The video embedded below is making the rounds these days, to nearly universal reactions of vicarious embarrassment among people with souls. This is one of those cultural signifiers that splits its audience neatly in two: if you don’t find anything objectionable or cringe-inducing about this, chances are an explanation why everyone else does may not be of any help. Still, I tried to address exactly this subject last year in an editorial for Expiring Monthly. The column in question is available as part of our free issue, so I have reproduced it below.
On Eating What We Kill
The slogan, popular among many traders, that “we eat what we kill” isn’t just absurd, it’s dangerous. The cliché is absurd because every tick in profit and loss that accrues to a trader’s account is the result of a series of institutions, laws, practices, labor hours, and countless other concrete relations of production without which trading would be inconceivable.The chain of dependence that leads to a successful “predatory” financial transaction is, in fact, so much more protracted than the series typical of ordinary “agrarian” cubicle work that we might instead regard trading as among the most tenuous, gossamer pursuits anywhere in Western culture. Recent hysterical outbursts among banks, hedge funds, and high-frequency shops over the mere mention of the possibility of a Tobin tax on financial transactions illustrate the extreme fragility of the business of trading. But an environment of perpetual regulatory capture is just the most obvious in the long chain of conditions necessary for presumably independent, carnivorous traders to exercise their purported skills.
Every financial instrument is a derivative, after all, of the work that goes on elsewhere in the material economy. When that material world occasionally impinges on the austere realm of finance – in interruptions natural, political, workerist, and so on – it becomes clear just how entirely reliant the financial sector is on the people and relationships that it exploits for profit.The impetus for the slogan, I take it, is that whereas ordinary workers depend on bosses or consumers or other businesses for their livelihoods, traders have severed such ties and are free to take profits wherever they find them. But this is just irredeemable mythology, and it gets the relationship precisely backwards. Medicine will never be a useless profession as long as people get sick; farmers, chefs, and vintners will be needed to keep us fed and happy; and we can think of similar explanations of the importance of teachers, barbers, police officers, and so many others. My claim is not that traders are useless to society; that’s a question for another time. But whereas the allocation and reallocation of capital to different assets is an activity so utterly reliant on the strength of the material economy, boasts of carnivorous independence on the part of traders seem immediately not just false, but also in poor taste. Traders proud of their supposed predation are the anemic leonine aristocracy of a protected nature preserve, oblivious to the guards, gates, and smaller animals without whom they would quickly die.
Beyond the absurdity of bluster about “eating what we kill,” I’ve claimed that the slogan also represents a dangerous attitude. If, instead of an attitude of humility and circumspection, I approach markets with all the maturity of a frat boy, I dramatically increase my chances of making serious errors.The conceptual mistake here, for one, is in attributing any success I have to my own efforts, rather than to luck; in the absence of statistically robust performance data, any claim about my own trading prowess is just a swaggering invitation of future losses. And even if we exclude discretionary traders, a healthy dose of overconfidence is a great way for a mechanical or systems trader to fail to notice important changes in the market. In addition to being an obviously false description of reality, the mythology of self-reliance is a distraction and a cognitive bias that we can all do without.
A more accurate summary might be something like,“we eat whatever we’re lucky enough to find.” I don’t expect that inelegant phrasing will ever catch on, but the best traders don’t tend to think in slogans, anyway.