In theory, Americans might just love themselves some great financial services. A finance-dominated economy might deliver extraordinary value to consumers and businesses, drive investment and innovation, and shift upward the nation’s economic trajectory. In practice, this is obviously not the case. The “value added” that economists record as financial firms generate trading profits and rack up fees does not “add value” to the real economy in any meaningful sense. It does not improve the typical family’s life, create better jobs, or expand productive capacity.
Sophisticated financial analysts love to discuss opportunity cost and diminishing returns, until it is their activity proving costly and their returns diminishing. Our nation would be more prosperous with a smaller financial sector that left more talent and capital to the real economy.