I've Solved the Deficit

[Al B. Sure!]

The athlete's job is only to be better than other athletes with respect to winning games or putting up gaudy stats insofar as wins or gaudy stats translate into commercial success for the team (and this is a very iffy relationship what with established fanbases, name recognition trumping game performance for casual fan attention, etc.).

His value is not dictated directly by how it relates to others anymore so than the trader's value is related to the performance per cost of other traders.

[giblets]

I could say a stock trader's job is to be better than other traders. Therefore, a trader's value is dependent on how good they are relative to other traders.

Then the value of a stock trader is positional to some degree.

[Kidlicious]

Salary ceilings would work perfect in this case. What else are professional athletes going to do? ... I'm just saying.

[giblets]

Salary ceilings would work perfect in this case. What else are professional athletes going to do? ... I'm just saying.

That would just let the middlemen keep more of the money.

[Kidlicious]

That would just let the middlemen keep more of the money.

That's the thing about price controls. You have to do it right. Think about it.

[Al B. Sure!]

Then the value of a stock trader is positional to some degree.

So then damn near every profession should be taxed excessively a la Kuci!

[giblets]

That's the thing about price controls. You have to do it right. Think about it.

What do you want? A price cap on ticket prices? That would create a shortage.

[giblets]

So then damn near every profession should be taxed excessively a la Kuci!

No, the ones that are relatively more positional should be taxed more.

And hey, we already have a substantial tax on virtually every profession.

[Kuciwalker]

There are, in fact, positional segments of finance - e.g. in high-frequency trading, a lot of money is invested in minimizing the actual communications latency between the traders and the exchange - ideally, the exchange would just establish latency boxes, auction spots in those boxes, and then randomize the order of trades within a given box and window, obviating a certain amount of essentially wasted labor.

(At which point the government could tax those auctions at a fairly high rate with almost no deadweight loss.)

[Al B. Sure!]

Salary ceilings would work perfect in this case. What else are professional athletes going to do? ... I'm just saying.

What is the stock trader going to do otherwise? What is the engineer going to do otherwise? Let's put salary ceilings on everyone!

[Kidlicious]

What is the stock trader going to do otherwise? What is the engineer going to do otherwise? Let's put salary ceilings on everyone!

Whatever they do I'm sure they would make more money than the pro athlete

[Egbert]

The athlete's job is only to be better than other athletes with respect to winning games or putting up gaudy stats insofar as wins or gaudy stats translate into commercial success for the team (and this is a very iffy relationship what with established fanbases, name recognition trumping game performance for casual fan attention, etc.).

His value is not dictated directly by how it relates to others anymore so than the trader's value is related to the performance per cost of other traders.

Winning games gets the fan base and the name recognition. Losing enough games leads to relegation to a lower league. Liverpool and Manchester United have big fan bases, perhaps largely due to considerable success over decades. Winning the FA is particularly desirable in commercial terms, lots of sales of merchandise etc. Some say that in sports you come either first or nowhere, the winner certainly gets the lions share of the rewards. With such disproportionate rewards the rewards for skill become disproportionate. A slightly better player may get a good deal more than another player because that tiny edge is so valuable. There may be little difference in ability between the winner and loser of the FA Cup final but the commercial rewards to the teams will be very different.

There may be very little, if any, difference between the salaries of the best and second best stock trader. They are not paid to compete with one another.

[Al B. Sure!]

There are, in fact, positional segments of finance - e.g. in high-frequency trading, a lot of money is invested in minimizing the actual communications latency between the traders and the exchange - ideally, the exchange would just establish latency boxes, auction spots in those boxes, and then randomize the order of trades within a given box and window, obviate a certain amount of essentially wasted labor.

(At which point the government could tax those auctions at a fairly high rate with almost no deadweight loss.)

I'm glad you're actually learning about finance now, guy who didn't know that capital losses are tax-deductible and didn't know of the existence of TIPS and tax-free Munis. But blah blah blah about how high-frequency trading.

I contend virtually every profession is as positional as professional sports.

[Al B. Sure!]

Winning games gets the fan base and the name recognition. Losing enough games leads to relegation to a lower league. Liverpool and Manchester United have big fan bases, perhaps largely due to considerable success over decades. Winning the FA is particularly desirable in commercial terms, lots of sales of merchandise etc. Some say that in sports you come either first or nowhere, the winner certainly gets the lions share of the rewards. With such disproportionate rewards the rewards for skill become disproportionate. A slightly better player may get a good deal more than another player because that tiny edge is so valuable. There may be little difference in ability between the winner and loser of the FA Cup final but the commercial rewards to the teams will be very different.

There may be very little, if any, difference between the salaries of the best and second best stock trader. They are not paid to compete with one another.

American sports leagues do not operate like that. There is no such thing as a franchise being relegated to a lower league.

But yes, the stock traders are paid to compete with one another, not just because they may work for competitive firms on the arena of the stock floor, but because they compete for jobs in the industry.

A trader's performance as it relates to his firm's revenues is tied to his compensation in the same way as a football player's performance as it relates to his team/league's revenues is tied to his compensation.

[giblets]

I contend virtually every profession is as positional as professional sports.

That doesn't make any sense, because winning games is zero sum.