Read This

This is a devastating take-down of the culture of high finance. What's more, it does so from a sociological and anthropological perspective, as opposed to a conventional economics analysis, which suits my temperament better:

The excessive pay can be interpreted as a sign of unfair or inefficient markets. It is that, but I think the deeper cause is not so much economic as sociological. Financiers have persuaded the broader society that they are modern aristocrats. Pampered lives are part of the package. They go along with an unthinking sense of entitlement and a mix of self-righteousness and self-centredness, with just a hint of condescending tolerance for limited criticism.

Of course, today’s financial aristocracy is different from traditional nobility. The contemporary titles (partner, managing director) and privileges (first-rate education, political influence) are not exactly hereditary, and long hours on the job have replaced a life of leisure. But I believe the commonalities are more significant.

………

In my view, the sociological analysis provides more insight into the industry’s condition than the more common argument about “heads I win, tails you lose” incentives. I rarely meet financiers who would admit to being reckless or wasteful. What I observe is sublime and blind self-confidence.

Living largely with other members of their caste, they rarely have doubts. To them, more finance is always better than less and higher margins always better than lower. They welcome the development of more complicated financial products; they don’t worry much about the effect of these products on the rest of the economy.

Read the whole thing.

I think that his analysis is spot on, though his last 'graph is a bit too optimistic for my taste.