And for today\’s Ritchie we have…..

The idea, entrenched in the City, that bankers somehow create wealth as a result of their zero sum games when this is far from the truth

Lordy almighty.

Just try living in a society that doesn\’t have either a functioning banking system nor a market based method of capital allocation. Then you\’ll see whether bankers create wealth or not.

15 thoughts on “And for today\’s Ritchie we have…..”

  1. mind you, the merits of a well-functioning finance sector are one thing; some of the things the actually existing finance sector gets up to are another. Have you read Looting Mainstreet?

    even after applying a discount for exaggeration and adjusting the emphasis to place more blame on corrupt and inept government officials, the bankers are still wankers.

    Tim adds: Yes, I have read it. (Bonus aside, I once interviewed for the job of business correspondent on the paper that Taibbi was running in Moscow….). I would put down the ultimate cause (as opposed to hte proximate of those bankers being indeed wankers) as the standard political motivation. Push costs out beyond the next election.

  2. Perhaps Ritchie wants us to revert to barter.

    There must be some sort of remedial programme we can put him on.

  3. accepting what you say about politicians, when it comes to “ultimate causes” can you not also find room for the greed of bankers alongside the self-interest of politicians?

  4. The Pedant-General

    I’m going to be a little pedantic here…

    The finance sector, in and of itself, IS largely zero sum.

    But, and it’s a big but, what it does do is act as the facilitator for OTHERS to create value. The value does not come from the bankers, but from the fact that they allow others to create value.

    It’s not quite the same thing.

    There is a simple thought experiment:
    A world with ONLY bankers would never create any value. (or not really)
    A world with everyone else but NO bankers would create some, but not much, value
    A world with both allows lots of value to be created.

    That’s not to say that Ritchie isn’t a WGCE though, because the first case is irrelevant. He is arguing that there is no difference between cases 2 and 3 which is clearly arrant nonsense.

  5. The Pedant-General

    Sorry – he is arguing that because case 2 > case 1, that case 2 = case 3.

    Which is the bit that is bollocks.

  6. Well those bankers can’t be producing much tax revenue then if all they do is spin their wheels with zero sum games!

  7. Have you read Looting Mainstreet?

    Simple solution: Ban government, at all levels, from borrowing money. Yes, even for capital investment projects. If you want a new sewerage system, hospital, school, aircraft carrier or anything else, you pay for it in advance.

  8. Did this chap pass anything or did he write his own Degree in orange crayon?

    If the Traders do not cut transaction costs, people would abandon those venues and exchange elsewhere.

    How on earth can someone like Ritchie be ignorant about risk, liquidity?

  9. Sorry PG, but you err. You think “create value” means creating pots, pans, cars, chips, heroin, hookers and blow, motorcycles, school desks and battleships.

    It does not. It means creating “what people want measured exclusively by those people actually spending their money on the things created”.

    Bankers create financial products and lots of people, including me, want them. When I spend my money buying such a financial product that is not, repeat, not, a zero sum transaction.

    The great communist delusion was, and is, that “value” is an absolute measurable thing, the same for all people, in all places, at all times.

  10. Bankers do not create anything but *paper* wealth. And they’re pretty useless at that as well. What they do have down to a fine art is systemic risk and socialising losses.

    BTW: “Nice elision, Timmy”. It’s clear what Murphy is refering to: most of the financial sector is a lot more trouble than its worth.

  11. Luis writes:

    “accepting what you say about politicians, when it comes to “ultimate causes” can you not also find room for the greed of bankers alongside the self-interest of politicians?”

    This is where the insights of what is called “Public Choice Economics” is so important. Inasmuch as today’s banking industry, with all its deposit protections, state bailouts, cheap central money, etc, is not much like a genuine free market, then bankers have quite a lot in common with some politicians. There is a lack of the discipline that comes with the knowledge that failed ideas lead to bankruptcy.

    If a bank loses shitloads of money, it gets bailed out by the taxpayer. If a bad government policy goes sour, the government in question will ask for even more money to set the fuckup correct, etc.

  12. The Pedant-General

    fred Z,

    Possibly, but even if you DO take the prescriptive line that I have taken, you STILL can’t get to Ritchie’s (WGCE be upon him) argument.

    I think that’s my point.

  13. I’d have to agree with the Pedant Gen. that there is some truth there.

    If we take the quoted sentence, which refers ONLY to the zero-sum games the bankers play, not the other noble and selfless duties they perform, then it is undoubtedly true.
    Their zero-sum games do not create wealth.

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