Anorak | Oh yes, the financial sector can be too large

Oh yes, the financial sector can be too large

by | 23rd, July 2012

YES, yes, any number of mouthbreathing lefties insist that the UK is “too reliant” upon finance. That we’ve got to cut the banksters down to size. That we should concentrate more on the production of real things.

The sad thing is, given how rarely said mouthbreathers are actually right about anything, they do have a point. It is actually possible for the financial sector to grow too large. There’s a lot of very good (ie, not lefty) research showing this. Try here if you’re into the geeky side of economics.

There’s nothing very surprising about this either: there’s a diminishing marginal value to everything. An economy that was 100% finance would be hell: as would one that is 100% manufacturing. That first 1 or 2% of finance is worth much more than the last 1 or 2% of manufacturing and vice versa. And the first few percent of the economy used to grow food is pretty essential, more so than the last few percent of

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Posted: 23rd, July 2012 | In: Money Comments (2) | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink