SA wrote:
> If this shift Chuck is talking about were a general phenomenon, you
> would find that aggregate investment and employment have been shifting
> from the non-finance industries to the finance industry."
On 8/9/2011 4:26 PM, socialismorbarbarism wrote:
> But this (paragraph 2) wouldn't necessarily be the case. All that is
> required is that the financial sector wouldn't have to be as
> resource-intensive as the "real" sector--which is true almost by
> definition
Yes, exactly. The finance sector can "expand" without absorbing any scarce resources. Therefore, its expansion *does not* displace or crowd out the real sectors.
I see that we agree on this, since you say:
> That profits may be
> greater in the financial sector in a particular historical phase does
> not preclude investment in the "real" non-financial sector at the same
> time; in fact the state of things no doubt *requires* more intensive
> investment to maintain sufficient profit in the "real" sector.
So I don't think we disagree, then.
My disagreement is with those - like Harvey, Brenner, et. al. - who say the finance sector has expanded *at the expense* of the real sector.
Let me make another thing clear. The common perception is that "we don't make things anymore in the U.S." I understand where the perception comes from. Like anyone else, I see lots of goods that are made in China or the Philippines. My sister recently started working for a private equity firm. I hear all the stories about companies being gutted and stripped, etc.
But these are just anecdotes. It is very hard to find evidence for this story in the data.
Here is a chart of the annual change in per capita domestic goods production, from 1930-2007: http://bit.ly/qoe72e
Where is the evidence that we don't make things anymore?
SA