Dear Resentful Intellectual,
Some time ago a few of you complained about the filthy lucre that “Chet” was raking in. “Chet” is supposed to be the prototypical Wall Street guy — tall, handsome, personable, eerily well-adjusted, everything but clever. Of course what you really want to know is not why Chet makes so much money, but why he makes so much more money than you do.
Chet does exist. I’ve worked in finance (the software end), and I’ve met Chet. But I’ve also met any number of brilliant people, as intellectual as you please, and Chet usually works for them instead of the other way around. Of the dozen most intelligent people I have ever known, half of them have spent some time on Wall Street. Is George Soros a Chet? Is Taleb? Is Derman? Brad DeLong, after supplying several more examples of non-Chets on Wall Street, explains matters politely:
Part of the answer is that [Chets] are sitting at a nexus: a huge amount of money blows past Wall Street, and if you can sit in the right place with a large net, unbelievable quantities of money will be trapped by it.
A bigger part of this answer is that there are four relevant human capabilities here: the ability to master details, the ability to quickly grasp what the salient issues are and follow them through to their conclusion, the ability to work like a dog, and the ability to size up people — figure out quickly who will actually produce something useful and who will not, who will hang tough and who will easily bid more, who will soften if wooed and who will stay hard-nosed. Next to nobody has all four or even three of these capabilities in world-class measure. Fewer people than you think have even two. And for someone who has one of the other three — mastery of detail or skill at analysis or the ability to work like a dog for ungodly periods of time — mastery of Chet-hood is a very valuable and lucrative skill.
I will put it less politely: Chet makes a lot more money than you because Chet is worth a lot more money than you. Chet the i-banker regularly spends his weekends drafting prospectuses; Chet the bond salesman often arrives at his office at 3 or 4 AM to trade the foreign markets. What time do you start work? Chet can probably do bond math and explain Black-Scholes. Can you? You have opinions on Wittgenstein, which Chet lacks; are you quite sure the opinions are worth having? Chet is not brilliant, to be sure; neither are you. Brilliant people produce brilliant work. Where’s yours?
The kernel of truth in your complaints is that the regulatory-cash complex protects the incomes of Wall Street, and Chet profits from this. But Chet decided early on that he wanted to trap money with a large net. He majored in economics and went to business school while you were dicking around with philosophy and Russian literature. While you sneered at all of your classmates who wanted to be doctors, lawyers, or investment bankers, Chet signed up for his interview with Morgan Stanley. He may be a welfare queen, and it is irritating that he will rarely recognize the fact; on the other hand, you likely work in academia, which is no stranger to tax dollars. You also, unlike Chet, frequently agitate for still larger subsidies, which annoys Chet as much as he annoys you, although he, unlike you, is probably too tactful to say so.
Yes, the world is full of rank injustices. No, your modest salary is not among them.