Your engineer friend may be far more productive in 40 hours than you in 80 hours.

An employer paying $165 can be more selective than one paying $125. The difference between two individuals with the same nominal education, job skill level, and job unemployment risk, when one is offered premium pay and the other is refused it, is presumptively significant. Calling the resultant difference in wage “excess” rather than “premium” is a political choice.

Even right out of school, if I sign up for a finance job with 80 hours a week, I should probably get paid substantially more than twice as much as my engineer friend who works 40 hours (my declining marginal utility of money and increasing marginal utility of leisure). Second, if you compare us 5 years down the line, we are no longer apples-to-apples. I have acquired the equivalent of 10 years of work experience to my engineer firend’s 5. There is no particular reason to think this extra experience should affect my compensation linearly either. It may well be (and I would argue that it is in trading positions) that the job simply cannot be done by 2 people who work 40 hours a week. The knowledge gained from spending 80 hours a week with the market simply must be concentrated in one decision-maker.

Very few managers consistently beat the market. Why should they be rewarded in the good years and not be penalized in the bad?

You can invent all the financial instruments you like, but in the end the total return on all investments come form company profits. Simple is fair, “innovation” is esentially unjust.

If you work in a software company, there is all kinds of leftover hardware and software to take home.

If you work in finance, guess what there is leftover to take home?

I know what I want to achieve. I have been writing about it for many years. I want to get rid of those capital requirements that discriminate in favor of those AAA that do not need it and in favor of those TBTF that no one seems to want.

“It’s the regulators’ fault!”

You mean the same regulators bought and paid for by those same banks? You mean the regulators working with legal tools gutted at the behest of those same banks?

Tell me the banks didn’t get rid of Glass Steagal. Tell me the banks weren’t behind the CFMA. Tell some more lies, since that’s the only thing which can prop up your zombie political agenda.

Why not just go all the way and blame the predatory borrowers? Especially those in the inner cities, right?

As for blaming the regulators, I’d rather just get rid of the criminals rather than have to rely on the cops not to be corrupt. Then we could get rid of the corrupt cops too.

What is the correlation between financial industry salaries and it being a common Wall Street belief that risky bets gone south will likely be bailed out by the Treasury and Fed?

It’s just verification that the story hasn’t changed, and, further, that it won’t (if the reregulation ends up as weak as it appears), especially if campaign and lobbying laws aren’t changed to modify economic incentives for long run balance. And, by the way, it is now clear that the next bubble is well on its way, and ready to come to a community near you. And, further, the media is being highly cooperative, the Baseline Scenario is one of the few outlets that is telling it like it is.