The Cost of Greed

It has become common wisdom that greed on Wall Street is a primary culprit, if not the sole culprit, for current financial instability. Those investment bankers have figured out how to get politicians to make main street pay for their overindulgence. And it isn’t fair that we all suffer for their greed.

I reject the greed hypothesis. Those who argue that greed is like gravity—universal, uniform, and inescapable—make the best case. Since greed is everywhere, the problem must be something else. To keep in line with the meme, it is at least a failure of the checks against greed.

Maybe the investment bankers were supposed to exert self-control, and manage this natural human impulse. But working on Wall Street is not the same as living on easy street. These scapegoats of common wisdom did not lie around the office counting their gold while undocumented aliens fed them grapes:

When I was a kid and had my first serious jobs on Wall Street, there was no explicit formulation of that conundrum, but the firms understood their place. You could make a very very nice living on Wall Street. The barriers to entry were high enough to allow for oligopoly pricing, but that meant for rich pay packages rather than an easy life. You do not know how hard you can work, short of slavery, unless you have been an investment banking analyst or associate. It is not merely the hours, but the extreme time pressure. Priorities are revised every day, numerous times during the day, as markets move. You have numerous bosses, each with independent demands and deadlines, and none cares what the others want done when. You are not allowed to say no to unreasonable demands. The time pressure is so great that waiting for an elevator is typically agonizing. If you manage to get your bills paid and your laundry done, you are managing your personal life well. Exhaustion is normal. One buddy stepped into his shower fully clothed.

And exhaustion and loss of personal boundaries is an ideal setting for brainwashing, which is why people who have spent much of their career in finance have such difficulty understanding why their firm and their world view might not be the center of the universe, and why they might not be deserving of their outsized pay.

No doubt the lifestyle of an investment banker was replete with expensive luxuries. But was consuming luxuries in grand orgies of greed the reason for the career choice? What I sense drives bankers, like most folks who have plenty of cash, is not greed. It is a desire to win. And to be recognized as a winner. Money is a clear and inarguable measure of success.

I suggest investment bankers and corporate CEOs are little different from sports stars. The usual banter around an athlete shopping for a new contract involves mention that the player doesn’t need an extra few million. The players reportedly just want their bottom line to reflect their own estimation of how they rate in the league. The best performers demand the biggest contracts.

Many say that athletes, too, are overpaid. That can be a seperate discussion. My point here is only to recognize that making exceptional talent pay tremendous rewards requires tremdendous sacrifice. Being rich is easy. Getting rich is hard.