This article is something I don't understand. I can understand that rewards should reflect the risk that people are willing to take. What risks do financial advisors personally take to justify the rewards they reap? It seems to me that if you take a much bigger reward than the risk you personally take, then that reward is undeserved and a pure expression of greed vs. what you're truly entitled to. Am I missing something?

Gary Rogan writes:

Clearly the flexionic millionaires don't deserve their rewards, especially after their companies should be long bankrupt if left to the vagaries of the free market. Is the remuneration of a financial adviser, who without any governmental or otherwise illegal/unethical tricks, derives good income from seemingly simple work, "justified"? I suggest that this is another "angels on the head of a pin" questions that cannot be answered, because it's "ill posed". In a free market, anything you get from a voluntary exchange is "justified" by it's existence. If you want what he's got, try it on your own and see if you can do as well or better. I personally don't believe in the services of a "financial advisor" so I've never been to one. I have the same attitude towards them as I do toward well-paid athlete in a sport I don't care about: if somebody is willing to voluntarily pay them their salary, it's not my problem or concern.

The article, in a true populist fashion, confuses ill-gotten gains with the rewards of the free market. This "trick" is a favorite of revolutionaries, who use the existence of scoundrels to destroy any semblance of order and replace it with a dictatorship led by even worse scoundrels.

Mark Goulston replies:

Thank you Gary. It is aimed at the true "flexionic millionaires," and I am in favor of the free market and oof people who are willing to put themselves and finances at risk to reap the rewards when they pay off. I'm just not sure I agree with "flexionic" people reaping the rewards as a result of their risking other people's money.

Gary, Hit me with your best shot about: The Obsfuscation Conspiracy.

Gary Rogan responds:

Mark, I think that most of the "flexionic millionaires" are probably CEOs of large, mostly (but not exclusively) financial companies and to a lesser extent, some hedge and other fund managers. It seems from the context that you were referring to the latter group rather than some down-home financial advisors who take on a few clients personally. To the extent that they derive their gains from their flexionic connection they are just thieves. The problem is it's often hard to separate what percentage of their gains comes from their honest skills and what percentage comes from exploiting the illegal/unethical schemes.

The real truth is that in complex societies those who learn to exploit complicated "angles", legally or illegally do well. We should try to clamp down on the illegality because otherwise everything else becomes corrupt, as corruption cannot be contained to one sector. The quest however to link compensation to the social value of one's work by anything other than enforcing anti-corruption laws and encouraging such attitudes is likely to become a fight with windmills or worse, a populist revolutionary crusade with disastrous consequences. Freedom trumps unfairness, but unfairness due to corruption should fought by good people.

Fast Anonymous writes:

While the flexonic millionaire are an issue. The cause of this issue is those millionaires that made their money by skimming a small sliver of risks and put it on the unsuspecting. No body has gone to jail, for this willful blindness. Not only have they not gone to jail those very workers are the new untouchable, too big too fail, in with the government: flexons. Of course they can put together a new system built on trust (wink, wink, nod, nod). We have all heard of perhaps the urban legend "penny skimming" millionaire. The con where you simply take a few pennies from every account, and 99.9% never notice but simply adjusted their books each month it happens . Those that did notice, did not take the time to complain. those that complained never sued etc.

Many in Wall Street simply skimmed the risks, added more and more risks, to those that thought they were buying safety, got sold garbage. The truth got stretched further an further out. One in 1 in million soon became 1/1000, then 1/100 then 1/10 and thereafter bound to happen sooner or latter. Allstate has done a statistical study that proves without a reasonable doubt many of these mortgage pools were outright frauds. The audacity of the lies were staggering to me. AIG sold over $500 billion of insurance on such securitized products, that they could not cover. They eagerly took the premium thinking they were the ones selling worthless promises.

Craig Mee writes:

Give people an inch and they take a mile. How long is a piece of string… if you do something, your kids will follow. At times no doubt its to do with re-educating people. For example, when countries move to a greater minority group within their populace, initially sometimes, those then deem to capitalise on looseness within the system. The locals then realise they're paying higher premiums because of this and get in on the act. And then the snowball begins. (A mate recently in court with a bad neck from car crash…usd7000 was the going rate. Turns out 8 people were sitting beside him with their hand out, all from the same family two car accident, usd 56000, a nice down payment on small business.)

As banks have been shown to "take liberty" so has the public. On a recent problem with a bank in Australia, atm's started punching out cash regardless of balance… from an official : "we have some people innocently trying to get sums of money out and being given more, through to people pushing security guards out of the way to go and get to it."*

We breed it and deliver 4 year political terms for those to give our cash away at will to secure votes in a socialist environment, and pay the consequences.what the answer. Work Harder!

The old laborer had to stand together, from such risks skimmers, to make a safe work place.

Wall Street must stand up to these skimmers of risks also.

Mr. Krisrock writes:

I appreciate that you posted this because it exposes that you are a supporter of Obama's strategy to VILIFY 500,000 people working in financial services and millions more who work in service industries that support them and the capitalist methods of allocating capital.

VERY VERY VERY few of these people were responsible for the financial crisis and in fact, some of us saw the fact that these same people never chose to attack the PUBLIC PRIVATE SYNDICATE called Fannie Mae.

Craig Mee writes:

Mr Krisrock, you may want to set your scope on a more deserving recipient. How my idea that "banks have taken liberty" has anything to do with a slam dunk and vilification of 500,000 financial service workers I don't quite understand.

I am a supporter of less taxes, that's what I'm a supporter of, and a fair go, for those who are having a crack.

Kim Zussman comments:

The meme gains momentum.

Ralph Vince writes: 

It's ALL about money. Nothing else. In ALL walks of life, medicine, teachers, cops, politicians, waitresses, hookers, traders and traitors. Pretending to be "Above it all," is alway, bankably, a phoney act. All the little people's greed is always at the fore of their consciousness (excepting in young men, where that greed is surrogated by something else).

And who says the compensation should be consistent with the risks one takes? Or the good one does? Or their intellect?

I love that expression "…what you are entitled to." It rather rings of the other one those kind of thinkers lob out there, "…fair share."

It's enough to make you think we don't really live in a jungle. My experience, is that these are expressions of the largest predators among us, their weaponry consisting of the very specious argument that we are not in a jungle.

Let's not believe that for one second.

Gary Rogan writes:

The way the world really works is that if you unleash the government to take from those who have to cure sick patients and to house homeless children, you will have more patients unable to pay and more homeless children. Not immediately though. The liberal argument is always about here and now: "If we take the money today, we can spend more of it on worthy causes immediately. How can you not see that those in pain deserve it more than the rich who have more than enough?". Michael Moore who inserted himself into the Wisconsin crisis the other day went further. His claim was that we don't have ANY financial crisis and no government is broke because there is this untapped resource which really belongs to "the people", the wealth of the rich, that is simply not being tapped.

The real argument in Wisconsin is actually more about power than money. In this case the money, more specifically the forcefully extracted union dues of the public employee union members, is what has kept the Democrats in power in a self-sustaining feedback loop: we give you more secure and better paying jobs, you keep getting us elected with your contributions. The left is having the proverbial cow that the election process has somehow gone so wrong as to break this loop. Their reaction is bewilderment and blind rage.


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