"I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth - one shred of evidence." - Paul Volker (2009)All of us suspect the obvious - that Wall Street not only is too big to fail, but also just too damn big. But where's our evidence? It's one thing to direct our anger at financial elites and the top one percent. It's quite another to make a factual case that Wall Street, indeed, is much too big, and therefore should be radically reduced in size. So here's some data.
1. Explosion in Financial Sector Incomes But No Rise in Economic Growth
Check out this chart: Between WWII and 1980, the wages of financial workers were the same as those who worked in non-financial industries. Then the two lines split apart with Wall Street extracting an enormous premium. Do the financiers deserve it? And how would we know if they do or don't? The answer should depend on how much value the financial sector, in fact, produces for our economy. Is there a correlation between the explosion in Wall Street incomes and economic growth?
Yes, there is, but it's negative. As Wall Street wages rise, economic growth slows down.
1950s (1950-1959): 4.17 percent[Source for these unemployment numbers ]
1960s (1960-1969): 4.44 percent
1970s (1970-1979): 3.26 percent
1980s (1980-1989): 3.05 percent
1990s (1990-1999): 3.2 percent
2000s (2000-2009): 1.82 percent
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