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View Poll Results: People in finance are typically:

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  • Wealth creators

    4 33.33%
  • Wealth takers

    8 66.67%
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  1. #11
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    Quote Originally Posted by Mal+ View Post
    At the end of year one, the island has more wealth than it had at the beginning.
    The argument would be semantical..

    You're right, though, if we're to use your definition of wealth.

    What I meant is that without the human element, wealth is static.

    And that the human element doesn't create it as much as it manipulates it into what it defines as wealth.

  2. #12
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by ygolo View Post
    Which of these mindsets do you believe typifies the world of finance, right now?

    Do people in finance more often create wealth or take the wealth of others?
    I think the mindset has been furnished by Ayn Rand and other capitalist theorists, and in so far as that goes its a sort of barbarism, believing you can do no wrong and you're entitled to everything.

    I think that the financial sector has expanded away beyond what it was or should be and also that this sector being monied, a powerful status group and drawn from a particular social sector with schools, universities etc. in common is never going to be properly challenged or brought into line by government the way in which they dealt with trade union power in the eighties. I see the power and consequences, ie struggle and special interests, as being very, very similar, infact I would have considered the trade unions as less illegitimate.

    The fact that this sector has expanded and does not create new wealth and needs more wealth to be satisfied has meant that the state has had to contract, the amount of money in circulation in the economy to other sectors and in other sectors has contracted too. So there are major consequences for everyone. However, I think that there isnt going to be any challenges to this trend and, as has been the case since before the eighties, most economic and social policy and ideology has strengthened this sectors hand more and more. To the point were "too big to fail" happened.

    In terms of the entire communities which were objectively decimated coal, steel works, heavy industry and other unionised sectors were not "too big to fail" in the eighties and I just see that as a class struggles.

  3. #13

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    Quote Originally Posted by ptgatsby View Post
    I guess when talking about finance, the first question I have is...

    Who funds the entrepreneurs? Could the financial institutions be removed in that equation?

    I don't believe so; finance is fundamental for all wealth creation. The legal structure and the institutions themselves are certainly debatable, but my experience is that corruption runs about as deep as the political process (finance and politics being very intertwined - I would even put forth that governments are essentially finance entities). Finance facilitates wealth the way computers facilitate efficiency, even if a company isn't in the business of finance or technology.
    Certainly, finance is essential for entrepreneurship. My question deals more with the current culture that typifies financial institutions. Do they aim to create new wealth for themselves, or is most of their time spent trying to find tricks and gimmicks to take money from others?

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  4. #14

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    Quote Originally Posted by xisnotx View Post
    The argument would be semantical..

    You're right, though, if we're to use your definition of wealth.

    What I meant is that without the human element, wealth is static.

    And that the human element doesn't create it as much as it manipulates it into what it defines as wealth.
    I consider this more than semantics. In what possible way is wealth static? Even the human element changes over time.

    Accept the past. Live for the present. Look forward to the future.
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    "[A] scientist looking at nonscientific problems is just as dumb as the next guy." Richard Feynman
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  5. #15
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by ygolo View Post
    Certainly, finance is essential for entrepreneurship. My question deals more with the current culture that typifies financial institutions.
    Just wanted to be sure we were starting from the same point.

    Do they aim to create new wealth for themselves,
    In defense of all those that do, I don't think is an issue. However, do you mean to imply that finance in and of itself should be considered a public good (or an inherent monopoly)? I can't see that since the premise of finance is the transfer of loans/obligations, but it's a different argument premised on (theoretical) economics.

    or is most of their time spent trying to find tricks and gimmicks to take money from others?
    And here, do you refer to a particular location/environment, or the core nature of finance? The US is relatively corrupt and unstable relative Canada, mostly due to regulation and oversight. OTOH, other places are a lot worse (Russia and the eastern block come to mind) than the US.

  6. #16
    ^He pronks, too! Magic Poriferan's Avatar
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    Quote Originally Posted by Mal+ View Post
    The belief that wealth is static is based in false Marxist propaganda which is easy to knock down. And such a simplistic falsehood exemplifies why I can never be a Marxist.

    http://www.city-data.com/forum/polit...th-static.html
    'A conservative friend recently told me he had a liberal friend who believed that wealth in the world is static and cannot be created. If this argument were true, then the liberal argument would make more sense regarding redistribution of wealth.

    The problem as I see it is that this is a totally bogus argument to begin with. Take the following example:

    Only two people live on a deserted island. In year one, person 1 works 80 hours per week building a house, making tools, planting a crop, building a boat for fishing, and making a fire-starting device.

    Person 2 spends the first year eating fruit and leftover fish from person 1 and the rest of their time lying on the beach and relaxing.

    At the end of year one, the island has more wealth than it had at the beginning. The island has shelter from storms, fire for heat and cooking, crops for variety of food to eat, and a boat for transportation around the island. Converting some of the islands resources into more usable items while creating creature comforts "created wealth".

    Now whether person 1 should be forced to share his wealth with person 2 or whether person 2 should get off their ass and get to work is a different argument. My question is, how would a person who believes in static wealth get around this simple scenario? Would honestly like to hear the other argument.'
    You're talking about the direct results of labor, labor that includes things like resource extraction and synthesis (mighty fancy words building and farming, eh?). I'm sure someone out there thinks these things can never create wealth, but I've never met such a person. That's not usually what people seem to mean when they talk about wealth being static.

    If the crux here is wealth distribution, then a certain static element is relevant. Monetary wealth is basically static, or rather it is so relative that it's effectively a zero sum game, thus the world cannot be minted into prosperity. The issue is that by necessity all matters of real wealth (like those boats and fruits) are now pegged to monetary wealth. With monetary wealth forming the foundation, the choices we make in manipulating economic development depend on redistribution of wealth. That is, by giving money to research and development, in other words giving research and development a larger share of all available monetary wealth, we increase the capital with which it can accomplish its task and produce (directly or indirectly) more real wealth.
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  7. #17
    Senior Member Mal12345's Avatar
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    Quote Originally Posted by Magic Poriferan View Post
    You're talking about the direct results of labor, labor that includes things like resource extraction and synthesis (mighty fancy words building and farming, eh?). I'm sure someone out there thinks these things can never create wealth, but I've never met such a person. That's not usually what people seem to mean when they talk about wealth being static.

    If the crux here is wealth distribution, then a certain static element is relevant. Monetary wealth is basically static, or rather it is so relative that it's effectively a zero sum game, thus the world cannot be minted into prosperity. The issue is that by necessity all matters of real wealth (like those boats and fruits) are now pegged to monetary wealth. With monetary wealth forming the foundation, the choices we make in manipulating economic development depend on redistribution of wealth. That is, by giving money to research and development, in other words giving research and development a larger share of all available monetary wealth, we increase the capital with which it can accomplish its task and produce (directly or indirectly) more real wealth.
    So nobody is actually saying that real wealth is static, only monetary wealth is? Hmmm...
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  8. #18

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    Quote Originally Posted by ptgatsby View Post
    JIn defense of all those that do, I don't think is an issue. However, do you mean to imply that finance in and of itself should be considered a public good (or an inherent monopoly)? I can't see that since the premise of finance is the transfer of loans/obligations, but it's a different argument premised on (theoretical) economics.

    And here, do you refer to a particular location/environment, or the core nature of finance? The US is relatively corrupt and unstable relative Canada, mostly due to regulation and oversight. OTOH, other places are a lot worse (Russia and the eastern block come to mind) than the US.
    I am not entirely sure what you mean. But I am not asking about anything fundamental to finance as an institution.

    Rather, I am asking about culture/corruption. My impression is that things can get rather corrupt, and is relatively corrupt now as compared to the past (in the U.S. in particular, but with the issue with the LIBOR recently, and how interconnected things are, I wonder if the corruption is more wide spread.)

    Accept the past. Live for the present. Look forward to the future.
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    "As our island of knowledge grows, so does the shore of our ignorance." John Wheeler
    "[A] scientist looking at nonscientific problems is just as dumb as the next guy." Richard Feynman
    "[P]etabytes of [] data is not the same thing as understanding emergent mechanisms and structures." Jim Crutchfield

  9. #19
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by ygolo View Post
    I am not entirely sure what you mean. But I am not asking about anything fundamental to finance as an institution.

    Rather, I am asking about culture/corruption. My impression is that things can get rather corrupt, and is relatively corrupt now as compared to the past (in the U.S. in particular, but with the issue with the LIBOR recently, and how interconnected things are, I wonder if the corruption is more wide spread.)
    I couldn't say whether or not Wall Street's culture has changed because I'm not an insider, but it looks incredibly corrupt from the outside. A big part of the problem is that many Americans view profit as THE end rather than a means to an end (improving the lives of American citizens).
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  10. #20
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by ygolo View Post
    Rather, I am asking about culture/corruption. My impression is that things can get rather corrupt, and is relatively corrupt now as compared to the past (in the U.S. in particular, but with the issue with the LIBOR recently, and how interconnected things are, I wonder if the corruption is more wide spread.)
    Ah, then there is no particular disagreement over the core of it.

    I'd say that, in general, the culture is negative but corruption is about average... when compared to politics. That can be taken as dismal or good, depending on your view on it. I'd use much the same description as fashion and technology. Backdoors in operating systems? Providing huge echelon monitoring software? Targeted malware? Industrial espionage?

    The reality of the world is that it is "corrupt" to a certain degree. I mean, echelon was used for financial manipulation. That's not corruption "in finance". A lot of corruption trickles into finance: is identity (selling other people's homes?) financial? Is lying on a mortgage application, or mis-interpreting a mortgage application financial fraud? Is overlending or overextending fraud or caveat emptor? Same with credit cards. Is bitcoin currency bouncing financial fraud? I mean these rhetorically, and they are just the starting point. Insurance is open-ended; overcharging? Denying claims? Does it exceed the number of false claims? It's not easy to define, even in aggregate. Yet each of those items are beneficial (being able to borrow capital, risk aversion, etc.)

    The other major issue, as seen with the LIBOR, is that very few people need to be involved to perpetuate massive fraud. This often leaves the impression of "wide spread" corruption although it often is "deep" corruption that is rare. OTOH, wide spread corruption due to a lack of regulation does happen, as seen in the US mortgage collapse. It is a serious issue but it tends to be systemic. Deregulating food safety has the same effect.

    The central problem I have is that finance and politics are intertwined so deeply. It becomes an issue of "who watches the watchers". That's my bottom line and why finance is different. True corruption lives at the top of the finance chain, and I believe that is very systemic and very present in most of the world.

    So, my opinion is: finance is a necessary evil. It does good, but is dangerous. A country lives or dies by it and the people eat or starve by it. Unfortunately that means it is political, and politics carries corruption with it.

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