How Do Investment Bankers Reconcile Their Lack of Productive Output With Overcompensation Relative to The Poor?
Gents,
Not looking for a flame war, merely just curious on the psychology behind the IB phenomenon that has been in effect since god knows how long. When a hard-working, middle-aged, father of three comes to your expensive apartment to set up your wifi for you or deliver and assemble your furniture to you, how do you justify that you make 5x what he will be compensated for despite relying on him for practical, productive output? Do you truly think it is fair that someone working an essential job that will wear them down both physically and mentally is undercompensated while investment bankers enjoy excess and pay a tax rate just 10-20% higher despite producing no discernible essential product? Obviously we all hate taxes, but it just seems odd to me that my friends in finance are so hostile about the idea of chipping off 50-60% of their trappings and still having more than they need when there are so many good people out there, providing way more essential services and working more demanding jobs that are barely scraping by because they weren't born into the good ole boys club.
I know this is an extreme example but look at Disney acquiring Marvel. I read somewhere the other day that the valuation of marvel now is something similar $15-19 Billion (and it was acquired for about 4 billion back in the day). Think about the number of jobs that were created because of this, it wasn't just for Disney, it increased businesses for so many others (toy-makers, Netflix (before Disney pulled marvel movies from there)), etc. I honestly think that M&A isn't even as helpful. I think the work that capital markets do can be even better. You don't have redundancies, and a lot of times some of these companies wouldn't be able to survive without people like us addressing their capital requirements, and a lot of times the capital markets work done by IB also propels them through growth and so on and so forth, which also benefits so many others. I know this trickle down can take some time but I still think that we do more good than harm.
Lol mergers usually result in thousands getting laid off. Most mergers don't provide the value and synergies promised either.
M&a is honestly pretty low value add (unless you are Facebook buying instagram). Usually its done so a board of directors can say we aren't wasting our capital (and often because they have no clue how to use it to produce more value creation, hence all the lazy companies just doing share buybacks with it). At least they tried by doing an acquisition...
If you let a ton of capital sit on the books without returning it to shareholders or "using" it, good luck with your elliot management and nelson peltz phucking you in the bootyhole goals of 2020
I don't reconcile it because it's a meaningless comparison. There is no absolute fairness in the world. Otherwise why aren't you born a starving migrant in Africa? It sucks to have my earnings stripped from me because it sucks, morality doesn't come into the thought process. Also I wouldn't get paid as much as I do if people didn't value what I do. People have free will, stop infantilizing them, and making every essential worker a martyr.
“Morality doesn’t come into the thought process”, ie, you have no morals? Or merely selective morals that you conveniently chose to discard when the tangible benefit to you is higher than the emotional benefit of feeling like a good person?
As for “people have free will”, spoken like a true upper-middle class honkey. You really think your lanky, pasty, cracker-ass would be where you are if you were born in Flint, MI drinking lead water and an insufficient public education system? Kiss my ass whitey.
Not white but okay lol
“Not looking for a flame war”
Go back to Reddit FFS. You come to an online message board for people working in/interested in a high-paying field and proceed to harass them for making good money? Grow up — life isn’t fair.
The entire argument you made hinges on the factor that life inherently has value, and more so that all lives have the same value. They don't. All life is meaningless. We're on a floating rock in space moving around a massive ball of exploding gas in a universe slowly tending toward absolute entropy. Oh and absolutely nothing happens when we die. If you were rich nothing happens. If you were poor: nothing still happens. All this shit is meaningless. Let me enjoy my pointless existence on this shithole of a planet in my penthouse wiping away my tears with hundred dollar bills playing a sad song on the tiniest violin in the world for all the poor ol' PrAcTiCaL PrOdUctIVe OutPuT people.
You know you have no argument when you resort to this level of abstraction. Would you keep that same energy if some booty goons ran up in your mom’s house and hit licks? “Ah geez well life is meaningless anyway, doesn’t matter!” I highly doubt you look at things this way unless it benefits YOU benefiting at other people’s expense. Classic Caucasity
I'm Argentinian-American but OK buddy. And yeah you're god damn right I look at things this way because it benefits me. I'm not Mother Theresa- I couldn't possibly give less of a fuck about people who "produce AcTuAl output". That guy installing wifi in my house made his choice. I didn't have an old boys club. I came to the US with my parents on a work visa. I lived in low-income housing for most of my childhood. I went to public school. I had loans through college and a part-time job. But I grinded my ass off in college, and that's why I'm in IB. The guy setting up my wifi either A) didn't know about the opportunity or B) Wasn't able to get it. I have no sympathy for either. For A, I'm not responsible for that guys lack of knowledge/preparation. For B) I'm even less sympathetic because it means he wasn't good enough to get it. I'm here where I am in majority due to my own actions and hustle- I don't give two fucks about other people.
Life is not fair. I know plenty of people that grew up with much better circumstances than I did and chose to go other ways. We all make different decisions in life and have our own incentives. I'm paid what the clients are willing to pay me
Again, do you keep that same energy of “life is not fair, whatever” when you are the one being preyed upon? If you were born in Flint, MI and had no drinking water or if you were stuck in NoLa without aid post-katrina and your neighbors and family members were dying, would you still simply be cool with “oh well, life isn’t fair so I’m cool with this!”
He’s accepted it, he didn’t say he was cool with it. Those are two very separate things and I agree with @MorganStanleyYes"
This is a very lazy approach to defining practical value. Come back with something better. You can’t actually think installing WiFi at a hyper local level is more productive than advising companies, right? Also, having children does not make you more or less important to others/society. Irrelevant to your example which is supposed to be about practical value; it’s also a lazy emotional ploy.
There is no such thing as a "fair" compensation. Society values investment bankers more than the guy who sets up wifi at my apartment, hence the difference in salary. Why are bankers more valued? Both because rich capitalists need them to execute their own M&As and because, while anyone can setup wifi at an apartment, few people have what it takes to become an investment banker. Think about it: to be an investment banker, you need a prestigious pedigree, good sales skills, strong analytic and quantitative skills (compared to the average Joe - I'm aware we're not quants), excellent attention to detail, and the willpower to work 80 hours weeks for several years. Few people have all that, hence a smaller supply and a much higher compensation.
Also, if your answer to inequalities is a higher labor tax, then you have it wrong. If anything, labor taxes exacerbate inequalities. What reduces them is a higher tax on capital gains (the top 0.1% don't work for a salary, they invest the capital they already have and let it grow for them).
Damn 80 hour days? They got you by the balls fam
Lol fixed it
Anybody can be an investment banker permitted they come from a white, upper middle class pedigree. Also your concept of “prestige and pedigree” is clearly non-inclusive. When you imagine a prestigious person of proper pedigree, are you imagining a black woman from Flint, MI or some cracker ass honkey who went to Taft and didn’t have to take out student loans? Try again whitey.
By pedigree, I mean educational pedigree, i.e. a prestigious school. Last I checked, most prestigious schools had a good amount of diversity in them, like Harvard which has half of its student body being non-white. Also, I'm not in the US so not too familiar how Michigan-Flint differs from regular UMich, but I would include UMich in that set of schools. I really made no mention of race so I have no idea where you're getting that from, especially at a time when investment banking has so many programs for diverse candidates to enter the profession (which I'm all for, but you can't argue that banking's exclusivity is a race-based exclusivity).
Also:
No. This is precisely the opposite of what I'm saying. Plenty of white upper-middle class people who fail to get into banking for one or several of the reasons I mentioned above.
EDIT: I've just gone through your other comments on this thread and realized that you're baiting everyone with the race-card. My bad, should have seen the troll coming. And I hope it's a troll, otherwise I can't fathom how sad an individual you must be to create a thread with the intention to reply to those who comment with aggressive race-based comments
I've thought about this before, and I think the simplest answer is - most bankers truly believe they work harder than everyone else, and should be excessively compensated accordingly. They can't fathom that the cleaning lady on their floor might have 3 jobs and puts in 70-80 hours a week just like they do. Senior bankers bitch about their 7am Monday morning flights to LGA, failing to notice the airport is packed with people doing the same thing for a lot less money.
An MD I used to work for who was considering leaving for industry remarked that he couldn't find any gigs because he "deserved to make no less than a million a year". This guy had never opened a new market, invented a new product, managed more than 5 people, built out a FP&A function, scaled a company, etc. Nope, he had knocked on private equity doors for sell side mandates to wash, rinse, repeat through the sell-side process for 15+ years. And that skillset was now worth no less than $1 million in Corporate America, somehow.
Should bankers make well above average for a finance gig? Yes. Client service is demanding, and the work can be more complex and critical than a standard month-end close. But 3 - 10x their peers in other finance roles? I'm not so sure.
Agree with everything you said. Also, people never consider that things like being a single-mother require additional, uncompensated labor. Whereas if your income is high enough you can pay your way out of that because your hourly wage is higher than the hourly wage you must pay a nany. Others don’t have that option. Working from 8AM - 6PM and then spending the next four hours cleaning, helping with homework and taking kids shopping is still a 14 hour day.
Then don't have kids you can't afford/care for. If you have kids you have made a choice. That choice has consequences. Maybe it's working more hours at work- having a smaller bank account- not being able to do IB etc. But actions have consequences. If you don't like the consequences, then don't take the action.
At the EOD it’s just about markets. Is it fair construction workers who physically build things and destroy their bodies over a lifetime of carrying bricks and shingles get paid less than a spiffy white collar 22 year old? On its face, no. But the same goes for many other industries outside of banking. Take sports for example. There are individuals who play a game for a living and make far more than the vast majority of finance hardos. Is the argument really that sports stars add more value than finance professionals? Mahomes ripping the pigskin downfield is impressive yes, but it’d be a stretch to say that he adds as much value to society as someone who allocates capital to maximize returns, thus increasing overall productivity and well-being in society generally. We don’t get paid because of some inherent value that’s assigned to our profession, we get paid as much as we do because that’s what the market (business owners, for the most part) have decided is appropriate. The same goes for sports, musicians, mathematicians, plumbers, and everyone else. If the going rate is too high, people can go find a suitable substitute and the labor market will flex to reflect that shift in consumer preferences over time.
--> Proceeds to start a flame war with racial slurs
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