Internet gains vs Wall Street innovations
This is the title of a very interesting article written by Prof Prabhudev Konana of the University of Texas at Austin. Click here to read his article.
He compares two massive streams of innovations in the last two decades – the internet and the financial sector. The Internet has revolutionalised our way of life, created jobs and wealth for a lot of people and , in general, has created unprecedented social good. Financial innovation has created lots of wealth and done good, but it has done bad as well. Prof Konana wonders whether the rewards for financial innovation have been disproportionate and whether our systems for rewarding innovation are appropriate.
Thought provoking article ( the Professor has written it for the average reader and not a scholar – so its refreshingly devoid of 25 letter words that business professors often inflict on us, mortals). It nicely captures one of the dilemmas I have been musing on – is the reward system for the financial sector “right” ? On the one hand, these financial innovations have enabled many liquid markets to emerge, enabled access to capital for business which otherwise would have been impossible, given tools for people to spread and manage risk, and brought efficiency to markets and businesses that have been unprecedented. On the other hand, huge sums of money can be made (or lost) on just timing or luck without an attendant economic benefit – in fact often to the accompaniment of economic destruction.
I am having great difficulty reconciling with the idea that a society can bestow the highest wealth on just being at the right place at the right time. The concept of “easy money” as opposed to one “earned through hard work” is sitting uneasily in my “socialist heart”. I am a subscriber to Narayana Murthy's view that you should be a capitalist in your mind and a socialist at heart !
There are of course many sides to this argument and a blog post is not the equivalent of a research thesis. This blog is a muse on business; so I can take the liberty of wondering aloud and perhaps stimulating you to do so too. As Prof Konana asks – should the contributions of Prof Berners-Lee and John Paulson be even on the same page ??
He compares two massive streams of innovations in the last two decades – the internet and the financial sector. The Internet has revolutionalised our way of life, created jobs and wealth for a lot of people and , in general, has created unprecedented social good. Financial innovation has created lots of wealth and done good, but it has done bad as well. Prof Konana wonders whether the rewards for financial innovation have been disproportionate and whether our systems for rewarding innovation are appropriate.
Thought provoking article ( the Professor has written it for the average reader and not a scholar – so its refreshingly devoid of 25 letter words that business professors often inflict on us, mortals). It nicely captures one of the dilemmas I have been musing on – is the reward system for the financial sector “right” ? On the one hand, these financial innovations have enabled many liquid markets to emerge, enabled access to capital for business which otherwise would have been impossible, given tools for people to spread and manage risk, and brought efficiency to markets and businesses that have been unprecedented. On the other hand, huge sums of money can be made (or lost) on just timing or luck without an attendant economic benefit – in fact often to the accompaniment of economic destruction.
I am having great difficulty reconciling with the idea that a society can bestow the highest wealth on just being at the right place at the right time. The concept of “easy money” as opposed to one “earned through hard work” is sitting uneasily in my “socialist heart”. I am a subscriber to Narayana Murthy's view that you should be a capitalist in your mind and a socialist at heart !
There are of course many sides to this argument and a blog post is not the equivalent of a research thesis. This blog is a muse on business; so I can take the liberty of wondering aloud and perhaps stimulating you to do so too. As Prof Konana asks – should the contributions of Prof Berners-Lee and John Paulson be even on the same page ??
Comments
Post a Comment