THE FINANCIALIZATION OF AMERICA—AND THE DEATH OF THE AMERICAN DREAM
THE FINANCIAL SECTOR’S SHARE OF BUSINESS PROFITS IS NOW 50%
The coverage of issues in this Great Country is a curious business. The information is normally out there—somewhere—but fundamental issues of huge importance all too often do not get either the coverage or the analysis they deserve. Instead the media obsess about the Oscars, or a celebrity murder, or a whole host of other matters which really do not deserve that level of attention. The concept of “The News as Entertainment” has a lot to answer for. Distraction from the issues that really matter is the result.
Are the media deliberately keeping us distracted? Well, I cannot speak for individual journalists—some of whom are excellent—but it is clear that the policies of many of the media are driven by commercial agendas which are not motivated by a desire to advance our best interests. Consider Fox News and the Wall Street Journal. The former is a blatant propaganda machine, and the latter is not a great deal less biased—even though it is clothed in the robes of being a serious and respected journal. Given the track record of the owner, Rupert Murdoch, that is an unconvincing disguise.
An issue of the most profound importance is the financialization of the U.S. Economy—the structuring of the economy is such a way, particularly through legislation and massive financial support, that the financial sector—dominated by the Big Banks--can extract a disproportionate share of profit while contributing only a minimum amount in terms of productive investment, added value, and employment.
The end result is an economy which just doesn’t work too well for most Americans—which is exactly where we are right now. Growth is minimal, unemployment is way too high, high wage jobs are being replaced by low wage jobs, demand is being sucked out of the country, investment in infrastructure is entirely inadequate, business investment is far from what it needs to be, and Wall Street is driven almost entirely by speculation rather than acting as a conduit for productive investment.
Evan Soltas has just written a fascinating blog on the share of profits now going to the financial sector. I commend his observations to you. Let me quote an extract:
But most of it is a huge increase in the profit per man-hour worked in the financial industry. Making some rough approximations about the financial industry's share of payroll employment, I can estimate that the average hour worked in the financial industry generates nearly 30 times the average per-man-hour profit in the rest of the economy. That's up from six times the average in 1964.
The dominance of the U.S. economy by the financial sector is a systemic problem of such magnitude that it constitutes an existential threat to the future of this country. Yet most of us are not even aware that such a problem exists.
Remedial action could and should be taken by Congress—but who owns Congress? Why, Big Money, of course.
Well, surely the Federal Reserve can do something—apart from supporting the banks? Then again, perhaps not. After all, let’s appreciate that it is not a government agency (though it masquerades as one). It is owned by the banks.