When articles that deal with the world outside of startup finance appear on Hacker News, the articles and comments usually have so little knowledge behind them they are practically unreadable.
Sometimes these issues just don't require that much knowledge to understand, though, and I think this is one of those.
When upside returns are based on a percentage of your winnings, and downside is limited to the loss of a job, at worst, the course of action is clear: shoot the moon, take on as much risk as you possibly can. Push the rules as far as they'll go to crank up the variance of your returns, and half the time, it'll pay off.
There are no subtleties here, no deep knowledge of banking required to see what's wrong with this picture. I'll agree that finding a solution might be tricky, but the fundamental problem has nothing whatsoever to do with politics, it's simple arithmetic.
Hell, even the people that benefit from these sort of incentive schemes - they're most definitely not a stupid lot, if you've ever interacted with them! - tend to think that they're crazy, they agree that what's good for them personally tends to be bad for their companies, and bad for the economy at large. But being fairly rational decision makers, they optimize for personal profit, just as most of us would if we were in their shoes.
Sometimes these issues just don't require that much knowledge to understand, though, and I think this is one of those.
When upside returns are based on a percentage of your winnings, and downside is limited to the loss of a job, at worst, the course of action is clear: shoot the moon, take on as much risk as you possibly can. Push the rules as far as they'll go to crank up the variance of your returns, and half the time, it'll pay off.
There are no subtleties here, no deep knowledge of banking required to see what's wrong with this picture. I'll agree that finding a solution might be tricky, but the fundamental problem has nothing whatsoever to do with politics, it's simple arithmetic.
Hell, even the people that benefit from these sort of incentive schemes - they're most definitely not a stupid lot, if you've ever interacted with them! - tend to think that they're crazy, they agree that what's good for them personally tends to be bad for their companies, and bad for the economy at large. But being fairly rational decision makers, they optimize for personal profit, just as most of us would if we were in their shoes.