The Financialization of the World Is Kind of Mysterious

Facts matter: Sign up for the free Mother Jones Daily newsletter. Support our nonprofit reporting. Subscribe to our print magazine.


In the course of a general critique of the US economy over the past few decades, Brad DeLong says this:

The US today spends 8% of GDP on finance. That is twice as much as 40 years ago. Once again, the U.S. gets nothing for it—gets, in fact less than nothing, because the lion’s share of responsibility for the 10% growth shortfall of the past decade rests on the shoulders of the hypertrophied dysfunctional finance system. It is not as though anybody claims that the plutocrats of high finance and of our corporations are doing a materially better job at running their organizations and allocating capital by enough to justify their now even-more outsized compensation packages. It is not as though we can see the impact of paying more to financiers in the tracks of faster economic growth. Rather the reverse.

I know I’m probably revealing more ignorance here than I should, but how did this happen? Finance isn’t a monopoly. In fact, it’s one of the most globalized, fluid, and competitive industries on the planet. Why haven’t its profits long since been reduced to zero, or close to it? I can understand occasional blips as markets change—CDOs and SIVs get hot for a while, so experts in CDOs and SIVs make a killing—but the overall industry? How has it managed to hold onto such outlandish rents for such a sustained period?

Real answers, please, not buzzwords or conspiracy theories. What’s the deal here?

REAL QUICK, REAL URGENT

Minority rule, corruption, disinformation, attacks on those who dare tell the truth: There is a direct line from what's happening in Russia and Ukraine to what's happening here at home. And that's what MoJo's Monika Bauerlein writes about in "Their Fight Is Our Fight" to unpack the information war we find ourselves in and share a few examples to show why the power of independent, reader-supported journalism is such a threat to authoritarians.

Corrupt leaders the world over can (and will) try to shut down the truth, but when the truth has millions of people on its side, you can't keep it down for good. And there's no more powerful or urgent argument for your support of Mother Jones' journalism right now than that. We need to raise about $450,000 to hit our online fundraising budget in these next few months, so please read more from Monika and pitch in if you can.

payment methods

REAL QUICK, REAL URGENT

Minority rule, corruption, disinformation, attacks on those who dare tell the truth: There is a direct line from what's happening in Russia and Ukraine to what's happening here at home. And that's what MoJo's Monika Bauerlein writes about in "Their Fight Is Our Fight" to unpack the information war we find ourselves in and share a few examples to show why the power of independent, reader-supported journalism is such a threat to authoritarians.

Corrupt leaders the world over can (and will) try to shut down the truth, but when the truth has millions of people on its side, you can't keep it down for good. And there's no more powerful or urgent argument for your support of Mother Jones' journalism right now than that. We need to raise about $450,000 to hit our online fundraising budget in these next few months, so please read more from Monika and pitch in if you can.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate