!!
fiat justitia ruat caelum ...