When you say hedge-funders I assume you mean the wealthy individuals who
invest in these vehicles and not the managers themselves? The managers may
be overpaid but they are milking rich fatcats, so why should we care?
(Unless of course said "fatcats" are pension fund managers gambling with
workers money.)
^^^^
CB: Yea, well both. How does the activity of the hedgefund create more
wealth for society ? What in what the managers do creates more wealth for
society ?
How does "providing liquidity" cause society to end up with more wealth ?
Doesn't some of the activity cause society to end up with less wealth ?
^^^^^
I found this podcast from the Chicago business school ("Warren Buffett is
wrong, money managers deserve huge paychecks") which is perhaps a good
summary of the "other" view point. It says exactly what you'd expect that
hedge funds make important economic contributions by providing liquidity to
the financial system and making sure that capital is allocated to the most
productive ventures. And the managers compete in a free market, therefore by
definition they deserve whatever they are paid.
http://www.chicagogsb.edu/news/2006-04-11_pricetheory/02-TalentMarket.aspx
-raghu.
_
