Banking as an ethical career

The High Pay Commission today published a report denigrating the salaries of executives in the city.  This isn’t unusual: it’s common to see the high pay of bankers and other city workers is reviled in the media.  But there’s a flip side to bankers’ earnings, which often gets neglected.   Wealth, of course, can be spent on champagne and yachts and private jets.  But it can also be spent on helping people.  In fact, there are reasons for thinking that, if you spend your money wisely, you can do much more good by taking a lucrative career such as banking than by pursuing a conventional ‘ethical’ career such as charity work.

 

First, as a banker, you could earn well over £6million.  By donating 50% of those earnings, you could pay for several charity workers.  So you’d do several times as much good than if you were a charity worker yourself.

Second, if you decide not to be a charity worker, someone else will take your place, and so the benefit you provide would have happened anyway.  In contrast, if you take a lucrative career and donate your earnings, your donations provide a benefit which would not have happened anyway.

Third, as a philanthropic banker, you can put your money anywhere.  So you can fund only the very best causes.  In contrast, as a charity worker, you are much more limited in your choice of where to work.  Some causes are thousands of times more cost-effective than others, so this can be a big deal.

 

Between these three arguments, it seems pretty compelling that one can do far more to help others by taking a lucrative career and donating a substantial proportion of the proceeds, than by pursuing a more conventional ethical career.

 

Over 40 people, including many here at Oxford, have been convinced by these arguments and have formed a community called 80,000 Hours.   Members of this community support each other in their pursuit of a high-impact ethical career, trying to use the 80,000 hours of their working life to help other people as much as they can.  Members pursue careers in what we call ‘professional philanthropy’, careers in which they’ll have a big influence, and careers in which they can research highly important but neglected areas.  Each member of 80,000 hours can expect to save over 10 000 lives in the course of their career.

 

We have a finite time on earth, but, if we’re willing to think hard about how to best use the hours of our working life, we have a tremendous ability to do good in the world.

 

For more information, my research is discussed today in a BBC news article (http://www.bbc.co.uk/news/education-15820786) and I was today was interviewed for the Today program (http://www.bbc.co.uk/iplayer/radio/bbc_radio_four/20111122, 10 minutes from the end).

For more info on the organization, you can check out 80,000 Hours at: www.80000hours.org

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52 Responses to Banking as an ethical career

  • Anthony Drinkwater says:

    As a professional hit-man I will easily make ten times as much as the paltry £6 million that a banker might earn.
    By donating 50% of those earnings, I will pay for several dozen charity workers.
    If I decide not to be a hit-man, someone else will take my place, and so the benefit I provide will be lost.
    Third, as a philanthropic hit-man I can put my money anywhere. So I fund only the very best causes.
    Finally, my employers are not the sort of people who normally fund charity workers, so my funding is all new money which would certainly not otherwise available for charities.

    Can I please join 80’000 Hours ?

    • George says:

      "As a professional hit-man I will easily make ten times as much as the paltry £6 million that a banker might earn."

      Really? As a consistent average over a thirty or forty year career? That seems highly unlikely to me. You might be able to exceed the average banker's salary for a while, but this would be at considerable risk, and its most unlikely you'd be able to continue it for 30/40 yrs.

      That said, your point seems to be that we can think of very unethical careers which earn lots more than most careers. I accept that. Your next point seems to be that therefore we are faced with the choice of doing these careers or holding inconsistent views. I disagree.

      You're ignoring the fact that the main effect of charitable giving of this sort is to spur other people to make more donations and foster a more charitable culture. Becoming a hitman who donates lots of money wouldn't result in lot's of new converts, whereas a banker donating lots of money would. We can therefor expect the hitman's total impact to be lower than the banker's (despite the hitman making more money).

      Also, maybe I'm too much of a hard-nosed consequentialist – but I really would prefer for an altruistic person to become a hitman and give money away than for a normal person to become a hitman and give nothing. Assuming all else equal and certainty of being replaced by someone else if you don't go hitman.

      • Kevin says:

        George,

        You are off the mark. Anthony is not pointing out that there are lots of unethical careers. He is merely taking the p1ss out of the article. If you don't know what that means, please look it up.

        I recall many friends in college who went into finance or politics with stated intentions of "changing the system from the inside". In order to advance in unethical careers you simply MUST compromise your personal ethics. There's no way around it. 20 years after graduation, I find these same people to be wealthy, unethical and quite definitely unhappy.

        • Jeff Kaufman says:

          <blockquote>
          I recall many friends in college who went into finance or politics with stated intentions of "changing the system from the inside". In order to advance in unethical careers you simply MUST compromise your personal ethics. There’s no way around it. 20 years after graduation, I find these same people to be wealthy, unethical and quite definitely unhappy.
          </blockquote>

          Trying to "change the system from the inside" and make finance or politics more ethical is both very difficult and not what 80000 Hours is advocating. They're saying you should go into finance (or another high paying career) and give away a percentage of your income.

    • Tony says:

      Dear Mr Drinkwater,

      Leaving aside the consequentialist justification – even if we were to accept deontological arguments that some acts are wrong, regardless of consequences, I assure you that banking is itself not unethical. It saddens me that many people have a warped impression of what (investment) bankers do. Let me clarify:

      What does an Investment Banker do?

      Think of him (or more rarely, her) like a real estate agent. There are people in the economy who have money to invest, and there are people in the economy who have bright ideas and need money to fund their ideas. Now, this market is opaque – it is hard to tell which companies are worth investing in, and it is also hard for company CEOs to decide how best to raise funds. The company CEO might approach an investment bank to 'take the company public' – this means that he splits his company into X number of shares, and sells the shares of his company on the open stock market (Initial Public Offering, IPO). What happens then?

      Since individual bankers do specific tasks which may be far removed from the work of the whole team, let me speak for the entire team's actions. The banking team (henceforth 'banker') speaks to the CEO, and 'values' the company (for a detailed study of Valuation, see McKinsey's 'Valuation'). The banker then speaks to investors, to begin what is called 'book-building' – interested investors sign up to purchase shares. The banker negotiates the whole deal between investors and the company, and negotiates on behalf of the client (the company) to secure as high a price as possible for his company. However, because there are regulations about financial accounts and records, the banker cannot lie to the clients about the company. Indeed, any company which wishes to do an IPO must have been properly audited and measured.

      Where in this entire endeavour is the banker doing something even remotely close to what a hit-man does? There is a massive difference between assassination and selling a company for as high a price as investors are willing to accept.

      I hope this enlightens you.

      • Matt Sharp says:

        "Where in this entire endeavour is the banker doing something even remotely close to what a hit-man does?"

        Causing starvation isn't quite the same as murder, but it's pretty close.
        http://www.guardian.co.uk/global-development/2011/jan/23/food-speculation-banks-hunger-poverty

        (Obviously not all bankers engage in this sort of activity. But neither do all of them engage in the more innocent activity Tony describes.)

        • Dave Frame says:

          If you really want to look at drivers of poverty via food resources look no further than Europe's Common Agricultural Policy. If you think you really are part of an elite, and if you think your actions can make a difference, then concentrate on getting rid of rich world agricultural trade barriers. Fair trade, at the end of the day, is free trade.**

          **Some conditions apply (esp. to do with bargaining power & information) but not many.

      • Anthony Drinkwater says:

        Dear Tony
        My reply has nothing to do with whether banking is a noble or ethical profession or not.
        It is simply that the arguments advanced by Will Crouch to justify it as an ethical career apply equally to hit-men. Therefore I conclude that the arguments, whether singly or together, do not work.

        • Tony says:

          Fair enough – that is a problem endemic to strict, hard-nosed consequentialism. I can see why it may be unattractive as an ethical theory. I do maintain that a consequential good, which also happens not to contravene any rules of common morality (do not kill, do not steal, etc.), is ethically worth pursuing. So the hit-man example is justified by the consequences, but opposed by the contravention of moral rules. The banker example is justified by consequences, and unopposed (as long as you obey the rules set by the Financial Services Authority or local equivalent) by the contraventino of moral rules.

          Banking isn't noble, but it isn't evil either. It's really not much different from being an ordinary sort of salesperson, except that in this case you are selling entire companies. In the case of salespeople (of financial securities), they are selling assets to investors. Most 'traders' in banks are not 'proprietary traders' – they are 'market makers'. A market cannot function properly without a market maker, but being a market maker requires a massive balance sheet. Market makers make money on the 'spread' – the difference between the bid price and offer price. The more ethically dubious role is probably the 'proprietary trader' – but even then, the individual proprietary trader is merely seeking his own company's profits. The marginal effect of one proprietary trader is negligible, but the effect of speculative capital markets can be destructive.

          The argument for 80,000 hours comes down to this really: Whilst a wise archangel can probably design a better system than the flawed and unhappy capitalist system we have today, what can you as an individual do to help the world? Railing against the injustices of the rich making more money is not going to save anyone. The best we can do is to dedicate our careers to helping those who need help, whether through donations, scientific research, or political campaigns. The typical individual does not have control over the system, but he has control over his own property. The only relevant decision you have to consider is not the decision whether or not to abolish speculation on commodities, but the decision to live the life that can, under these imperfect circumstances, help the most people. I hope to do this myself, and I have no choice but to work within the system in order to acquire the assets necessary to make a difference to those who need help.

          We have similar goals – we differ in method.

  • Anthony Drinkwater says:

    My point was that the arguments in the post that are proposed to praise altruistic bankers are equally valid for the praise of altruistic hit-men and I am sad that you seem to agree.
    PS : Nowhere in the post is it argued that bankers' imagined altruism could be defended as an example to spur others to do the same. (Which is why I ignored it – I'm not at all sure that it's a "fact" though).

    • George says:

      Yeah sorry – my calling that a "fact" wasn't actually that well researched (and isn't in Will's post), but to make a less strong version of the argument – this social aspect of giving does have at least some effect on the total consequences, meaning that'd we'd have to take it into account for our decisions.

      Can you see how the argument would appeal to certain breeds of maximizing consequentialists – even if you aren't one yourself? Even if we kill some people by being a hitman, we save greatly many more by giving the money away (a consequentialist would say).

  • Julia says:

    This is a very interesting topic. I'm curious about what the author means by "philanthropy". It might be referring to traditional charitable organizations, like soup kitchens, and other nonprofits that provide shelter and sustenance. With this definition of philanthropy I agree with the author that one can make a greater impact by making a large sum of money.

    But for some in the nonprofit world, that is not what philanthropy means. Some see a problem that they believe the have a solution for. They get involved for more complex reasons than wanting to do good. They get involved because they believe they have an answer or an insight for solving a pressing issue. I'm thinking of Kavita Ramdas or this man http://www.youtube.com/watch?v=JOl4vwhwkW8

    I think a footnote of your argument needs to be that philanthropic causes require much more than money. Millions of dollars won't do much good without creative forces to utilize that money in the right way to achieve the greatest potential. For that reason, it is a mistake for you to say that a banker who donates does "several times as much good than if you were a charity worker." I don't think you can compare who "does more good" in a symbiotic relationship. But at any rate, I thought this was a great post and I think it would be excellent if more people became bankers to raise money for causes they believe in.

  • Will Crouch says:

    Hi,

    Thanks for comments! I’ll just pick up on one salient issue:

    I think that there is an important distinction between being a philanthropist as a banker and as a hitman, even if we grant: a) that becoming a banker typically causes significant harm and b) that a common-sense non-consequentialist theory is true. I’m not committing myself to these views, I just want to point out that these assumptions were implicit in the hitman example and that, even if one grants them, my conclusion still holds.

    The reason is the Doctrine of Double Effect:
    It’s permissible to cause a harm if that harm is caused as an unintended side-effect of pursuing a much greater good.

    Most non-consequentialists accept (something like) this principle. If you don’t accept it, any position other than Pacifism in the ethics of war is very difficult to justify. And you get the wrong result in the famous ‘Trolley’ case, in which the train you are driving will (accidentally) kill five people, unless you switch tracks and kill one different person.

    Applying this to career choice:

    If you become a banker on philanthropic grounds, you certainly don’t aim at harming others. Such harm is a side-effect of the market transactions you engage in and advise about. If you could make a similar amount of money without harming others, you would do that instead. So the action is permissible under the doctrine of double effect. Moreover, because the benefit you do far outweighs the harm that you cause (certainly the ratio is better than 5:1, as in the Trolley case), it seems reasonable to suppose that that it is ethically preferable to pursue the philanthropic banker career route than to pursue some other career where one does much less good.

    In contrast, in becoming a hitman, as part of the job you have to intentionally harm others. So your action is not permissible under the Doctrine of Double Effect. (Though that’s not to say that there might not be other justifications for why it could be permissible in certain circumstances).

    The Hitman case is therefore more like the Transplant case: where one doctor kills one person in order to transplant her organs to save five others.

    To recap: The standard explanation for the difference between the Transplant case and the Trolley case is that in the former case one actively and intentionally kills one person, whereas in the latter the killing is an unintended side-effect. The same distinction applies in the case of career choice, and explains why banking and the mafia are two very different kettles of ethical fish.

  • Anthony Drinkwater says:

    Dear Will,
    I’ve always been a little suspicious of doctrines, and the « Doctrine of Double Effect » (your capitals, not mine) is no exception.
    To take just two points : in no exposition of the trolley problem have I seen it claimed that the death of the 1 (as oppposed to the 5) is « unintended ». The whole point of the trolley problem is whether, in full knowledge of the consequences, I change the points / push the fat man etc etc
    Turning now to a modified version of your argument in §6 « If you drive a car whilst drunk, you certainly don’t aim at harming others. Such harm is a side-effect of the actions you engage in….. So the action is permissible under the doctrine of double effect »
    Could you please tell me if this is a good argument ?

    • Will Crouch says:

      Thanks Anthony.

      Standardly, we think that it's permissible to kill the one in the Trolley case and impermissible to kill the one in the Fat Man Trolley case (where one sees a train about to run over 5, and one has the option of pushing a fat man under the tracks, in order to stop the train). The standard explanation for this distinction is that in the latter you kill the Fat Man as a *means* to saving the five. In contrast, in the standard Trolley case you kill the one person as an unintended side-effect. So we can explain the distinction between these two similar cases by appeal to the Kantian idea of not using people as means, or the doctrine of double effect.

      As a hitman, you kill people as a means to making money. As a banker, even supposing that you do significantly harm others (which, again, I'm just supposing for the sake of argument), you don't harm others as a means.

      In your case of drunk-driving, at least as you've specified the case, you aren't aiming at a significantly greater good. So it's not permissible under the doctrine of double effect.

      • Anthony Drinkwater says:

        Thanks Will,
        I gpromise, this will be my last comment on this post :
        If philosophical justification is the equivalent of what is "standardly permissible" I will turn my weapon on myself. (Even though that deprives society of the benefit of my philanthropy…. – I was going to buy you a copy of "Virtues and Vices", but now you'll have to find a second-hand copy somewhere.)

  • Tim McEown says:

    The whole premise assumes (and incorrectly I think) that one persons efforts are much the same as any other, ie–I may well be a much better aid worker or volunteer than I am a banker. The equivalences are too facile and negate whatever value I might find for myself in what those 80,000 hours constitute. Effect isn't just about dollars, and a dedicated and successful aid worker can achieve enormous good in ways that are difficult to measure. And it smacks of clever self-deception to be honest.

    • Benjamin Todd says:

      Hi Tim,

      This is a very important point, and we take it seriously. Some people – those with especially valuable skills, or who are particularly bad at earning money – will be better able to help people by taking a 3rd sector job than becoming a professional philanthropist.

      However, it seems that typically, a high earner could earn enough to pay for several, better qualified 3rd sector workers than themselves.

      e.g. Suppose I could become a fundraiser for Oxfam, earning £30,000 p.a. As a management consultant, after just a few years, I'd be earning £100,000 p.a., and could pay myself £30,000 to live on, while also spending £70,000 p.a. paying for someone far better at fundraising to work for Oxfam.

      That's before we take account of the fact that if I don't the job at Oxfam, someone else will take it. Of course, it's likely that person will be slightly worse than me at the job. But they will still do a lot of good too. So the net benefit is reduced.

      That's also before we take account of the flexibility of money. Money can be used to fund the very best activites known at the time.

      Ben
      80,000 Hours member

      • bex says:

        You're conveniently ignoring the brain drain from other jobs/industries that need talented workers…

        Billion dollar charitable foundations — like the Bill Gates foundation — need first-rate executives just as much as Billion dollar companies. But, if wages are all out of proportion, they won't get 'em!

        By the same token… Society would be VASTLY better off if we had many more Physicists working on fusion power, or superconductivity… The talent pool there is incredibly tiny, and can't be replenished by the average Joe off the street. But where do Physicists go for the big bucks these days? Wall Street.

        This is all because the financial services industry extracts such absurd RENTS out of the rest of society, that it's more profitable to shovel around "other people's money" than it is to "invent useful things." Just look at Steve Jobs. He worked insanely hard to invent the Apple, iMac, iPod, iTunes, and iPad… but the cash he made there was NOTHING in comparison to a minor stock investment in Pixar, and a part-time board position.

        Lucky for us all, Steve cared more about actually creating things than making money.

        I will of course concede that lending banks, investment banks, and (yes) commodities speculators all perform a vital service. But… what percent of the profits are true labor and talent, and how much are RENTS they extract due to favorable regulations, bought politicians, and outright fraud? How much is due to shrewd investments, versus what they get because they can suck at the fire hose of liquidity at taxpayers expense?

        Put another way… assume 90% of your wages went to taxes. That would mean a $6 million investment banker job would only bring home $600,000 in cash. WOULD YOU STILL HAVE QUALIFIED APPLICANTS WHO COULD DO THE JOB EQUALLY WELL? If so, then bankers are mostly a drain on the economy.

        • Benjamin Todd says:

          We're not ignoring the brain drain.

          If you can do huge amounts of good (that wouldn't have been done anyway) by becoming a physicist researching fusion or by making a charity much more effective, then do it!

          For _typical_ physicists or charity workers, however, it's better to take a high earning job and pay for several people to do the work they would have done.

          Nor do we support inaction in addressing the structural problems in society. Notice that the argument applies to ANY cause, including attempting to change structural problems.

          Our concern is how can we make the largest possible marginal positive impact on the lives of others.

  • bex says:

    <blockquote>"So convenient a thing it is to be a reasonable Creature, since it enables one to find or make a Reason for everything one has a mind to do." — Ben Franklin</blockquote>

    If somebody wishes to donate their wealth to charity, by all means! Do so!

    But… this does not excuse inaction on addressing the <b>structural</b> problems in our society that cause <a href="http://www.ted.com/talks/richard_wilkinson.html">massive income inequality</a>, and all its associated ills.

    Instead, why not allow <b>credit unions</b> to operate like investment banks? That way, all those $6 million salaries would be funneled to the members of that union in the form of better interest rates, and cheaper mortgages… rather than income for a tiny handful of bankers.

    Pretty much every example of overpaid executives ends the same way. If the employees and/or customers were also owners of the business, we won't see anywhere near the initial <b>problems</b> that would then need to be fixed with <b>charity</b>.

  • Jeffrey Ellis says:

    Unfortunately, this model exists only in theory, not reality. There is more to doing "charity" — such an ill-defined term, anyway — that donating money. Part of the career choice all of us make usually involves compromising ethical and moral principles along the way. I daresay that by becoming a multimillionaire in the banking business, one can not avoid making financial decisions that may have a negative or even disastrous effect, socially. Does donating money to help victims of a problem you helped create somehow make you a better person? I don't think so. Checkbook charity tends to have limited impact, unless it is on the massive scale of a Carnegie or Gates. Even Gates deserves some strong criticism for meddling in arenas (such as education) where he may be well intended, but is over his head when it comes to understanding the issues about he attempts to form policy.
    Finally, the reality is that virtually no bankers actually contribute anywhere near 50% of their income toward true charities. And I would bet that most of the "charitable" contributions bankers and high income earners make are to their alma maters, religious institutions, private schools and other such entities that serve as much to reinforce their personal social status and community standing, as to help improve the lives of people in need.

  • Will Crouch says:

    Hi all,

    Again, thanks for the comments! And, again, I'm just going to pick up on one salient issue:

    There’s some confusion about whether I’m saying that the typical banker with ethical ideals is doing more good than a typical charity worker. I’m not saying that, and I would strongly doubt that that’s true.

    But from that it doesn’t follow that you can’t do more good as a banker. The fact is, by taking a lucrative career and donating a large proportion of your earnings to the very best causes (Schistosomiasis Control Initiative, Against Malaria Foundation spring to mind) – something that very rarely happens in the financial sector – then you can save tens of thousands of lives in your career. (see the latest charity cost-effectiveness research, on this, for example at Giving What We Can and GiveWell).

    Moreover, you’ll be making a difference that wouldn’t have happened anyway. And, though the donations are the reason why you can do so much good by taking a lucrative career, you might even provide a benefit just by taking that job in finance. Remember that, if you don’t take that finance job, someone else – someone less altruistically minded than you – will take your place, and will probably do more harm than you would have done. People often blame the financial crisis on greed and self-interested recklessness of the bankers. If the financial sector had been filled with altruistic and cautious individuals, perhaps the financial crisis would not have happened in the way that it did.

    There’s of course a risk that the idealistic youth will become corrupted in the course of these careers. We take that really seriously, and that’s why we formed 80,000 Hours – a community of people who can support each other (and check up on each other if necessary) in order to make sure that we keep living up to our ideals as best we can.

    • Anthony Drinkwater says:

      Dear Will,
      It strikes me as even more salient on a philosophy blog to own up when one has commited the fallacy of proving too much. Or is logic now optional in a DPhil?
      This is of course very uncharitable of me, but I'm just a hit-man, after all.

  • Simon Rippon says:

    "Money is power"
    +
    "All power corrupts, absolute power corrupts absolutely"
    =
    You're probably not going to do the good you plan on doing.

    I don't mean to be cynical, but what makes you think you and your friends are an exception?

    • Jeff Kaufman says:

      <blockquote>
      You’re probably not going to do the good you plan on doing. I don’t mean to be cynical, but what makes you think you and your friends are an exception?
      </blockquote>

      This is important, but I think they're approaching it well. They're committing publicly in signing a pledge, and they also look like they're trying to set up a community to provide social support. Keeping the people who go the business route connected to the ones who go the philanthropy promotion route should do a lot to limit values drift.

    • Will Crouch says:

      Thanks Simon.

      Like I've said, it's an important consideration. It's one that we've anticipated, and are very concerned about – in fact, concerned enough to form a community of people all with the same ideals (the aforementioned 80 000 Hours).

      There are many ways of tying oneself to the mast. For example, I regularly tell people publicly that I'm pledging to give everything I earn about 20 000 pounds. It would be really embarrassing for me now if I weren't to do this – all my good friends who are doing the same thing would criticise me, and so on.

      In general, we're working out all the ways of tying oneself to the mast, and implementing them. Public pledges are a pretty good first step; a community of like-minded individuals who can check up on each other is a pretty good second step. If you have more ideas, let me know.

      (Jeff’s post was written at the same time as mine)

      • Simon Rippon says:

        Thoughtful answers, fair enough!

        Ways to tie oneself to the mast, hmmm. How about: Find a philanthropist to loan you half a million pounds, you donate it immediately, and they promise to take legal proceedings if you don't pay back the loan over 25 years? You could even get a group of philanthopists together to provide seed money for a foundation that would do this ("The Mast Foundation"?) Because the funds would be replenished with your labour, their philanthropic gifts would keep recycling themselves. If the philanthropist was just going to donate to the charity directly, they could donate to the foundation instead. By doing so they would do almost the same amount of direct good now (there'd have to be a small overhead for running the foundation and keeping track of the loans), but also potentially many times more good in the future.

        • bex says:

          Or, you could have a foundation that finances the education of an individual in exchange for some free labor. Something like "Doctors Without Borders" but with Bankers.

          How's this sound… a foundation ACTUALLY dedicated to helping poor economies finances the college education of a few hundred superstars (possibly from developing countries). As payment for their education, they spend 5 years as analysts for developing countries to help make their financial systems more transparent / open to outside capital / work better for the average citizen. If they choose to be greedy bastards and renege on their promise, then they can do a buy-out at ten times what the foundation invested in them.

        • bex says:

          One more thing…

          The central premise behind the 80,000 hours idea is that you'd be better off "making money" than doing charity work… because charity workers are cheap, while bankers are expensive.

          I'd postulate than an ethical banker — meaning one who does as I mentioned above, and helped developing countries with their financial system — could do VASTLY more good than several dozen average charity workers. Perhaps several hundred. I do believe that a competitive market environment can do great good to bring people out of desperate poverty: the problem is that too often it's sold that way, and switched immediately with crony capitalism.

          Therefore… if you wish to be both ethical and a banker, you'd do something like "Bankers without Borders" and help countries avoid being screwed over by the modern, global, economic system… and overall raise the life expectancy of an entire nation. BIG WIN!

          THAT would be the ethical path: use your skill and labor as a banker to do the most good.

          NOW… if you STILL believe that you'd be able to do more good by working a "typical" banking job and hiring charity workers… then aren't you by definition VASTLY OVERPAID??? You claim that the DIRECT application of your labor does less good than your "leftovers" after a normal job. I don't agree with this premise… but if true, then the only conclusion to draw is that the banking system is an overall drag on the economy.

  • Dave Frame says:

    The thing I'm finding interesting in all this is the comic book mentality of posters who think that entering banking is somehow a reckless moral adventure in a way that is different from entry into other professions/trades. I find this ridiculous. The bankers I know are not evidently less moral in their personal behaviour than the other folks I know, and I'd be surprised (and impressed) if any of you have any actual hard evidence for the moral deficiency of bankers as opposed to plumbers, lawyers, builders, aid-traffic controllers and NGO workers. Anyway, academics are hardly well-placed to cast stones on the morality of others – as a bunch we're conceited, narrow-minded, supercilious and greedy for professional acclaim. I mean, just watch <i>Morse</i>.**

    But the other thing about this thread is that I don't see why banking should be the right place for your talents. Surely – as others have observed – it's about doing what you do best, and then trying to do good with that. It's not exactly an original idea:
    "We have different gifts, according to the grace given to each of us. If your gift is prophesying, then prophesy in accordance with your faith; if it is serving, then serve; if it is teaching, then teach; if it is to encourage, then give encouragement; if it is giving, then give generously; if it is to lead, do it diligently; if it is to show mercy, do it cheerfully."
    Romans 12:6-8 (New International Version)

    I quote the bible mainly because I know some of you will really hate that, but partly because I actually see in movements like 80,000 hours and "giving what we can" and all those hideous little climate justice things a new puritanism, or at least a very strong missionary zeal. Does anyone else pick up this vibe or do I just have my "sanctimonious drivel detector" set way too sensitively?

    **I note that in <i>Morse</i> the murderer is almost always the most senior academic (with the occasional insufferably posh brat thrown in as a change of pace). In <i>Wallander</i> the culprit is usually the wealthy industrialist. Here in the real world, most crime is actually committed by the poor, the weak, the ignorant, the desperate – the underclass. But it would be deeply uncool to actually make this point in public in a crime series – it would make for very bad reviews in the Guardian. And it wouldn't make good telly because complex feelings would kick in.

    • Jeff Kaufman says:

      <blockquote>
      Surely – as others have observed – it’s about doing what you do best, and then trying to do good with that.
      </blockquote>

      Not necessarily. I think I might be best as a musician and traveling dance caller, playing and teaching for traditional social dances around rural New England. But I'm also good as a programmer, and I can do much more good as a programmer donating a fraction of my income.

    • cynth217 says:

      the "underclass usually commit crimes against one person at a time, while the "upper class" such as banks, corporations, investment companies, that harm thousands of people at a time, then prove immune to the consequences of their crimes.

    • Phil says:

      <blockquote>Here in the real world, most crime is actually committed by the poor, the weak, the ignorant, the desperate – the underclass</blockquote>

      That, of course, is because the rich and powerful have managed to arrange it so that their get rich quick schemes have never been declared illegal. The poor, the weak and the ignorant are desperate because they are the ones who end up being crapped on from a great height.

      <blockquote>do I just have my "sanctimonious drivel detector" set way too sensitively?</blockquote>

      No, just high enough to make sure you can self-justify your own lack of concern for that annoying and reprehensible underclass.

      • Dave Frame says:

        "No, just high enough to make sure you can self-justify your own lack of concern for that annoying and reprehensible underclass."

        (1) I never said they were annoying and reprehensible – I merely stated an obvious fact about who actually commits crime. (2) I didn't say anything about the causes behind this or the reasons why these people commit crime. [Personally I think it's at least partly because modern social structures, quite unintentionally, leave a surprising number of people really badly equipped to make good decisions.] (3) You have absolutely no data on which to base your assertion – actually I think the move towards moral abstractions (marginal benefit is always remote, climate justice, Make Poverty History etc) short-changes the poor in societies like the UK.

        In any case you're conflating two completely separate parts of my post – one of the things that intrigues me about young middle class kids dedicating their lives to "doing good" is that calculations show that the marginal effectiveness of any dollar earned/donated/spent is always in the world's very poorest countries. One of my colleagues used to think this sort of current was just the sort of self-justifying turning away from hard problems you mention above – his argument included the claim that it was much more attractive for educated middle class kids in the UK to engage with an abstracted, romanticised poverty abroad** than to engage with the grim, hostile reality of UK poverty. There are, warm glow effects available to people engaging with satisfying abstractions that don't materialiwse if you actually try to help the folks on the estate down the road.

        **"Climate justice" is a poster child for this.

        • Will Crouch says:

          If you think that money has diminishing marginal value, then it's not very surprising that the poorest people in the world receive the greatest marginal benefit from one dollar. And if you want to benefit others, think that it's better to provide a greater benefit rather than a smaller benefit, and are roughly neutral about who receives that benefit, then it's not surprising that you'll want to spend your money where it has the greatest marginal benefit.

          • Dave Frame says:

            Will wrote: "If you think that money has diminishing marginal value, then it’s not very surprising that the poorest people in the world receive the greatest marginal benefit from one dollar. And if you want to benefit others, think that it’s better to provide a greater benefit rather than a smaller benefit, and are roughly neutral about who receives that benefit, then it’s not surprising that you’ll want to spend your money where it has the greatest marginal benefit."

            Agreed. But it's also a nice way to retain a warm glow about feeling good, because you don't actually have to confront some of the difficult social realities associated with relative poverty in your own back yard. I'm not disputing the reasonableness of arguments regarding marginal benefits – but I do question the degree to which one ought to be "roughly neutral about who receives that benefit". My view is that, at least for certain sorts of duty, I owe more to those in my community to those in, say, Mali. I'm not arguing it's wrong to be "roughly neutral" but I'm a very long way from being convinced it's right, especially as a generic principle. [ie even if I buy some duties are sort of agent-neutral, my intuitions are that many are more like agent-relative, ie proximity matters.]

            Psychologically – and this is of course utterly speculative – I think people do like to get payoffs from "doing good." And I think middle class intellectuals can do this quite nicely from the sorts of arguments deployed by 80,000 hours. We can convince opurselves that we're actually pretty great guys as long as we sign a cheque for somewhere appropriately distant and destitute. We can then happily ignore the "chavs" lurking around Oxford. I'm not meaning to be cynical here – some of the way I feel about this comes from my experiences in Oxford. I remember once being at the Union, hearing young people talk about the moral dimensions of climate change, talking about how "urgent" the problem is, and about various duties towards poor countries based on per capita abstractions. Then everyone emptied out onto St Michaels' St and everyone assiduously ignored the people at the Gatehouse.** The combination of satisfyingly righteous theorising and ignoring local poverty (1) made me sad (2) left me feeling that something disturbing to do with blind spots were going on. [Nothing new, of course – I expect when Thomas Jefferson and the gang discussed the inalienable rights of man they talked right through the slaves attending to them.]

            **A cafe on St Michael's St for homeless people aged over 25.

  • bex says:

    <blockquote>Here in the real world, most crime is actually committed by the poor, the weak, the ignorant, the desperate – the underclass</blockquote>

    That shouldn't be surprising… in places with wide income inequality (like the UK and the US), the "underclass" is pretty much the bottom 99% of society. If your claim is that the bottom 99% of society commits more than 50% of the crime, you're probably correct.

    But… what you notice is that in cultures that are otherwise similar, when you reduce income inequality you REDUCE CRIME:

    http://www.ted.com/talks/richard_wilkinson.html

    • Dave Frame says:

      Bex wrote: "That shouldn’t be surprising… in places with wide income inequality (like the UK and the US), the "underclass" is pretty much the bottom 99% of society. If your claim is that the bottom 99% of society commits more than 50% of the crime, you’re probably correct."

      I think it's a bit OTT to call the 99% the underclass. I've never been in the 1% (nowhere near it) but I've never felt remotely as though my circumstances are analogous to those of folks born into (developed world) poverty in a UK sink estate or US ghetto. I think it would be disrespectful towards those who have it far tougher than I do to claim otherwise. I don't really see the point of the Occupy 99%/1% thing – I think it's kind of self-indulgent for middle class kids to arrogate to themselves the role of speaking for the 99%, as though we're all great pals except for those annoying people who have a bit more stuff than we do. [I get a big confused by some of what I hear from the Occupy types – on one hand we're supposed to be expanding our horizons and embracing the value of non-monetary things like ecosystems and volunteered labour; on the other we're supposed to be green with envy/red with rage because some folks have more stuff than we do. So on one hand inequality doesn't matter because it's not about who dies with the most toys; on the other it's all that matters (I take the Spirit Level to be saying the only thing that matters for most good things is equality of income.)]

      "But… what you notice is that in cultures that are otherwise similar, when you reduce income inequality you REDUCE CRIME:"

      I don't buy the Spirit Level arguments – I think it's daft to consider only a single explanation, and I note that experts in the field of labour economics etc have given this stuff short shrift. Also, it's weird to completely ignore the natural experiment that Europe conducted in the post-war period. Some areas (of Germany, for instance) were placed under a regime that put income equality right at the front of public policy priorities, while other areas (of Germany, for instance) had various other targets. Interestingly – though this is ignored by the authors of the spirit level – the places that had multiple goals in messy democratic tension did quite well, and were politically stable (no mean feat given their recent history), while those that emphasised the goal of income (& wealth) equality didn't work. I'm sure some people were happy there, but many weren't and after about a decade they had to build fences to keep their citizens in. Not only were they unhappy, but their economies grew slowly, which meant they became poor compared with other Europeans. This didn't make them very happy either. [But they were equal, it just turned out that being equal mattered less than being hungry.]

      • Phil says:

        "Then everyone emptied out onto St Michaels’ St and everyone assiduously ignored the people at the Gatehouse"

        Out of interest, just to help me judge how much weight I should give to your argument, how have you been working to assist those who need the Gatehouse, or is it antithetical to you for anybody to look after anyone other than themselves or perhaps their immediate family? Or is that we'll all be fine when the trickle down effect finally kicks in?

        "I get a big confused by some of what I hear from the Occupy types – on one hand we're supposed to be expanding our horizons and embracing the value of non-monetary things like ecosystems and volunteered labour; on the other we're supposed to be green with envy/red with rage because some folks have more stuff than we do. So on one hand inequality doesn't matter because it's not about who dies with the most toys"

        Then you really haven't been listening very hard, or only been hearing what you expected to hear. I'm sure the wealthiest 1% would be very pleased with an argument that says it doesn't matter how many toys we die with, after all that leaves them free to grab as much as they can (i.e. the present situation) and nobody should bother them. The point is that the free-market model has demonstrated time and time again that with minimal regulation all that happens is, yes, on average a society may well become wealthier, but no, funnily enough this doesn't help the majority of the society. Most of the benefits go to those who were in the right positions when the goodies got handed out, and use their power positions to retain access to the bulk of resources. Yes, markets can and do work, but without some kind of hybrid system most people will not benefit to any great extent. Please don't bother with the 'you have no data for this' ploy, you and I should both know there is plenty of data out there from even such left-wing institutions as the IMF which will back this up.

        One of the fundamental points the Occupy movement is making is that we have a situation whereby those writing the regulations which allows the accumulation of vast wealth by a small number of financial corporations are, have been and no doubt will be again, beneficiaries of those corporations. Furthermore, when these money-making ploys go wrong it is not those corporations who end up bearing the risk and cost, but the rest of us. That this isn't fair, and that we need to change the situation I really don't think is a difficult concept to get hold of.

        This feeds back in to the original subject of the post, banking as an ethical career choice. Yes, there are useful and even necessary things that banks do, but micro-second speculation on derivatives markets is not one of them. Futures once had a real world value to farmers, but now the percentage of trades in the futures markets that bear any direct relationship to giving primary producers some security is somewhere about 30% and falling. How does Goldmann Sachs creating huge hikes in wheat prices as it moves it's funds out of sub-prime mortgages in to 'safer' wheat futures represent anything other than the action of a parasite? Yes, I guess one could argue that if some of the bankers gave a few million of their profits away from these deals it is somehow a 'good', but personally I would much rather see the reform of the industry that even allows such trading to be legal. Stopping the problem is way more cost effective that bankers paying for the sticking plasters afterwards.

        I suspect that in some ways Dave we agree, in our scepticism of the 80,000 hours argument, however I think that a studied air of scepticism of all those who seek to address sources of injustice, pouring scorn without any signs of constructive engagement with a system that is structurally unequal, smacks more of an unwillingness to have ones smug comfort challenged.

        • Dave Frame says:

          "The point is that the free-market model has demonstrated time and time again that with minimal regulation all that happens is, yes, on average a society may well become wealthier, but no, funnily enough this doesn’t help the majority of the society. Most of the benefits go to those who were in the right positions when the goodies got handed out, and use their power positions to retain access to the bulk of resources. Yes, markets can and do work, but without some kind of hybrid system most people will not benefit to any great extent. Please don’t bother with the ‘you have no data for this’ ploy, you and I should both know there is plenty of data out there from even such left-wing institutions as the IMF which will back this up."

          I'm not a minimal regulation guy – markets usually require all sorts of regulations to protect consumers, investors, govts etc. And I agree that it seems very clear that financial markets have some structural problems that require further regulation. That's all perfectly reasonable, but there is a jumbled bunch of other stuff coming out of Occupy, and it's hard to know how "they" (if there is a they) order priorities regarding regulatory reform and income redistribution, for instance. Without knowing something about priorities I don't know what they're actually about.

          I'd also point out that every developed country is already a hybrid system that uses mixtures of markets and government oversight to achieve its ends. [Food markets, for instance, are regulated on grounds of nutrition, provenance, hygeine, and sometimes health outcomes.] Remember that in OECD countries the tax/GDP share is usually somewhere in the range 30-50% (when you add municipal/state taxes in) – the world we're in is a very long way from unfettered capitalism. I agree that modern developed societies are a long way from perfect, and I do actually spend my working life (and a fair fraction of my free time) trying to think about ways in which at least a couple of these problems might be addressed.

          • bex says:

            "That’s all perfectly reasonable, but there is a jumbled bunch of other stuff coming out of Occupy, and it’s hard to know how "they" (if there is a they) order priorities regarding regulatory reform and income redistribution, for instance."

            It's pretty consistent if you take a step back. All occupiers are protesting "economic injustice."

            There's no firm list of priorities, because there's no actual leadership. The people who are there are simply tired of feeling left out of the political and economic decision making process. Unemployment is high, despite record corporate profits, while banks get free money. It doesn't take a genius to see that the average Joe is getting screwed.

            Not to mention, each group of Occupiers have different goals, depending on whatever hey feel is the most important local issue. Occupy Seattle has their own Digg-like site where people can submit and vote on what demands to prioritize:

            http://occupyseattle.org/demands

          • Dave Frame says:

            Bex wrote: "All occupiers are protesting "economic injustice.""

            I guess I don't accept the equation between inequality and injustice. I agree that the causes of the recession have included a big dollop of injustice via reckless corporate behaviour, for which many perpetrators were not called to account. This obviously needs to be addressed. But I don't think this entails the view that income inequality necessarily involves "injustice". Income inequality may (or may not, I don't know) play an important part in fostering virtues like social cohesion, but I don't see how it links directly to issues of *justice*. It strikes me as slightly circular to anoint an income distribution as "just" and then complain that departures from it amount to injustice. [Even if you had a widely shared principle specifying a just distribution of things, there's still a way to go before you know how that in the real world will evolve over time to ensure continuity of "justice" – eg Rawls's famous contention about the just distribution being the one that a risk averse agent in the original position would choose still leaves quite a bit of important detail to be filled in, empirically.]

            Maybe all I'm really saying is that I think it is unhelpful to ask too much of "justice" in political debate. Widespread support for the view that justice is the first virtue of social institutions shouldn't blind us to the fact that it's not the only one. It seems to me much more credible to hang a lot of this stuff about equality off other virtues: magnanimity, maybe, or temperance, or kindness.

          • bex says:

            "I guess I don’t accept the equation between inequality and injustice."

            Not all of them make that claim. Some of them are avowed socialists who do indeed see inequality as injustice. Others are simply people who played by the rules, did most everything right, only to see their job prospects disappear because:

            1) lending banks started gambling on wall street
            2) they lost BIG TIME, and caused a global economic recession
            3*) their debts got bailed out, while mortgages and student loans did not
            4) they stopped lending
            5) they lobbied congress to ensure there would be no consequences for their recklessness, and that they'd continue to be allowed to be reckless
            6) unemployment and joblessness is not a priority in washington
            7) the deficit is suddenly a problem, and
            8) the powers that be expect the middle class and poor to shoulder the burden of balancing the budget, so that the rich can get (yet another) tax break that won't create any jobs in the near term

            I think that's sufficient injustice…

            * – I'm not advocating a bailout of mortgages or student loans. Bailouts in general are a bad idea, but it's a bitter pill to swallow that the reckless few who caused this mess got bailed out, while common folks got squat.

    • Dave Frame says:

      Bex wrote: "in places with wide income inequality (like the UK and the US),"

      By the way… by global standards the UK doesn't have high income inequality, at least as measured by the Gini coefficient. Generally developed countries have lower income inequality than developing countries** (as in, the average gini of a developed countries is lower than the average gini of developing countries). The US is pretty high by developed country standards. [Income inequality has grown in the UK and other parts of the developed world, but it's still well short of that of most developing countries.]

      **Countries from the former Soviet Union & eastern bloc have low inequality, as do some extremely poor places like Burundi and Ethiopia.

      • bex says:

        "By the way… by global standards the UK doesn’t have high income inequality, at least as measured by the Gini coefficient."

        True, but I was talking about income inequality in first-world countries. The US and the UK are outliers there, compared with Sweden and Japan. We also have much more crime than Sweden or Japan… and much more reliable crime statistics than Burundi and Ethiopia.

        What I found fascinating in the TED talk I linked to, was the comparison of all 50 US states… All things being equal, a good predictor of high crime is high income inequality… and I believe their argument about WHY is also pretty sound. We're hard-wired to feel rage at the though that somebody has a higher social status than us, and doesn't deserve it… so we're more likely to respond with violence.

        • Matt Sharp says:

          I suggest being very skeptical of anything you hear from Wilkinson and Pickett:
          http://spiritleveldelusion.blogspot.com/2010/04/20-questions-for-richard-wilkinson-kate.html

          There are a *lot* of issues with their interpretations of the data, and even with the selectivity of their data.

          This is not to say that inequality doesn't contribute to or worse problems in society, but I think still poverty reduction is a more important overall goal. If someone can afford enough food, has an ok job, lives in an ok house, I imagine they are less likely to respond to someone with an undeserved social status with violence than someone who lacks these things. Of course, what one means by 'an ok job' and 'an ok house' will be influenced by the time and culture you live in.

          • bex says:

            " If someone can afford enough food, has an ok job, lives in an ok house, I imagine they are less likely to respond to someone with an undeserved social status with violence"

            I'd mostly agree… food scarcity is a primary driver for the full-on revolutions in the Arab world. Income inequality is MUCH worse in Tunisia and Egypt than in the US. People mainly grumbled and "got on" because they were still fed (and living in a police state). Once food became an issue, police state or not, there will be revolution.

            The protests in the US are in good measure because there are huge swaths of young kids graduating from college, and finding zero opportunities… Not starving to death, but really, with not much to lose.

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