The growth of Wall Street is detrimental to the health of America. Let's review.
The "finance sector" of our economy is like a utility, for money: just like the power companies direct power to where it needs to go at any given time, the financial companies direct money from those who have it to those who want to use it. That's really it. Most of the more arcane and impenetrable corners of finance that pose as "too complex" for the layman to understand are, at their core, legal scams, ripoffs, and skims, the benefits of which accrue to a relatively tiny group of talented hustlers.
It is an accepted fact that Wall Street's pay has become disconnected from whatever benefits Wall Street offers to our society as a whole. Wall Street's primary talent, in other words, lies not in directing money to its most efficient use, but in directing money into the pockets of Wall Street employees.
Today, as part of the Washington Post's ongoing series about the death of the middle class, another reminder: the financial sector is twice as big as it was 50 years ago—and average Wall Street pay has increased by 700% since the early 1980s, which is coincidentally the same time frame during which wealth inequality soared in America—and yet its growth has not benefited the overall economy, because, unlike many other industries, efficiency gains in finance do not benefit the consumer, they just mean more money for finance people. For example:
In perhaps the starkest illustration, economists from Harvard University and the University of Chicago wrote in a recent paper that every dollar a worker earns in a research field spills over to make the economy $5 better off. Every dollar a similar worker earns in finance comes with a drain, making the economy 60 cents worse off.
The Post notes that Financial firms pocket about 2 percent of the money that passes through their hands," a rate that is higher than it was 50 years ago, despite enormous efficiency gains. They cite research showing that the growth of the financial sector has sucked a great deal of talent away from other professions in which the people would have contributed much more to overall economic growth.
Wall Street is the leech. We are the host. It will keep on sucking until we burn it off.