gjm comments on Things I Wish They'd Taught Me When I Was Younger: Why Money Is Awesome - Less Wrong

32 Post author: ChrisHallquist 16 January 2014 07:27AM

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Comment author: gjm 16 January 2014 03:08:12PM 3 points [-]

There are jobs for which being smart and working hard pretty reliably produces biggish bucks, even if lack of motivation means you never get exceptionally good and therefore never get what counts as "the big bucks" within that career.

Someone who happens to have roughly the right mental aptitudes and is willing to work moderately hard can make what's by most standards a very good living in software development, even if they're not entirely gripped by their work and never become a superstar.

Someone who happens to have roughly the right mental aptitudes and is willing to work very hard can make what's by any standards a very good living in finance, even if they're not entirely gripped by their work and never become a superstar.

Comment author: Izeinwinter comment score below threshold [+] (14 children)

Comment author: Lumifer 16 January 2014 06:25:23PM * 9 points [-]

Finance is a cancer ... and is strangling and poisoning everything.

That looks to be way too much emotion and not enough reason.

when the world comes to its senses and regulates that sector with fire

Are you making a prediction, by any chance? If you believe it, you can bet on it -- will make you very rich if it were to happen...

Comment author: [deleted] 20 January 2014 04:47:07PM 3 points [-]

Finance is a cancer ... and is strangling and poisoning everything.

That looks to be way too much emotion and not enough reason.

Given the way the FIRE sector has eaten up the pie of corporate profits in the developed world, with non-FIRE companies often losing money even as FIRE grows, I believe the cancer metaphor is apt. Even "rationalists" are supposed to feel emotions when they match the reality.

If finance is eating the economy, we should get mad at it and call it a cancer. And finance indeed appears to be eating the economy (warning: the paper's author has some political views, but the statistics are sound: finance is capturing increasing portions of economic output, which Should Not Happen unless their ability to minimize risk/predict the future has increased that quickly).

Comment author: gjm 16 January 2014 09:47:09PM 1 point [-]

It might be difficult to get very rich that way. Suppose Izeinwinter's opinion is that there's a 75% chance that some time in the next 20 years the financial industry will be struck hard by regulation, in a way that turns finance from (at least in, er, financial terms) a very attractive career to a rather unattractive one. The most obvious bet to make on that isn't going to pay out for another 20 years, and s/he still might well lose (75% < 100%), and even (say) a certain 5x gain over 20 years wouldn't be much above what one could plausibly hope for from, say, the stock market. And I can't imagine there being a big supply of people willing to take the other side of that bet for a large sum and offer 5:1 odds.

Comment author: Lumifer 17 January 2014 01:29:48AM * 3 points [-]

It might be difficult to get very rich that way.

Not really. Deep out-of-the-money options can provide a LOT of leverage.

Suppose Izeinwinter's opinion..

Well, he is posting here so he can tell us what his opinion is, if he wants to, of course.

Comment author: ChristianKl 17 January 2014 01:12:56PM 2 points [-]

Not really. Deep out-of-the-money options can provide a LOT of leverage.

That assumes that nobody passes a law that makes enforcing contracts about deep out-of-the-money options impossible.

If you believe in serious actions against the finanical sector there might just not be a trustworthy counterparty for the deep out-of-the-money options that will pay 20 years in the future.

Comment author: Larks 20 January 2014 04:23:09PM 1 point [-]

Then have them post daily collateral.

Comment author: ChristianKl 20 January 2014 04:31:18PM 0 points [-]

What do you mean specifically and how would you go about buying such an option contract?

Comment author: Izeinwinter 17 January 2014 11:57:46AM * 2 points [-]

Those numbers are close enough, but that is not why I am not setting up a global short on the finance institutions of the world. I am not doing that because if I am proved correct most of the potential counter-parties to that deal will be first against the metaphorical wall, and thus I do not get paid either way.

Look, for most of the history of capitalism finance and banking is where mediocre intellects with high conscientiousness scores went to earn a respectable boring living in a respectable boring job. The current status quo is an aberration, and will keep blowing up until it is stopped. None of the bullshit that led to the financial crash has actually been fixed, because finance had too much pull with politicians. Its going to happen again. Soonish. Politicians will not be able to shield them a second time (and if they try, very worrying people will replace them in office)

Comment author: Lumifer 17 January 2014 03:40:49PM 4 points [-]

if I am proved correct most of the potential counter-parties to that deal will be first against the metaphorical wall, and thus I do not get paid either way.

A fair point. However if you think that scenario is likely I would recommend to buy ammo and beans and not worry about high-tech things like AI.

for most of the history of capitalism finance and banking is where mediocre intellects with high conscientiousness scores went to earn a respectable boring living in a respectable boring job.

That is not true at all. It is so for accountants and tellers, but it is true for them in our days just as well. People who owned and managed high-level financial and banking institutions always had high risk and, if successful, high profits. Think about financing trading ships half across the world, financing wars and shaky monarchies...

The big banking houses did not rise through efforts of people with "mediocre intellects [and] high conscientiousness scores".

Comment author: [deleted] 20 January 2014 04:51:49PM * 6 points [-]

The big banking houses did not rise through efforts of people with "mediocre intellects [and] high conscientiousness scores".

Mediocre compared to whom? Certainly, from what I've heard, the skills necessary for banking are, in this order:

Consciousness/Work Ethic
Ability to socialize with the upper classes
Intellect

With the general level of intellect being roughly "can pass freshman calculus but not necessarily an entire engineering degree." Certainly bankers aren't stupid, but if you compare their job to what's necessary in science, medicine, professional engineering, or law, I do think they're the "dumb jocks" of the smart crowd.

Comment author: Lumifer 21 January 2014 07:29:19PM 1 point [-]

Mediocre compared to whom?

It's the term you used. I assume compared to the general population.

the skills necessary for banking

What do you call "banking"? As is true for every complex industry, there is a variety of things to be done which require diverse skills. An accountant, a salesperson, and an executive might all work in a bank but the skills they need are very different.

Comment author: gjm 22 January 2014 11:20:18AM -1 points [-]

It's the term you used.

It appears in fact to be the term Izeinwinter used; so far as I know, Izeinwinter and eli_sennesh are not the same person.

continue this thread »

Comment author: gjm 16 January 2014 09:42:14PM 2 points [-]

First of all, I was not making any recommendations. Just pointing out that you can get quite big bucks even from a job you don't enjoy very much, in some fields.

Second, taking the moral rather than the pragmatic aspect of your comments about the finance industry: I think it's clear that (a) the world has more people in finance than it needs and (b) some people in finance have been responsible for a lot of harm -- but going into finance could still, for an individual, be the best thing they can do for the world. (By getting paid a lot of money, and then giving a lot of it away in a way calculated to do as much good as possible.) There's a post on the 80000 Hours blog that does some calculations and concludes that even with very unfavourable assumptions someone who can do well in finance can do a lot more good than harm that way. And, of course, the fact that an industry has been responsible for some very bad things doesn't mean that everyone working in it is doing a lot of harm; it seems pretty clear to me that a lot of what happens in the field does (to a very good approximation) no overall good or harm at all. And if a person of good conscience goes into finance, they're probably in effect displacing someone with fewer scruples and may even on balance make the world a slightly better place by their work.

On the pragmatic point: If your prediction is correct, and some time in the nearish future it is likely that the finance industry will be hit by legislation that costs a lot of jobs and hugely reduces profits, then indeed it would be a bad career choice. I have to say that it doesn't seem a very plausible prediction to me.

(This seems like the sort of discussion where disclaimers like the following may be useful: I do not work in the finance industry -- I'm at a small technology startup -- and neither does anyone close to me; but I'm a mathematician, lots of mathematicians end up in finance, and it's not impossible that I might work there some day. I would have no particular moral qualms about that, for exactly the reasons given above.)

gjm comments on Things I Wish They'd Taught Me When I Was Younger: Why Money Is Awesome - Less Wrong

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