Members of Occupy Wall Street may welcome the conclusions of a study published last year titled “Has the U.S. Finance Industry Really Become Less Efficient?” by NYU Stern professor Thomas Philippon. [h/t The Huffington Post]
Philippon’s study analyses the payments and money that goes into the financial sector against what assets and liquidity services—things that actually benefit society—are produced as a result, and concludes that the financial industry is becoming less efficient, thus more wasteful. The study was published in November last year, but is the talk of blogs again this week.
That report would definitely be liked by Occupy Wall Street, whose members often like to cite the fact that bankers are useless and produce nothing for society at large—Philippon’s study essentially concludes that the industry should be much smaller considering their output. In addition, the industry wastes about $280 billion per year.
Philippon points out that it is puzzling the financial sector should become more inefficient over time because the advent of advanced technology should have significantly lowered the cost of certain services. It appears that the advent of high frequency and high volume trading, he concludes: “improvements in information technology seem to have been cancelled out by increases in trading activities whose social value is diﬃcult to asses.”
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