Monday, October 12, 2009

From Making Things To Financing Things

A couple of stories today highlight the power and dominance of the financial sector of our economy, and politics. The first is an op-ed in the Huffington Post by Robert Creamer who argues that the dominance of this sector has become "a mortal danger to our economic security."

This sector, he reports, "has doubled in size over the last 14 years. During the period 1973 to 1985 the financial sector never earned more than 16% of domestic profits. This decade, it has averaged 41% of all the profits earned by businesses in the U.S. In 1947 the financial sector represented only 2.5% of our gross domestic product. In 2006 it had risen to 8%. In other words, of every 12.5 dollars earned in the United States, one goes to the financial sector, much of which, let us recall, produces nothing."

This helps to explain why, as the associated press reports, Treasury Secretary Timothy Geithner's telephone logs show he talks with Goldman Sachs and Citibank CEOs more frequently than the chairs of the House and Senate Banking committees.

Both articles are worth a read.