"Panics do not destroy capital "“ they merely reveal the extent to which it has previously been destroyed by its betrayal in hopelessly unproductive works" - John Mills, "Credit Cycles and the Origins of Commercial Panics", 1867
The release of the Financial Crisis Inquiry Commission’s report contained several enlightening nuggets of information regarding the crisis and its causes, however, none was likely more eye opening than the chart showing the growing discrepancy between compensation in financial services and nonfinancial.
Of course, this is all part of the great financialization of our country. It would be easy for me to sit here and villanize the financial industry, but we must also remember that this is a function of the current environment. After all, the government promotes this huge financial industry through lax regulation and consumers have rewarded the financial sector by taking on excessive debt and paying exorbitant fees for their services. To a large extent the American public is to blame for the excess demand they have attributed to this industry.
Many free market proponents will likely argue that the growth in financial services is a function of demand. It is the natural progression of the US economy as it has become a wealthy service based economy. This is a reasonable response. However, that does not mean it is necessarily good. As a society we have to ask ourselves if this financial behemoth is sustainable and in the best interest of the future of America? Are these high rewards disproportionate to their social productivity? Are we becoming a system that diverts excess capital from long-term investment into short-term unproductive casino-like activities?
This is not to entirely undermine the important role that financial services plays in the US economy, however, I think we can likely all agree that the financial sector has and continues to grow wildly out of control while reaping an inordinate amount of the benefits that the US economy generates. We must seriously consider whether this wild growth is not disproportionate and now contributing negatively to our future economic prospects. I believe it is. How could this mass financialization be negative?
Unfortunately, there are no easy answers to this problem and the USA is clearly not taking any extreme measures to reverse course. What we need is regulation that helps to ensure that particular entities are not able to detract from the prosperity of the USA. We need to reduce the Fed’s role in markets so as to close the ties between the central bank and the banks it was created to protect. We need to establish fiscal policy which does not exacerbate the gap between the rich and the poor while also rewarding investment. We need to establish programs that help educate the public about financial matters so that the public can become less reliant on Wall Street “professionals”. Clearly, none of this has happened and in fact the USA now appears to be growing back into the same exact animal that existed before the credit crisis. Truly a crisis wasted….
My point here is not to argue that the financial services industry is useless. The financial services industry greases the engine of capitalism. That is an incredibly important function. But we must not become deluded into believing that it IS the engine of capitalism. If it once again grows to become a disproportionately unproductive portion of the economy there is no reason to believe we aren’t at risk of another major crisis. I am always bullish about the long-term prospects for America, however, the financialization of this country is one trend which is not only unsustainable, but could prove as the primary roadblock to future prosperity. ——————————————————————————————————————————————————
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More on this topic (What's this?) My Thoughts On Financial Regulation (, 1/19/11) On the Lack of Left Wing Discourse in the Blogosphere (naked capitalism, 1/17/11) On the Gutting of Financial Services Reform (naked capitalism, 12/21/10) SFBeta Announces Financial Innovation Edition Event (Lending Club, 12/22/10) Read more on Financial Services at Wikinvest icBrokerWidget('pragcap', 600, 55); Comments goodfriendI like those no nonsense post, putting away all partisanism and “ill use” of theoritical arguments about free markets etc which are, when logically analysed, most of the time like religious axioms.
Still i would like to add that the points you mention are “leveraged” by the classical degree of corruption inherent to any system.
pragmatism…
Reply 01/28/2011 at 4:37 AM JohanI have a question unrelated to this particular topic but still. When the government spend, before getting the money through bond/bill, in which “account” does this gap go?
Thank you so much for your articles!
Reply 01/28/2011 at 5:03 AM okljohan,
where the govt money ends up is entirely up to the govt to decide; it can end up in infrastructure (roads, bridges, utilities, subsidies, military) or end up like what happened in 2008 when imho, Washington knee-jerk reacted and placed them in the banks.
basically, it is entirely up to the govt to decide where to spend the money.
secondly, remember that under the current monetary system, the govt does not depend on any bill/bonds to spend.
Reply 01/28/2011 at 6:19 AM JohanYes, I know this part, but since they spend before they receive, I would like to know the simple name of the account “money spent but not existing yet”.
Reply 01/28/2011 at 6:43 AM Cullen RocheGovt spends first….
Reply 01/28/2011 at 9:59 AM boatmanwe ARE deluded….it HAS been “capitalism” for awhile now ….11 years.
we manufacture paper…..and electrons.
but you are right as usual.
Reply 01/28/2011 at 6:06 AM VWell this is the essence of it. The politicians were in such a rush to spend $787 billion on TARP and god knows how many trillion on bank bailouts, but nobody asked what could $2 Tril actually get in terms of future value if it were spent on something else? I think it would of gone a hell of a long way toward R&D on new energy systems, infrastructure etc.
We see the markets again today in a stupor to allocate $60B to a glorified e-coupon book, meanwhile long-term energy projects (eg production of oil from algae etc) struggle by with tiny capital raisings etc.
Reply 01/28/2011 at 7:04 AM DunixiI have appreciated this website for sometime. Always the best analysis.
The above post derides the financialization of our economy, but I ask the question, “for what purpose did the US change to this system” (being the paranoid that I am). I suspect that it was done exactly for the purpose to remove money from the real economy. The same reason you deplore (I deplore it as well). However, if you can ignore the corruption, unfairness and deception in that decision for a few moments then another reason may resolve itself other than simple greed (which was certainly fully satisfied in this case as well). If the people get too wealthy they are uncontrollable…we all become ungrateful noblemen. After 20 years of a great bull market we were about to unleash a generation of financially independent early retirees into the world. What would they do? Not entirely clear, but they would certainly fall outside the realm of the “easily controlled because they only have 10% disposable income” category. I do not mean to imply that TPTB worry about a few tens or hundreds of thousands of early retirees lounging around in South Florida for 25 years. What they certainly care about is how much money is circulating in the real economy that isn’t controlled by debt.
Debt motivates people, Wealth demotivates. I now believe that the goal of our governmentally driven financial system (at least domestically) is to maximize the amount of personal debt so that each individual is driven to perform to maintain their lifestyle. See Student Loans. That requires a balancing act between safety net programs and foreclosures and devastating bankruptcy outcomes. The amount of national debt required to support this is now meaningless since Big Ben showed us that he will print what is necessary to cover for the Congress and the Banks. What is most important is serviceability of our personal debt. That is their new nut to crack….and crack it they will.
Reply 01/28/2011 at 9:00 AM JonnyblazeThis is SO true. I, myself, am example A for how difficult this problem can be though. I studied Finance/Economics in college because I wanted to be among the best and brightest that America had to offer, which was embodied by Wall Street. I was jaded after meeting many of these bankers and ultimately went a slightly different route, but I still am working in financial services. Now, I feel something of a pull to change fields and do something more meaningful with my life. Lately, I’ve been feeling like a cog in a larger financial system engine that I don’t really want to keep running the way it has. BUT I have a wife and a kid on the way, so where does that leave me? Plus, there are plenty of incredibly bright people out there, many with advanced degrees, who want to work but cannot find anything in the field they desire. So returning to school for further education does not even seem like a sure ticket for people in my position. I believe it will take nearly as long to unwind ourselves from this over-financialized economy as it did to get to this point, especially if our national policies refuse to allow any destructive creation to take place.
Reply 01/28/2011 at 9:02 AM ESTry consulting. Big five consulting companies will take you with finance degree and you can’t do all kinds of things there – business / management consulting or IT consulting. If you can get into the bsuiness consulting like McKinsey that also opens you ot pexlore a lot s of opportunites and from there you can decided what it is you really want to do and transaition while on the job without getting additional degrees. This is what I did.
Reply 01/28/2011 at 9:19 AM ES“you can do “, sorry
Reply 01/28/2011 at 9:20 AM JonnyblazeThanks. That’s something I’ve been thinking about as well. Appreciate the thoughts.
Reply 01/28/2011 at 9:50 AM PodWow. TPC, people that live in glass houses should not cast stones. You are a money manager, i.e. engagaed and employed in the “financial services industry”. Is what you do socially usefull? Apparently you think not, which is fine. I think it is quite usefull. In fact, were it not usefull you would not be able to make a living doing it.
Demand creates supply. Were there not a growing demand for financial services products and services, there would be less supply.
The US economy has migrated away from low value-add production and towards capital and knowlege intensive services, R&D, sales/marketing, distribution and finance. Our workforce is not cost competitive for low value-add production which is why we do less of it. The rise in financial services as a share of GDP, compensation, or any other way you want to measure it is a reflection of that basic economic fact.
And were it not for the above, there would be a lot of very cold and hungry people in the USA, and as we all know there are very few. Fewer and fewer people in this country are enabling more and more wealth. That is why we have rising unemployment, rising entitlements, a rising standard of living and diminimus inflation.
Reply 01/28/2011 at 9:15 AM Cullen RocheYou’re being extreme. I specifically stated that I was not undermining the industry. I merely think it has grown disproportionately large….Let’s not overreact.
Reply 01/28/2011 at 10:01 AM Mister“knowlege intensive services, R&D, sales/marketing, distribution and finance. Our workforce is not cost competitive for low value-add production which is why we do less of it.”
And in a generation we will be uncompetitive in R&D, distribution and finance. Finance in terms of what is being done at Wall Street is not “hard” and 90% of it is glorified sales. Only those who practice it think otherwise. I am not talking “investors” but all the salesmen who basically put 2 parties together and extract their fee. Basically they are realtors but have convinced the world that its takes millions to reward them for putting together weddings.
R&D is already moving next to the “low value add” manufacturing, go visit Bangalore.
Sales/Marketing as high value add? Seriously – most of the people in Sales marketing are the people who were on the prom queen/king court in high school and were great at looking pretty and talking nicely and being charming. What “value add”.
The only thing the U.S. is still dominating is ‘knowledge based’ work – the rest is only here because it is hard to outsource a salesperson. Or barber. And in a generation much of that knowledge based work will go where its cheaper as well.
I guess everyone can then be a daytrader making a mint of easy ben’s money.
Reply 01/28/2011 at 10:20 AM PodTPC, you say financial services is not the “engine of capitalism”. What is your point in that statement? No particular industry is the “engine of capitalism”. The only “engine of capitalism” is human nature. Payroll is not the “engine of capitalism” but it is certanly the “engine” of ADP. Automobiles are not the “engine of capitalism” but are certainly the engine of FoMoCo. Steel is not the “engine of capitalism” but it is certainly the engine of X, STLD and VALE. Financial services are not the “engine of capitalism” but is certainly the engine of Goldman, Morgan and JPM. So what?
Reply 01/28/2011 at 9:21 AM Cullen RocheThe engine of capitalism are the innovators. Wall St only exists to give the innovators a platform upon which they can succeed.
Reply 01/28/2011 at 10:03 AM ESPod, people who produce added valuea re the enging of capitalism. What is the added value of the financial sector other than facilitating the capital flows? Financial sector has its role but it grew to big and started being a parasite on the producitve secotrs of the economy .
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More on this topic (What's this?) My Thoughts On Financial Regulation (, 1/19/11) On the Lack of Left Wing Discourse in the Blogosphere (naked capitalism, 1/17/11) On the Gutting of Financial Services Reform (naked capitalism, 12/21/10) SFBeta Announces Financial Innovation Edition Event (Lending Club, 12/22/10) Read more on Financial Services at Wikinvest icBrokerWidget('pragcap', 600, 55); Comments goodfriendI like those no nonsense post, putting away all partisanism and “ill use” of theoritical arguments about free markets etc which are, when logically analysed, most of the time like religious axioms.
Still i would like to add that the points you mention are “leveraged” by the classical degree of corruption inherent to any system.
pragmatism…
Reply 01/28/2011 at 4:37 AM JohanI have a question unrelated to this particular topic but still. When the government spend, before getting the money through bond/bill, in which “account” does this gap go?
Thank you so much for your articles!
Reply 01/28/2011 at 5:03 AM okljohan,
where the govt money ends up is entirely up to the govt to decide; it can end up in infrastructure (roads, bridges, utilities, subsidies, military) or end up like what happened in 2008 when imho, Washington knee-jerk reacted and placed them in the banks.
basically, it is entirely up to the govt to decide where to spend the money.
secondly, remember that under the current monetary system, the govt does not depend on any bill/bonds to spend.
Reply 01/28/2011 at 6:19 AM JohanYes, I know this part, but since they spend before they receive, I would like to know the simple name of the account “money spent but not existing yet”.
Reply 01/28/2011 at 6:43 AM Cullen RocheGovt spends first….
Reply 01/28/2011 at 9:59 AM boatmanwe ARE deluded….it HAS been “capitalism” for awhile now ….11 years.
we manufacture paper…..and electrons.
but you are right as usual.
Reply 01/28/2011 at 6:06 AM VWell this is the essence of it. The politicians were in such a rush to spend $787 billion on TARP and god knows how many trillion on bank bailouts, but nobody asked what could $2 Tril actually get in terms of future value if it were spent on something else? I think it would of gone a hell of a long way toward R&D on new energy systems, infrastructure etc.
We see the markets again today in a stupor to allocate $60B to a glorified e-coupon book, meanwhile long-term energy projects (eg production of oil from algae etc) struggle by with tiny capital raisings etc.
Reply 01/28/2011 at 7:04 AM DunixiI have appreciated this website for sometime. Always the best analysis.
The above post derides the financialization of our economy, but I ask the question, “for what purpose did the US change to this system” (being the paranoid that I am). I suspect that it was done exactly for the purpose to remove money from the real economy. The same reason you deplore (I deplore it as well). However, if you can ignore the corruption, unfairness and deception in that decision for a few moments then another reason may resolve itself other than simple greed (which was certainly fully satisfied in this case as well). If the people get too wealthy they are uncontrollable…we all become ungrateful noblemen. After 20 years of a great bull market we were about to unleash a generation of financially independent early retirees into the world. What would they do? Not entirely clear, but they would certainly fall outside the realm of the “easily controlled because they only have 10% disposable income” category. I do not mean to imply that TPTB worry about a few tens or hundreds of thousands of early retirees lounging around in South Florida for 25 years. What they certainly care about is how much money is circulating in the real economy that isn’t controlled by debt.
Debt motivates people, Wealth demotivates. I now believe that the goal of our governmentally driven financial system (at least domestically) is to maximize the amount of personal debt so that each individual is driven to perform to maintain their lifestyle. See Student Loans. That requires a balancing act between safety net programs and foreclosures and devastating bankruptcy outcomes. The amount of national debt required to support this is now meaningless since Big Ben showed us that he will print what is necessary to cover for the Congress and the Banks. What is most important is serviceability of our personal debt. That is their new nut to crack….and crack it they will.
Reply 01/28/2011 at 9:00 AM JonnyblazeThis is SO true. I, myself, am example A for how difficult this problem can be though. I studied Finance/Economics in college because I wanted to be among the best and brightest that America had to offer, which was embodied by Wall Street. I was jaded after meeting many of these bankers and ultimately went a slightly different route, but I still am working in financial services. Now, I feel something of a pull to change fields and do something more meaningful with my life. Lately, I’ve been feeling like a cog in a larger financial system engine that I don’t really want to keep running the way it has. BUT I have a wife and a kid on the way, so where does that leave me? Plus, there are plenty of incredibly bright people out there, many with advanced degrees, who want to work but cannot find anything in the field they desire. So returning to school for further education does not even seem like a sure ticket for people in my position. I believe it will take nearly as long to unwind ourselves from this over-financialized economy as it did to get to this point, especially if our national policies refuse to allow any destructive creation to take place.
Reply 01/28/2011 at 9:02 AM ESTry consulting. Big five consulting companies will take you with finance degree and you can’t do all kinds of things there – business / management consulting or IT consulting. If you can get into the bsuiness consulting like McKinsey that also opens you ot pexlore a lot s of opportunites and from there you can decided what it is you really want to do and transaition while on the job without getting additional degrees. This is what I did.
Reply 01/28/2011 at 9:19 AM ES“you can do “, sorry
Reply 01/28/2011 at 9:20 AM JonnyblazeThanks. That’s something I’ve been thinking about as well. Appreciate the thoughts.
Reply 01/28/2011 at 9:50 AM PodWow. TPC, people that live in glass houses should not cast stones. You are a money manager, i.e. engagaed and employed in the “financial services industry”. Is what you do socially usefull? Apparently you think not, which is fine. I think it is quite usefull. In fact, were it not usefull you would not be able to make a living doing it.
Demand creates supply. Were there not a growing demand for financial services products and services, there would be less supply.
The US economy has migrated away from low value-add production and towards capital and knowlege intensive services, R&D, sales/marketing, distribution and finance. Our workforce is not cost competitive for low value-add production which is why we do less of it. The rise in financial services as a share of GDP, compensation, or any other way you want to measure it is a reflection of that basic economic fact.
And were it not for the above, there would be a lot of very cold and hungry people in the USA, and as we all know there are very few. Fewer and fewer people in this country are enabling more and more wealth. That is why we have rising unemployment, rising entitlements, a rising standard of living and diminimus inflation.
Reply 01/28/2011 at 9:15 AM Cullen RocheYou’re being extreme. I specifically stated that I was not undermining the industry. I merely think it has grown disproportionately large….Let’s not overreact.
Reply 01/28/2011 at 10:01 AM Mister“knowlege intensive services, R&D, sales/marketing, distribution and finance. Our workforce is not cost competitive for low value-add production which is why we do less of it.”
And in a generation we will be uncompetitive in R&D, distribution and finance. Finance in terms of what is being done at Wall Street is not “hard” and 90% of it is glorified sales. Only those who practice it think otherwise. I am not talking “investors” but all the salesmen who basically put 2 parties together and extract their fee. Basically they are realtors but have convinced the world that its takes millions to reward them for putting together weddings.
R&D is already moving next to the “low value add” manufacturing, go visit Bangalore.
Sales/Marketing as high value add? Seriously – most of the people in Sales marketing are the people who were on the prom queen/king court in high school and were great at looking pretty and talking nicely and being charming. What “value add”.
The only thing the U.S. is still dominating is ‘knowledge based’ work – the rest is only here because it is hard to outsource a salesperson. Or barber. And in a generation much of that knowledge based work will go where its cheaper as well.
I guess everyone can then be a daytrader making a mint of easy ben’s money.
Reply 01/28/2011 at 10:20 AM PodTPC, you say financial services is not the “engine of capitalism”. What is your point in that statement? No particular industry is the “engine of capitalism”. The only “engine of capitalism” is human nature. Payroll is not the “engine of capitalism” but it is certanly the “engine” of ADP. Automobiles are not the “engine of capitalism” but are certainly the engine of FoMoCo. Steel is not the “engine of capitalism” but it is certainly the engine of X, STLD and VALE. Financial services are not the “engine of capitalism” but is certainly the engine of Goldman, Morgan and JPM. So what?
Reply 01/28/2011 at 9:21 AM Cullen RocheThe engine of capitalism are the innovators. Wall St only exists to give the innovators a platform upon which they can succeed.
Reply 01/28/2011 at 10:03 AM ESPod, people who produce added valuea re the enging of capitalism. What is the added value of the financial sector other than facilitating the capital flows? Financial sector has its role but it grew to big and started being a parasite on the producitve secotrs of the economy .
Reply 01/28/2011 at 9:34 AM firstAmen
Reply 01/28/2011 at 10:01 AMI like those no nonsense post, putting away all partisanism and “ill use” of theoritical arguments about free markets etc which are, when logically analysed, most of the time like religious axioms.
Still i would like to add that the points you mention are “leveraged” by the classical degree of corruption inherent to any system.
pragmatism…
I have a question unrelated to this particular topic but still. When the government spend, before getting the money through bond/bill, in which “account” does this gap go?
Thank you so much for your articles!
johan,
where the govt money ends up is entirely up to the govt to decide; it can end up in infrastructure (roads, bridges, utilities, subsidies, military) or end up like what happened in 2008 when imho, Washington knee-jerk reacted and placed them in the banks.
basically, it is entirely up to the govt to decide where to spend the money.
secondly, remember that under the current monetary system, the govt does not depend on any bill/bonds to spend.
Yes, I know this part, but since they spend before they receive, I would like to know the simple name of the account “money spent but not existing yet”.
Govt spends first….
we ARE deluded….it HAS been “capitalism” for awhile now ….11 years.
we manufacture paper…..and electrons.
but you are right as usual.
Well this is the essence of it. The politicians were in such a rush to spend $787 billion on TARP and god knows how many trillion on bank bailouts, but nobody asked what could $2 Tril actually get in terms of future value if it were spent on something else? I think it would of gone a hell of a long way toward R&D on new energy systems, infrastructure etc.
We see the markets again today in a stupor to allocate $60B to a glorified e-coupon book, meanwhile long-term energy projects (eg production of oil from algae etc) struggle by with tiny capital raisings etc.
I have appreciated this website for sometime. Always the best analysis.
The above post derides the financialization of our economy, but I ask the question, “for what purpose did the US change to this system” (being the paranoid that I am). I suspect that it was done exactly for the purpose to remove money from the real economy. The same reason you deplore (I deplore it as well). However, if you can ignore the corruption, unfairness and deception in that decision for a few moments then another reason may resolve itself other than simple greed (which was certainly fully satisfied in this case as well). If the people get too wealthy they are uncontrollable…we all become ungrateful noblemen. After 20 years of a great bull market we were about to unleash a generation of financially independent early retirees into the world. What would they do? Not entirely clear, but they would certainly fall outside the realm of the “easily controlled because they only have 10% disposable income” category. I do not mean to imply that TPTB worry about a few tens or hundreds of thousands of early retirees lounging around in South Florida for 25 years. What they certainly care about is how much money is circulating in the real economy that isn’t controlled by debt.
Debt motivates people, Wealth demotivates. I now believe that the goal of our governmentally driven financial system (at least domestically) is to maximize the amount of personal debt so that each individual is driven to perform to maintain their lifestyle. See Student Loans. That requires a balancing act between safety net programs and foreclosures and devastating bankruptcy outcomes. The amount of national debt required to support this is now meaningless since Big Ben showed us that he will print what is necessary to cover for the Congress and the Banks. What is most important is serviceability of our personal debt. That is their new nut to crack….and crack it they will.
This is SO true. I, myself, am example A for how difficult this problem can be though. I studied Finance/Economics in college because I wanted to be among the best and brightest that America had to offer, which was embodied by Wall Street. I was jaded after meeting many of these bankers and ultimately went a slightly different route, but I still am working in financial services. Now, I feel something of a pull to change fields and do something more meaningful with my life. Lately, I’ve been feeling like a cog in a larger financial system engine that I don’t really want to keep running the way it has. BUT I have a wife and a kid on the way, so where does that leave me? Plus, there are plenty of incredibly bright people out there, many with advanced degrees, who want to work but cannot find anything in the field they desire. So returning to school for further education does not even seem like a sure ticket for people in my position. I believe it will take nearly as long to unwind ourselves from this over-financialized economy as it did to get to this point, especially if our national policies refuse to allow any destructive creation to take place.
Try consulting. Big five consulting companies will take you with finance degree and you can’t do all kinds of things there – business / management consulting or IT consulting. If you can get into the bsuiness consulting like McKinsey that also opens you ot pexlore a lot s of opportunites and from there you can decided what it is you really want to do and transaition while on the job without getting additional degrees. This is what I did.
“you can do “, sorry
Thanks. That’s something I’ve been thinking about as well. Appreciate the thoughts.
Wow. TPC, people that live in glass houses should not cast stones. You are a money manager, i.e. engagaed and employed in the “financial services industry”. Is what you do socially usefull? Apparently you think not, which is fine. I think it is quite usefull. In fact, were it not usefull you would not be able to make a living doing it.
Demand creates supply. Were there not a growing demand for financial services products and services, there would be less supply.
The US economy has migrated away from low value-add production and towards capital and knowlege intensive services, R&D, sales/marketing, distribution and finance. Our workforce is not cost competitive for low value-add production which is why we do less of it. The rise in financial services as a share of GDP, compensation, or any other way you want to measure it is a reflection of that basic economic fact.
And were it not for the above, there would be a lot of very cold and hungry people in the USA, and as we all know there are very few. Fewer and fewer people in this country are enabling more and more wealth. That is why we have rising unemployment, rising entitlements, a rising standard of living and diminimus inflation.
You’re being extreme. I specifically stated that I was not undermining the industry. I merely think it has grown disproportionately large….Let’s not overreact.
“knowlege intensive services, R&D, sales/marketing, distribution and finance. Our workforce is not cost competitive for low value-add production which is why we do less of it.”
And in a generation we will be uncompetitive in R&D, distribution and finance. Finance in terms of what is being done at Wall Street is not “hard” and 90% of it is glorified sales. Only those who practice it think otherwise. I am not talking “investors” but all the salesmen who basically put 2 parties together and extract their fee. Basically they are realtors but have convinced the world that its takes millions to reward them for putting together weddings.
R&D is already moving next to the “low value add” manufacturing, go visit Bangalore.
Sales/Marketing as high value add? Seriously – most of the people in Sales marketing are the people who were on the prom queen/king court in high school and were great at looking pretty and talking nicely and being charming. What “value add”.
The only thing the U.S. is still dominating is ‘knowledge based’ work – the rest is only here because it is hard to outsource a salesperson. Or barber. And in a generation much of that knowledge based work will go where its cheaper as well.
I guess everyone can then be a daytrader making a mint of easy ben’s money.
TPC, you say financial services is not the “engine of capitalism”. What is your point in that statement? No particular industry is the “engine of capitalism”. The only “engine of capitalism” is human nature. Payroll is not the “engine of capitalism” but it is certanly the “engine” of ADP. Automobiles are not the “engine of capitalism” but are certainly the engine of FoMoCo. Steel is not the “engine of capitalism” but it is certainly the engine of X, STLD and VALE. Financial services are not the “engine of capitalism” but is certainly the engine of Goldman, Morgan and JPM. So what?
The engine of capitalism are the innovators. Wall St only exists to give the innovators a platform upon which they can succeed.
Pod, people who produce added valuea re the enging of capitalism. What is the added value of the financial sector other than facilitating the capital flows? Financial sector has its role but it grew to big and started being a parasite on the producitve secotrs of the economy .
Amen
“Were there not a growing demand for financial services products and services, there would be less supply.”
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