Comments on: Is wealth inequality so extreme that it’s OK to be a ruthless trader? https://80000hours.org/2015/07/is-wealth-inequality-so-extreme-that-its-ok-to-be-a-ruthless-trader/ Thu, 15 Dec 2022 10:42:47 +0000 hourly 1 https://wordpress.org/?v=6.4.2 By: Joe https://80000hours.org/2015/07/is-wealth-inequality-so-extreme-that-its-ok-to-be-a-ruthless-trader/#comment-270 Fri, 21 Aug 2015 19:12:00 +0000 http://80000hours.org/?p=34527#comment-270 In reply to Owen Cotton-Barratt.

That’s a really good point. Of those 100,000 people mentioned previously it is likely that a large fraction of their wealth is ultimately donated to charity. (See the Buffet/Gates giving pledge)

]]> By: Owen Cotton-Barratt https://80000hours.org/2015/07/is-wealth-inequality-so-extreme-that-its-ok-to-be-a-ruthless-trader/#comment-210 Sat, 25 Jul 2015 19:21:00 +0000 http://80000hours.org/?p=34527#comment-210 Good work with this analysis. I guess you should also think about what eventually happens to the (marginal) wealth held by extremely rich individuals. If it’s consumed by them, your argument applies. But if it’s invested for decades then this may be a reasonably efficient allocation of capital, and if it’s often donated (e.g. at the end of their life) then this could be a major reason to think it isn’t socially neutral to take money from them. Any idea if there’s data available on this?

]]> By: Mark https://80000hours.org/2015/07/is-wealth-inequality-so-extreme-that-its-ok-to-be-a-ruthless-trader/#comment-200 Thu, 23 Jul 2015 17:40:00 +0000 http://80000hours.org/?p=34527#comment-200 Recent research also suggests that financial booms can cause harm through the misallocation of capital and labor. For example, a recent BIS paper finds that a financial boom can result in 2% lower productivity growth in R&D intensive industries by pulling talented labor away and allocating capital to lower growth areas like real estate [1,2]. This 2% compounded over a 5-10 year financial boom could be quite harmful, especially if the areas of R&D are high value [3]. This is before even considering the harm that was caused by financial collapse.

Of course, this is new research and it has been questioned [4], but also seems to have held up to that questioning [5]. It is also unclear how the marginal worker impacts the industry, but one should at least consider these points before choosing a career in finance.

[1] Why does financial sector growth crowd out real economic growth? https://www.bis.org/publ/work490.htm
[2] Warning: Too much finance is bad for the economy. http://www.economist.com/blogs/buttonwood/2015/02/finance-sector-and-growth
[3] Research note: How valuable is medical research? http://globalprioritiesproject.org/2015/02/research-note-how-valuable-is-medical-research/
[4] Too Much Finance, or Statistical Illusion? http://www.iie.com/publications/interstitial.cfm?ResearchID=2796
[5] Too Much Finance or Statistical Illusion: A Comment. https://ideas.repec.org/p/gii/giihei/heidwp12-2015.html

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