We’re at the end of the American Century and it has all been signaled by the rise in finance in the U.S., according to Larry Elliott of The Guardian.
Elliott cites Giovanni Arrigh and his book The Long Twentieth Century that points out the connection between the rise of the financial industry in a country, and the downfall of that state’s international dominance.
Elilott writes (emphasis and date added):
It was during this period [1873-1896], Arrighi argues, that commerce started to play second fiddle in Britain to finance, just as it had in Genoa and Holland when their phases of pre-eminence were drawing to a close. The financialisation of the American economy in turn can be traced back to the mid-1970s, so by this interpretation of history, the dotcom collapse of 2000-01 and the financial crisis of 2007-08 (with the military entanglements in Iraq and Afghanistan sandwiched in between) are part of a much longer term development. According to this thesis, the concentration of economic power on Wall Street, the stagnation of incomes for all but the rich, the structural trade deficit, the military overreach, the switch from being the world’s biggest creditor nation to its biggest debtor add up to a simple conclusion: we are in the twilight years of the long American century.
Not too far from the truth, we might guess. But the reality is finance professionals weren’t doing anything wrong, per say, during this time period. They were only moving into one of the few surviving industries in the American economy, which now makes up around 21% of the total.
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