Twofish's Blog

February 25, 2008

Thoughts from a corporate fat cat

Filed under: china, finance — twofish @ 4:11 am

http://www.rgemonitor.com/content/view/245470/86/ 

There is a stereotype of people in the banking industry as people in country clubs smoking cigars, and getting money for nothing. It’s also rather inaccurate. If the bonuses get cut too much, I put in my resignation and then there won’t be anyone to write the computer programs to babysit the databases.

The division between labor and capital is very different today than in the 19th century, and I think that the new division is between skilled labor and unskilled labor. Since I can program, I have skills and hence bargaining power, and if the bonuses are too low, I leave.

There are parallels with the farmers in Zimbabwe. It bothers me a lot that the gap in wealth between people that have skills and people who don’t is growing. If you can crunch numbers and solve complex mathematical equations, then the world is yours. If you can’t then your career prospects are limited.

The trouble is that the obvious solution which Mugabe tried of “attack the rich” makes that people with skills leave, and then production plummets. OK, you have the revolution, you’ve just cut bonuses, and then rich fat cats that used to run the place are now gone. You are now staring at a blank computer screen. What happens now?

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1 Comment »

  1. Interesting! But isn’t writing the computer programs a very specific subset of banking? If I look at the bankers I meet most in my daily life, principally M&A specialists on the transactions I handle as a corporate lawyer, the meat and drink of their job seems to be understanding whichever market the client company is in and predicting how that affects the figures*. Where they add most value is in knowing the market and the market participants: and while that’s not money for nothing, it is perhaps money for something that does not require a skill set that is unique to bankers.

    On the more general point, it seems to me that there are two options: accept a degree of inequality but aim to mitigate its effects (either through redistributive tax policies or if practical some kind of culture of charitable giving); or try to level the playing field. I suspect that the latter is principally a matter of access to education, as there are a number of case studies of other attempts to manage equality throughout the 20th century and none of these is very edifying.

    *The side-order of their job is, possibly, sending irritating emails to corporate lawyers at 6:29pm on a Friday requesting answers to questions they should know the answer to themselves. Such emails are only occasionally received with joy.

    Comment by Beefeater — February 26, 2008 @ 2:41 pm


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