Isn’t the financial industry supposed to grease the wheels of commerce, rather than apply a severe brake on economic growth? It ain’t happening in the US, where Forbes says Wall Street is hogging so much for itself that it’s slashed growth by half of what it should be:
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“Wall Street is back,” says the New York Times, and the economic cost is high. The excessive financialization of the US economy reduces GDP growth by 2% every year, according to a new study by International Monetary Fund. That’s a massive drag on the economy–some $320 billion per year. Wall Street has thus become, not just a moral problem with rampant illegality and outlandish compensation of executives and traders: Wall Street is a macro-economic problem of the first order.
The Financial Tail Wags The Economic Dog
How has this happened? Properly scaled, the financial sector is a good thing.