Wall Street Fianciers are Douchey
From Zanecorpwiki
Planet Money #226 opens with a short tape of Wall Street guys first agreeing (at least not pushing back) that their employers would have failed without tax payer bailout. They then take umbrage at the idea that they should say thanks/we're sorry to the American taxpayer.
Their basic argument is that they each individually have their jobs and success because they're smart guys. (See "The Smartest Guys in the Room".)
Being a somewhat smart, sometimes arrogant fellow, I think I understand this and it's not all bad. It takes a certain amount of self confidence that can easily swerve into arrogance to do certain jobs.
The first problem for me is I'm not so sure finance benefits from self-belief in the same way that small business entrepreneurship or research does. Finance allows things to happen, but it doesn't create anything. The self confidence leads to risk, but risk isn't so useful here, not at the societal level.
To be sure, there are other mechanisms and just like there's a lot of research that says women make better leaders and entrepreneurs because they don't have the same innate drive to "beat" their cohorts, I suspect that womenwould make better financiers.
Each of those financiers (and fortune 500 CEOs, etc.) thinks they are special. Sure, the industry may get hit, but each and every one of them sees themselves as smarter than the average. Some of them certainly are, but the secret is that it doesn't matter.
The research we have on who succeeds and loses at finance points out three things. Two of them boil down to an unfair advantage: insider knowledge (like trading ahead of a public announcement) or overwhelming force (like when financiers bet against Asian currencies and then forced the Asian currencies into collapse).
Which leaves one key differentiator in a level playing field: luck. With only a few exceptions (Warren Buffet is the only possibility that comes to mind) you can be fairly certain that those that win big in the market are either cheats or had a lucky event.
So maybe a lot of smart people go into finance, but that's not the reason they all kept their jobs and outsized bonuses. For that, you have to look to the American taxpayer.
