I haven't been able to sleep too well since hitting the ripe old age of thirty. Surely,
one is not alone in this problem. The major problem besides waking up in the middle
of the night is actually being able to wake up without wanting to smash the snooze
button with my fist.
When waking up at some fixed time, I seemed to never wake up feeling like I do when
I just wake naturally on the weekends when I am not supposed to be anywhere in particular.
After doing a little research on sleep cycles, circadian rhythms and whatnot, I came
across something called sleep inertia. That is groggy feeling that seems like an
overwhelming cloud in the mornings that hangs over until dispersed by time or a tank
of coffee. This is caused by waking up in the middle of a sleep cycle. So if a person
can just figure out how to avoid waking in between sleep cycles, sleep intertia can
be reduced if not eliminated. In comes the sleep calculator
With the sleep calculator from http://whentosleep.com we can just put in the time
we are wishing to wake or fall asleep can a time table is automatically generated
with the proper times. One difference between this and other sleep timing apps online
is that most of the others assume each cycle is 90 minutes. This is not true! Only
the first cycle is 90 minutes with the subsequent cycles running anywhere from 100 to
120 minutes long, depending on the person. The calculator from when to sleep
has an adjustable input for length of the average cycle that is the average by default
but can be tuned over a few days by the user. Check it out, it just may help you
reclaim your mornings.
I ran across an interesting forum on economist.com that extends upon a post
written by Arnold Kling at EconLog. The post examines the issue of
compensation, particularly that of exorbitantly paid investment bankers
clustered at the favorable tail of the income distribution. In light of these
“rents” (economic parlance for what essentially amounts to excess payments),
asks Dr. Kling, why aren’t there more investment bankers? I’ve sometimes
wondered the same and Kling’s prompting has distilled my thinking on the
Kling’s concludes that investment bankers enjoy continually high rents because
would-be competitors simply have better things to do with their lives.
In short, the distribution of wealth represents differences in taste. Many
people prefer jobs with less income and more of other characteristics.
I think that many people steer away from finance and accounting as a matter
of taste. But people who choose different occupations are not all satisfied
with simply making their own choice and letting other people make their
choices. Just as there are people who believe that it is in bad taste to
smoke or drive an SUV, there are people who believe that it is in bad taste
to be an investment banker. And just as there are people who want to see
government do something to punish smokers and SUV owners, there are people
who want to see government punish those who choose high-income careers.
Though operative, this reasoning fails to fully explain why high salaries
persist in IB. I’d argue one reason for the theory’s inadequacy resides in its
acceptance of some flawed assumptions.
Assumption #1: IB Has Few Barriers to Entry
Kling offers that, outside of financial knowledge, there exist few barriers to
entry in IB.
I can see how doctors earn rents–there are obvious barriers to entry. And
the field of entertainment generates winner-take-all results, in part
because being popular makes you more popular. But a lot of the big money is
in finance–investment banking. One would expect more people to go into
investment banking and compete away those rents.
I am pretty sure that all of my daughters could master finance if they
wanted to. Both economic theory and my wife are telling them that they
should major in accounting, but none of them will do so. I may be naive,
but I suspect that there are a lot of people who could raise their incomes
by going into investment banking. They are not prevented from doing so, but
they choose other careers as a matter of taste.
My personal observation has been that IB is highly specialized and that there
are often substantial barriers, specifically those of the type Kling
characterizes as “obvious” in other professions. Take, for example, any of the
go-to banks in biotechnology. Most biotech bankers have terminal degrees in
their respective fields of science and some have stacked an M.D. on top of
their doctoral training for good measure. Those lacking these credentials
almost uniformly have extensive experience in industry; few, if any, land these
jobs due to accounting prowess or dumb luck. These bankers aren’t paid high
wages because they are financial wiz kids (if anything, the financials are
simpler in this sector). Rather, they are highly paid because the basic
knowledge required to effectively interact with clients creates a relatively
high barrier to entry. Though I’m not as familiar with other IB sectors,
I suspect this barrier isn’t limited to biotech, but extends to many capital
intensive sectors, such as IT, where Dr. Kling has profitably operated.
Assumption #2: “Banking” is Homogenous
The first comment to Kling’s post (offered by KipEsquire, who has one of the
most phenomenal descriptions of a professional life I’ve seen recently)
The term “investment banking as a career” is comparable to the terms
“health care as a career” or “education as a career” — you are lumping
together far too many and too varied occupations for your thesis to have
any potency. (P.S. Yes I am an investment banker. No I am not in the top 1%
of incomes. Go figure.)
Bingo. Like KipEsquire, I’m an “investment banker” who, to this point, has
helped raise what amount to seed and VC rounds. Take 7% of what I place, deduct
expenses, and I assure you there’s not a seven figure remnant in my firm’s bank
account. Lumping the services I provide into the same pot as the fat cats who
structure multi-billion dollar M&A transactions is akin to comparing a Ford to
a Ferrari; they’re both cars, but the similarities end there. In an addendum,
Kling accepts this criticism as valid. Assumption #3: Banking Isn’t Highly
Dr. Kling suggests that IB is a field in which qualified people can move in and
out of the field unencumbered by competitive forces (again, note that Kling
seemingly argues “qualified” refers to those who possess a mastery of finance,
but in the interest of further exploring this idea, let’s also grant these
candidates an M.D., Ph.D., or J.D.).
I may be naive, but I suspect that there are a lot of people who could
raise their incomes by going into investment banking. They are not
prevented from doing so, but they choose other careers as a matter of
There is an entire cottage industry dedicated to helping people land IB jobs,
the existence of which suggests a competitive market (go to amazon.com and
search for “investment banking” and you’ll find dozens of career guides, at
least one of which is in its 5th edition). I doubt such an industry exists for,
let’s say, bank tellers.
An Alternate Explanation
On a personal level, people that have a head for financial services often don't
go into investment banking at any more due several factors. Most end up
becoming a financial planner managing personal assets for clients directly
instead of working at large investment banks and banks in general.
Investment bankers often need to have more in their background than just
working at a large fund to make it on a more personal level interacting with
clients. Such services as those provided a local houston area businesses like
Celtic Capital Corporation often offer
more than just investment advice but also legal counsel.
My answer to Kling’s question is admittedly pretty simplistic. At a fundamental
level, I think there aren’t more investment bankers for any reason other than
the fact that the world simply doesn’t need more of them. If Lehman Brothers or
any other well-capitalized firm needed more bankers, they clearly have the
resources to hire, train, and pay them exceedingly well. Simply put, banks
don’t need more bankers, they need better ones. I’d argue the reasons for this
are numerous, but include such things as the volatility of the industry (firms
don’t want to hire several bankers only to lay them off a few months later).
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