This weekly roundup thread is intended for all culture war posts. 'Culture war' is vaguely defined, but it basically means controversial issues that fall along set tribal lines. Arguments over culture war issues generate a lot of heat and little light, and few deeply entrenched people ever change their minds. This thread is for voicing opinions and analyzing the state of the discussion while trying to optimize for light over heat.
Optimistically, we think that engaging with people you disagree with is worth your time, and so is being nice! Pessimistically, there are many dynamics that can lead discussions on Culture War topics to become unproductive. There's a human tendency to divide along tribal lines, praising your ingroup and vilifying your outgroup - and if you think you find it easy to criticize your ingroup, then it may be that your outgroup is not who you think it is. Extremists with opposing positions can feed off each other, highlighting each other's worst points to justify their own angry rhetoric, which becomes in turn a new example of bad behavior for the other side to highlight.
We would like to avoid these negative dynamics. Accordingly, we ask that you do not use this thread for waging the Culture War. Examples of waging the Culture War:
-
Shaming.
-
Attempting to 'build consensus' or enforce ideological conformity.
-
Making sweeping generalizations to vilify a group you dislike.
-
Recruiting for a cause.
-
Posting links that could be summarized as 'Boo outgroup!' Basically, if your content is 'Can you believe what Those People did this week?' then you should either refrain from posting, or do some very patient work to contextualize and/or steel-man the relevant viewpoint.
In general, you should argue to understand, not to win. This thread is not territory to be claimed by one group or another; indeed, the aim is to have many different viewpoints represented here. Thus, we also ask that you follow some guidelines:
-
Speak plainly. Avoid sarcasm and mockery. When disagreeing with someone, state your objections explicitly.
-
Be as precise and charitable as you can. Don't paraphrase unflatteringly.
-
Don't imply that someone said something they did not say, even if you think it follows from what they said.
-
Write like everyone is reading and you want them to be included in the discussion.
On an ad hoc basis, the mods will try to compile a list of the best posts/comments from the previous week, posted in Quality Contribution threads and archived at /r/TheThread. You may nominate a comment for this list by clicking on 'report' at the bottom of the post and typing 'Actually a quality contribution' as the report reason.
Jump in the discussion.
No email address required.
Notes -
One of the things that I find interesting about Google is that when they were making (and now they are making) a ton of money, they didn't split the profits between investors (either via buybacks or dividends) and staff, they just hired orders of magnitude more people.
In finance, things are very different. If the bank is making a lot more money, as much money as possible gets used to pay everyone (those at the top much more than those below, of course) a lot more. As Warren Buffett famously noted, banks are run as much for employees as for shareholders, and indeed more for the former. Investment banking teams hire, for the most part, the minimum possible number of people they can get away with without making shorter decks/worse pitches than the next bank. That's one of several reasons behind the 100 hour week. Everyone is mostly happy with this, nobody wants to halve their bonus so they can work a few fewer hours.
Google is also famously a company that many have declared is run more in the interests of its employees (engineers described as coasting, practically retired, etc) than its shareholders, and the only two of the latter who matter are off in Hawaii on the beach anyway.
But at Google, they've spent 15 years printing money, and instead of just paying all the engineers $5m a year each, they decided to hire 25,000 more engineers to make failed products. It seems like such a weird failure of incentives. Were the early employees just so rich from their equity stakes that they didn't care about money anymore? Why did they agree to hire so many more people instead of just paying themselves from the unbelievable rents they extracted from the rest of the economy? Did Sergey and Larry really want that many more people on payroll?
It's finance that's weird here. The finance people are in it for the money as an end in itself. Most management types are in it largely for power, and that means more people under them. They certainly don't want to pay individual contributors more; there's no upside, and the ICs (who also aren't finance people in it for money as an end in itself) might take the money and retire early leaving them scrambling for more workers.
Managers that want to deal with less bullshit from low quality employees would like to pay as much as possible to attract top talent. Since it’s not their money, they don’t really care that they might be able to get away with lower tiers of talent.
More options
Context Copy link
Would save them the trouble of doing layoffs after the irrationally exuberant hiring.
More options
Context Copy link
More options
Context Copy link
Yeah, it's extremely weird that Google et. al. went on hiring sprees when they could have just given their employees next level money. All those weird side projects that haemorraged money led to lower return on capital employed, which pisses off investors (even more than not giving them fat dividends does) and also pisses off your employes compared to the counterfactual where they would get millions a year.
Funnily enough I was recently talking to a (leftier than me) friend of mine who didn't know that all the big famous investment banks were public companies and that anyone could buy their shares.
After I told him he was extremely surprised by this fact and opined that they must be an excellent way to make money only to be brought down back to earth after I told him that in reality they were really shitty investments because all that money they made went to their employees as salaries and bonuses, leaving their public investors with mediocre returns.
He said something along the lines of "Of course this happens, typical greedy banker behaviour". Because I value this friendship I wisely left it at that and changed the subject, but deep down a part of me wanted to quip "Firstly you complain about big companies putting investors ahead of their employees and how this makes them capital-B Bad/greedy, and now here you have an example of a class of companies which do the opposite and put their employees ahead of their investors and now you are calling them capital-B Bad and greedy for this behaviour? Make up your mind man!"
Why aren't there more often shareholder revolts against the banks then?
A few reasons. Banks do actually generate very healthy returns for investors in good times, and most large investment banks are integrated parts of ‘universal’ banks like Bank of America and Citigroup that have large retail banking operations that print money when rates are reasonable and the economy is fine. So often, while an economy is overheating and investment banking deal fees skyrocket, retail banking profits shoot up too, which means as a whole investors have little to complain about. The margin on M&A (especially in the US where deal fees are very high) is also so high that there’s enough for everyone to come away happy.
The second reason is that bank stocks are like all equities largely owned by institutional investors, many led by portfolio managers / executives who themselves started their career on the sell side (in investment banking). They have an understanding that a handful of the best and most well-liked dealmakers and traders (and their ancillary junior staff) can represent hundreds of millions or billions of dollars of income for the bank, and are themselves paid extremely well anyway, so they’re reticent to complain about banker pay (ie. “If you think banks pay too much, wait until you see hedge funds/pension funds/etc”).
More options
Context Copy link
More options
Context Copy link
I agree, in many ways finance is one of the most worker-friendly industries there is. Things like MDs who have a few too many bad years and get forced out being given (almost military style) promotions to some made up title and a couple million for a year or two while they look for a new job, long sabbaticals available to most longstanding employees, a real air of camaraderie. We had senior leaders take huge real pay cuts despite some of their individual sector teams doing well to limit layoffs early last year.
I have a friend on the business side of engineering who said that he almost got fired when he was late to a whole-team meeting with the CSO/global head of sales because they’d been drinking the previous night and he’d overslept, he’d been thrown under the bus. In finance that’s a rite of passage! I’ve seen a VP miss a critical pitch because they went too hard the previous night and everyone (including the MDs and relevant Vice-Chairman) covered for them, not to do so would have been dishonorable. I’ve seen guys give each other the shirt off their backs (literally!) if someone’s going out for a client meeting and they notice a stain and don’t have time to buy a replacement.
Seems sad that other industries lack that. There’s backstabbing in banking, but it’s pretty rare because it’s a small world and nobody wants to hire assholes after 2008, the money usually doesn’t justify it and clients rarely like them anyway.
Yes to all of this.
The dirty secret in banking is that it is a fantastically boring job with close to zero intellectual stimulation. It's a sales gig that also makes you work 60+ hours a week on busy work. The military analogies and military-like culture makes sense - the guys (and gals) who make it are 10-20% above average sales people and 80-90% "I can take relentless shit for years on end" tough.
The best hustle in the finance world is high-net worth / ultra-high net worth individual wealth management. If ever there was a job that was literally "I get paid to golf and go to cocktail parties" this is it. The hours are sane to luxurious (anywhere from 20 - 40 a week). The money can be seven figures easily. The rub - your first five years are often poverty wages, it is 110% networking (meaning that if your network is bad at networking, you pay the price), and everyone has their "lucky break" story. No one makes it through grinding alone.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
It all comes down to Sergey and Larry, IMO. They wanted to try lots of off the wall things with their newfound power and wealth without being subject to market discipline, which isn't necessarily a bad thing (except to investors). One option would be to just start new companies, but that's a bit more complicated than just starting random projects within your existing company. So people were hired to enable those things, and the ads revenue not only continued but increased exponentially, so hiring continued.
More options
Context Copy link
More options
Context Copy link