The High Cost of Finance - The Roosevelt Institute

1. Introduction

"The financial crisis of 2007–2008, whose massive costs are still being felt in
many parts of the country, made clear to most Americans that the financial system
is broken and needs serious reconstructive surgery. It has also become
apparent that the dysfunctions of finance go far beyond the dramatic crashes;
even when the system seems to be operating “normally,” it costs most of us
dearly on a daily basis and puts the long-term prosperity of our economy at risk.
These dysfunctions involve overcharging for brokerage services, predatory lending,
and generally charging high fees for financial services; misallocating human
talent from productive employment in technology, education, and health care to
less socially productive employment; reorienting non-financial corporate behavior
from long-term investment to short-term speculation that costs jobs,wages, and
productivity growth; and choosing poor investments that put people's retirement
incomes at risk.

The flip side of this coin is that a relatively small number of owners and
operatives in the financial sector make significant salaries, bonuses,and
profits as a result of these practices. Yet finance does not simply create a
zero sum game that transfers income and wealth from customers to bankers and
bank owners. It is worse than that: The destructive aspects of finance also
negatively affect the overall health of the economy,both in the short run and
in the long run. That is, finance has operated in recent years as a negative
sum game. This means that it costs us more than a dollar to transfer a dollar
of wealth to financiers—significantly more. So even if you think our financiers
deserve every penny they get, it would be a lot cheaper simply to write them a
check every year than to let them continue business as usual. ..." ...
[link:http://rooseveltinstitute.org/overcharged-high-cost-high-finance/|