If you see finance as infrastructure to help other businesses grow (as I do), then it's growth should result in the growth of other industries. Instead what we see is finance growing and other industries declining. To me that suggests a general dysfunction in the role of finance. It simply isn't doing the good it's supposed to.
There may be many or even most individuals who are acting in good faith, but the sector as a whole appears to be broken.
This isn't about demonization. It's about pointing out a serious threat to society's continued prosperity.
And as for the auto industry - they shouldn't have been bailed out either - that doesn't somehow make it better that the financial industry was. Also the auto bailout was a rounding error compared to the financial bailout.
What industries are declining? As far as I know, virtually every sector of the economy has grown. Manufacturing, medicine, education and technology certainly have.
What industries are declining, and why do you believe that finance has failed them?
The private goods-producing sector value added fell 6.4 percent in 2009, after a 4.2 percent decline in 2008. The private services-producing sector declined by 2.1 percent, after a 0.4 percent increase in 2008. The finance and insurance industry grew 6.1 percent in 2009, partially offsetting the widespread economic decline. The increase was primarily driven by the strong recovery of the insurance carriers industry.
That's a quote from a December 2010 report from the government's bureau of economic analysis.
Sorry, I didn't realize your comment was limited to a single year of our current recession. You are correct - for a short period, finance has grown while other sectors have shrank.
That's not the general trend, however, that's just a blip caused by the recently ended recession.
[edit: can't respond to your post, but June 2009 is also the time period when industrial production and retail sales started growing, and when the stock market recovered.
Funny - according to the very report I just quoted that positive GDP growth in 2009 is due only to growth in the financial industry which makes up for the declines other sectors are still seeing.
Finance was being discussed as a percentage of GDP. Every sector can't increase as a percentage of GDP. That should correct to a fair amount for the general growth in all industries.
If you see finance as infrastructure to help other businesses grow (as I do), then it's growth should result in the growth of other industries. Instead what we see is finance growing and other industries declining. To me that suggests a general dysfunction in the role of finance. It simply isn't doing the good it's supposed to.
Well, I don't know that I find that very persuasive. Industries rise and fall all the time, for many reasons; the world is a complex place. Perhaps a useful financial instrument now is keeping things from getting worse somewhere else. Or perhaps it will bear fruit in a decade, as one would generally expect with an investment. Such an argument seems hasty without a good understanding of what the relative growth rates of different industries under different conditions should be -- a rather tall order.
I do certainly see the moral distinction between George Soros' currency manipulation and Warren Buffett's shrewd investment, despite the fact that both men made their money with money. But I don't think it would make sense to reckon their true productivity by comparing their fortunes. Likewise, if one is going to suggest general dysfunction in the financial industry, I'm much more interested in what you think it's doing wrong specifically -- where the growth that you think is unhealthy is coming from -- than how big it is.
To talk in concrete terms, I think I read elsewhere that a lot of the recent growth in finance has been in insurance. It seems sensible to me that if a lot of people have lost money, insurance, and its role in mitigating financial risk, would be more important. Without it, we might see people completely unwilling to take on financial risk at all until they had more money, which would be devastating. At a first glance, I don't see anything unhealthy about such an industry's growth being decoupled from the rest of the economy--or even inversely correlated.
And as for the auto industry - they shouldn't have been bailed out either - that doesn't somehow make it better that the financial industry was.
Oh, indeed, I am not arguing that. Both were terribly bad. I was arguing only that a bad, but specific, historical event doesn't make the industry as a whole fundamentally bad. No one would say, "The government bailed out the auto industry -- making automobiles is fundamentally parasitic on society!" I mean, making those particular automobiles, sure. But all automobiles ever? That's overblown. But people do seem to take the financial bailouts as evidence that the industry as a whole is amoral.
What would have happened if the US government did not bail out GM? Would other auto manufacturers fill the void? How many american workers would be out of jobs (both from GM and from their suppliers, and their supplier's suppliers, etc.)? We would still have Ford, either way and most imports.
Contrast this with the finance sector. What would happen if Goldman was not bailed out. What investment banking firm would still be standing and what would it look like?
There may be many or even most individuals who are acting in good faith, but the sector as a whole appears to be broken.
This isn't about demonization. It's about pointing out a serious threat to society's continued prosperity.
And as for the auto industry - they shouldn't have been bailed out either - that doesn't somehow make it better that the financial industry was. Also the auto bailout was a rounding error compared to the financial bailout.