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Bellingham Bill
@
2013 Aug 26, 3:03am
You can find the parasite by removing them from the picture and seeing if the wealth creation/preservation is or isn't reduced.
And by "wealth" I mean the stock and provision of goods and services that satisfy human needs and wants.
By this measure, Big Finance is very parasitical, taking its skim without much actual wealth creation going on.
1% here, 2% there, it adds up quick.
Norway has a state-owned bank, as does N. Dakota:
http://en.wikipedia.org/wiki/Bank_of_North_Dakota
established when ND was a helluva lot more "Progressive" (the O.G. Progressive party) that it is now.
Buying stuff on credit can make perfect sense -- e.g paying 5% interest on a car loan means you can settle for a somewhat cheaper car and get it years before you could save up the money for the more expensive car (total principle and interest being the same over the period in this case) but when credit is applied to housing what also happens is that we can bid up the cost of housing dramatically (same thing with education).
Cars are not in any supply/demand shortage, we've solved that manufacturing problem and production is only limited by demand take-up.
Housing, not so much! Given the lack of new supply in most areas, prices are solely at the bid, the point of pain of the buyer, which is essentially how much the bank is willing to lend (in normal markets, in even more constrained markets specuvestors can win with cash bids and find the financing later).
Education is the interesting thing. For K12 it's a glorified baby-sitting service but college can and should be reinvented (e.g. with an inverted classroom of online recorded lectures and quizzes and in-class 'homework'). Lots of rent-seeking going on in Big Education, too!
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I've seen a lot of folks here denounce the financial sector as parasitical, but as I played the scenario out in my head I began to think I might not fully understand why. I can see why if the income and wealth is poorly distributed (and the financial sector already had too much of our capital) that giving them more would cause even more of an imbalance and hurt consumption by the lion's share of the population. In that example, they are secondary to the pre-existing inequality though.
But in normal capitalism how does it hurt, if the system funds purchases, takes a cut for the investment, then spends the investment on anything? Is it that their share of the profits is just too large? Or is it always a negative?
Thanks