Private Markets Charge More
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At a very high level, the job of the financial industry is to take customers’ money and invest it in economic growth. When the economy grows, the investors get a share of that growth as a return on their investment.
How much should the financial industry charge for doing that job? It’s not an easy job. The financial industry has to figure out what companies will generate economic growth, and allocate capital to them, and monitor them, and do all the administrative and sales work of moving money from people who have it to companies that need it. A lot of people are working away in their garages trying to develop a cure for cancer or cold fusion or a quantum supercomputer or a really addictive gambling website, and the financial industry has to figure out which of them will succeed and give them money. That job, at a high level, is both difficult and important; curing cancer is not mostly a matter of getting the financing right, but that is part of it.