That’s the title of a new article on the New York Times’ Economix blog, which is an case study in what happens when an economy, such as the United States’, sees financial services grow above its optimal size. It tallies extremely closely with our Finance Curse analysis. It contains references to research I wish I’d inserted into the analysis, such as one by Ozgur Orhangazi (whom I interviewed for an earlier story,) which has found that, as Bartlett explains:
“Investment in the real sector of the economy falls when financialization rises. Moreover, rising fees paid by nonfinancial corporations to financial markets have reduced internal funds available for investment, shortened their planning horizon and increased uncertainty.”
The new article is subscription-free, concise, well explained, and generally well worth reading.