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Is The Financial World A Level Playing Field?
Not according to this recent interview with Ed Thorp:
I think that one of the big issues today is that the playing field in the financial world is not level. If big institutions behave in a risky way and threaten to bring down the hole financial community and throw the entire country into a depression, they don’t seem to have to pay a price commensurate with what they’ve done. Instead, the public ends up bailing them out. We’re in a situation where the “too big to fail” institutions seem to have an option on the future rather than taking the full upside/downside risk that they should be assuming. They have privatized profits and socialized risk, in one formulation. That’s a concern for me, and I don’t that that has been changed by what we’ve gone through in the last few yeas. The fact we don’t have this level playing field, that people who are powerful and politically connected can manage things for themselves in a way that’s much more advantageous than the run-of-the-mill rich or the run-of-the-mill public can, is an issue. It’s lead to a major transfer of wealth from the rest of the country to a very small group at the top.