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Comment by branchless | Hacker News Reader

If the market is so efficient why are so many people working in it? The answer is it's parasitic. They don't allocate capital efficiently, progress has slowed dramatically in the west and a culture of rent seeking has taken over.

It's a huge misallocation of resources but of course people simply point to the fact that they are "making money" as a sign of success.

And yes, they are indeed "making money". That is the problem.

A total disaster for the west, if they don't reign this in it's over.

EDIT: fascist hacker news doesn't like it when you talk about usurers

To clarify:

if it's so efficient why is it such a large part of GDP?

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Your comment started out ok, but became increasingly grandiose in its rhetoric, which may explain some downvotes. If you do this, however:

> EDIT: fascist hacker news doesn't like it when you talk about usurers

you forfeit your place in the thread. Name-calling isn't allowed here, nor going on tilt. I'm pretty sure many HN users agree with you, or are open to your point, but you discredit it by commenting like this.

We detached this subthread from https://news.ycombinator.com/item?id=13185513 and marked it off-topic.

> It's a huge misallocation of resources

These resources are self "allocated". No one was forced or coerced into joining Goldman Sachs. Did you ever think that maybe those people enjoy their job? Or that Goldman Sachs isn't the net negative harbinger of the apocalypse you claim it to be? One could even argue that the success of "the west" is due to availability of capital, of which GS has played a role.

Nope, they are abusing their monopoly on credit creation and access to markets / lobbying.

The west has been struggling big time since the 1970s. Yes we have "growth" but that is just counted in fiat. We now have families with both parents working all the time for the same home their parents had. Because of the banks issuing credit ahead of the rate of increase of wealth creation.

It's been a total disaster.

>Nope, they are abusing their monopoly on credit creation and access to markets / lobbying.

You think banks have a monopoly on credit creation? Do you understand what credit is or how it works? Everyone is free to create and distribute (or accept) as much credit as they want.

> We now have families with both parents working all the time for the same home their parents had.

This is not true. Homes are much larger now than they were in the past: http://www.aei.org/publication/todays-new-homes-are-1000-squ...

Both parents working happened due to women _wanting_ to enter the workplace. It had nothing to do with Goldman Sachs.

While I agree its parasitic, I dont think its the end of the world. Its more like they are taking all of the cream from the milk, and just delivering skim milk to consumers with out telling them. People notice the milk is different, but can't quite put a finger on it.

Its just part of the problem with income inequality.

Okay that taking the cream part, which you clearly agree with. That is doing enormous damage. This is IMHO why you have Trump. The system simply is not allocating resources to people who are creating value.

This is part of the reason that we have discontent around the world.

The US has Trump because too many people want to say FU to the system and don't realize the are really just screwing themselves.

Market efficiency and the number of humans involved are unrelated.

When people talk about market efficiency they are talking about the markets ability to quickly allocate capital where it is needed at a "fair" price.

I think the comments about the industry being largely parasitic are generally correct. They real issue is that if there is a 100 billion dollar transaction taking place and you can make that happen 1% more efficiently any fee you charge up to a billion dollars is a "good deal" from a purely economic standpoint. That is unless someone is able or willing to deliver that same gain for less fee.

That is exactly the arms race that has so inflated the sector.

The fact that financial firms are massively profitable does indeed suggest that it's an inefficient market.

In an efficient market there's "no free lunch"--because somebody else comes along and eats it. If the financial sector were efficient, competition would drive down profits.

This is in fact happening to some extent with passively-managed index funds like Vanguard taking up a larger and larger share of investors' deposits, but it's been a surprisingly slow process.

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