Before the 1970s, the financial sector produced less than 20 percent of American corporate profits; by the turn of the century, the number had risen to 40 percent. Much the same is true in Europe. Between 2005 and 2014, Sweden’s financial corporations reported more profits than all Swedish non-financial corporations put together; in Germany and Britain, they took nearly half of the total profits.
Investment, too, has flowed toward finance rather than industry. From 1979 to 1989, investment in British financial services grew by 320 percent while investment in manufacturing rose by less than 13 percent. Before the 1970s, British banks held assets equal to roughly half the national GDP; by the time of the 2008 financial crisis, they held more than five times the GDP.
How’d this happen?
