How Discount Brokerages Make Money
&gt; Some people get mad about the financial industry for taking advantage of customers. I find it hard to get mad about a deal between willing counterparties, but if you think that Wall Street is soaking the US middle class, you should be monomanically focused on the interest spread between cash balances in brokerage accounts and high-interest bank accounts or money market funds. That is the cost that does not call itself a cost.<p>I&#x27;m grateful for this insight provided by the article. As someone interested in the takes on inequality presented by thinkers like Piketty, Stiglitz and McChesney, I think it&#x27;s important to consider the fact that ultimately, the public good will remain hamstrung by the fact that those with the greatest know-how to create returns on investment are also those with the greatest profit-driven motivations. The middle class gets to choose between getting fleeced by brokerage fees, getting fleeced by the low rates of return offered by the banks, or getting fleeced by your own ignorance and lack of access to the infrastructure to generate market returns in the adversarial world of modern finance.<p>UBI and higher taxes I don&#x27;t think can solve this problem, because as more and more of the market&#x27;s growth is captured (extracted?) by the monoliths of private sector, who in a globalized world are not beholden to any one nation (just look at the effect of Brexit on Britain&#x27;s financial sector), individual governments no longer really have the jurisdiction and leverage to capture enough of the market&#x27;s return.<p>In the past I have been quick to blame stuff like the repeal of Glass-Steagall and other bipartisan deregulation efforts, as well as the dangerous assumptions of competence behind stuff like Black-Scholes and the Harry Markowitz approach, but ultimately I can&#x27;t see any way around the fact that the profit motive just seems to be the greatest available driver of financial competence. What can even be done beyond impotently hoping for Gates Foundation-style philanthropy? Maybe the Chinese are actually ahead of the game with their State capitalism approach, and moving forward we should just all turn our governments into fintech companies with a side hustle of providing public infrastructure and services to the citizenry...