Trading firms are Rand-pilled cloisters of libertarianism.
Is it a self-serving post-hoc rationalization of meitrocracy that allows rich traders to not only enjoy wealth but virtue? Ha ha, sorry folks, not today. I’m ain’t gonna bait myself into this discussion.
I’m just going to leave you with a couple thoughts to turn over at your own pace.
When I was a trainee I remember an argument by a senior colleague who, as was typical, a market-maximilist who argued that teachers are probably overpaid, not underpaid as a fixed price will weed out everyone who knows they are worth more and therefore you structurally select for those worth less on average. Your best-case scenario is the price and talent are exactly matched. It’s basically the same argument for why buffet restaurants are bad business. It only selects for eaters who see the price as a good value.
To be honest, I think I’m giving the colleagues’ argument some grace. I don’t remember it being as cosmetically coherent as mine. His argument gestured in the general direction of “markets are right”. That the price of teachers is not set by a free market doesn’t seem to have found its way into the discussion. Details, details. This person is very rich today and extremely sharp on topics like trading and business, so you know, just another reminder that high aptitude in one area doesn’t easily transfer (whether it reflects natural cognitive silo-ing or motivated reasoning is yet another question.)
I’ve heard that a stereotypical view of wealth in many parts of the world is that if you’re rich you must have been corrupt or left a trail of bodies in your wake to amass wealth. In the US, wealth is virtue. Capitalism victory points. Evidence that you gave people something they wanted. A ledger of value creation.
My view is directionally American with wide error bars. There are a lot of rich people whose profit has been nothing but an unaccounted for externality. They got the benefit without bearing the cost. Tobacco is giving people what they want. But pardon me if I think gains from trying to get teenagers to become early addicts should not become wealth. I think even the oncologists who treat those “customers” would be willing to sacrifice the 5th bedroom in their house to not have this “value created.”
Markets are downstream of politics. Markets and law are inseparable constructs and US law is the product of either pure mob democracy (the proposition system in CA) or representative government, whereby a centralized agent, like a senator, is entrusted to, umm… do what they want, subject to the constraint of “get re-elected.”
If law is not a free market, neither are the markets that it rests on, notwithstanding the platonic inventions of libertarian fever dreams. My favorite example of this today is college athletes. They were always creating tremendous value. But one day they weren’t allowed to extract their share and the next they were swimming in NIL money. With the stroke of a pen, their bargaining position changed.
Wealth is not just a function of value creation. Its value creation times some bargaining position factor. And that factor is often political. From FCC spectrum to land to labor laws to unions to IP laws, from subsidy to censure, from Spotify to artists, from accredited investor laws to bank charters, from casino to prediction markets…it’s all infused with law which creates centralized nodes of outsize power to influence or corrupt.
This has always been my concern with wealth inequality. It’s not a normative or moral concern so much as an acknowledgement of social physics. Wealth is power and nobody believes anyone’s power should be unlimited. We watch as individuals’ wealth continues to climb to those of city-states distracted by talk of “greed” or “fair share”. That discourse travels well because it’s smoke. The fire is deeper in the walls.
The future is going to require more transparency than ever. Which should be available in the age of broadband, compute, and video. And yet we don’t trust our eyes and when we do, we disagree about what we see. The line between info and info hazard is blurring every day. It’s ironic that so much wealth has been created by liberating information, but that same wealth will be used to selectively control it.
Switching gears to wrap up…
As a practical matter, when you think about the work you do and how it improves people’s lives, recognize that it’s within a path-dependent, arbitrary system-level backdrop. You may create lots of value, but the rules have limited your bargaining position.
You can choose to make peace with it, fight to change the rules, find a way to express your talents in a more advantageous industry/company. But crying over it or arguing with the smug who say the invisible hand is giving you what you deserve will rot your heart. Face reality to deal with it.