The title of the article comes from a very interesting and hard-hitting paper authored by a leading mainstream economist, Luigi Zingales. He is a professor of entrepreneurship and finance at Chicago University’s School of Business, with impeccable mainstream credentials. The paper in question appeared in The Journal of Finance and can be found here.
The main argument made by Zingales is that while economies need banking and finance facilities, this sector has clearly become too large for the good of societies, with particular focus on the US. The out-of-control financial sector siphons off an ever-increasing proportion of economies’ surplus, levies odious fees and interest charges, engages in unceasing control fraud (though that term is not explicitly used), generates asset bubbles, rent-seeks, and buys off both politicians and the economics profession.
The financial sector has become bloated relative to the size of the economy:
A competitive, efficient and honest financial sector can only exist with public support. In contrast, Australia’s financial sector is the opposite, with the media revealing control frauds on a regular basis and a majority of the public in favour of a Royal Commission to investigate its many crimes. It has become a loathsome, criminal leviathan whose greed knows no bounds.
That the financial sector has made rent-seeking and the purchase of politicians into a fine art should come as no surprise....MORE