That said, the finance sector doesn’t need to be nearly as large or active as it is to fulfill that basic purpose. Much churn for comparatively little gain.

Bingo!

and thanks.

Perhaps it should have been Central Bankers Pay Positive Real Interest Rates Day or Ratings Agencies Admit “It’s ALL Junk” Day or iBankers Pitch “M&A Destroys Value” Day.

Actually, yours were better.
I take it back.

I’m not saying all of the financial markets are zero-benefit to society at large, but that a lot of the functions that people who work in the financial services industry do not benefit society. At all. There are exceptions of course, but the financial industry has morphed from a utility that adds value to society to a vehicle that largely extracts rents.

Take the archetypical example of a producing farmer hedging future crop prices: that hedge might be zero sum between the farmer and the counterparty, but if the financial stability from knowing his future prices induces the farmer to grow more crops and profitably sell them into a (reasonably) free market, doesn’t that marginal production increase society’s wealth?

Or imagine a business that doesn’t have the risk appetite to pursue a productivity-improving project that will be financed by long-term debt, if the interest rate on that debt would be variable, and the world is in a volatile interest rate environment. But that the company WOULD pursue that project if they can assure themselves of interest costs over that long-term (i.e. lock in a fixed rate). The IR swap would be zero-sum between the company issuing the variable-rate debt and the financial counterparty selling the fixed-rate swap, but if the project is truly productivity enhancing, then that project made society better off, and the IR swap is beneficial to society at large.

IANAEconomist, but I’m sure that there is some economic term for that concept.

For the record, I don’t have a problem with you. I just know that you work for you, not for me, or anyone else.

Sure we would like them to be independent arbiters of the truth, the whole truth etc… but they are simply human with an entire lifetime of experience to mould their views.

Such a set up doesn’t prevent excellent and important work (Muddy Waters and Meredith Whitney please stand up).

It applies to commenters even more: KenG clearly has a problem with us hedgies. (Why we are singled out as not contributing to society any more than other financial services is odd…)

Also if you study any philosophy you will note that following your own rules is circular logic not a reductio.

When the FCC began handing out TV licenses, they required stations to broadcast news programs as a public service. When they realized that news can be profitable, it turned into an entertainment business. And in the entertainment business, all that matters is profit. Truth is a nice-to-have, but not mandatory.

Seriously though, I thought it was simple. In the old days, journalists searched out and published the truth. When did they become compromised into looking for or creating the biggest arguments, and beggar the truth? How did honest reporting become subsumed into the quagmire of satisfying rich backers and the needs of advertisers?

I will start taking the agonizing over ethics seriously when they stop relentlessly cheering on development projects regardless of how the numbers work out, or mindlessly repeating political talking points because that is what sells airtime. Even NPR does this constantly. Drive time is dominated by absolutely trivial political horse race narration focused on illusory issues, with little to no reportage.

In the face of that obsessing over whether or not the “journalists” let an Obama/Romney staffer buy them a steak before they spent 5 minutes broadcasting their talking points with no factual or editorial oversight is just comical.

I don’t understand the need for the word “corporate” here. As Felix lays out, it occurs across all beats for reasons of both access and simple human friendship. It’s definitely a significant issue in political coverage, is clearly an issue in covering sports, and applies to sources at NGO’s/special interest groups every bit as much as corporations.

Most of what passes for “the media” is entertainment; the exceptions are usually regurgitated press releases or public lobbying. Ethics is rarely a consideration for any of those activities.