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Thread: Financial service companies take 50% of U.S. business profits

  1. #1 Financial service companies take 50% of U.S. business profits 
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    Last edited by Stanley514; September 6th, 2017 at 08:30 PM.
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    It's probably related in some mysterious economists-only statistical-spreadsheet way to the increase in the proportion of national income going to profits and dividends rather than to wages and other earned income during the same period.


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    Quote Originally Posted by Stanley514 View Post
    As of 2004, the financial services industry represented 20% of the market capitalization of the S&P 500 in the United States. The U.S. finance industry comprised only 10% of total non-farm business profits in 1947, but it grew to 50% by 2010. Over the same period, finance industry income as a proportion of GDP rose from 2.5% to 7.5%, and the finance industry's proportion of all corporate income rose from 10% to 20%.
    Financial services - Wikipedia, the free encyclopedia

    What does it mean? How does it happen?
    Not all industries are as profitable as others. As for why profits grew, I guess it's because it's importance grew. More mortgages, bank accounts, borrowing, etc. 1947 simply was a different economy to 2004.
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    Shows the monetary system is decoupled from the real needs of humans, and that elimination of a lot of useless occupations in our current system by transitioning to a resource based economy would allow a reduction(distribution and automation) in the work load for useful goods and services.
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    Quote Originally Posted by icewendigo View Post
    Shows the monetary system is decoupled from the real needs of humans, and that elimination of a lot of useless occupations in our current system by transitioning to a resource based economy would allow a reduction(distribution and automation) in the work load for useful goods and services.
    Such as?
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    credit cards
    various funds--retirement, money market, etc

    These things didn't exist in 1947

    Also, the manufacturing sector has taken some rather big losses in the recent couple decades as asian competition has taken much more market share.
    So, by comparison, the finance sector didn't really have to grow all that much to have a greater proportion of non-farm business profits.
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    "such as?"
    Most of the jobs in the banking, financial, and IRS/tax return services, cashiers, and other jobs that are inherently and directly related to a monetary system, for starters.

    Jobs that are kept because conflicts of interest blocks the elimination of the jobs or or of the activity that generates profits, or conflicts of interests push for waste to avoid the reduction in profits that certain types of efficiency would result in reducing. There would be less need for marketing and advertising, there would be virtually no advertising pollution, on tv, billboards, just significantly reducing spam on the net would be worth it (gawd).

    For example: Some have literally opposed electric cars with minimal need for maintenance, because;
    what about the jobs of the drivers that drive in a gas guzzling truck the gas to the gas station,
    what about the gas station employee? what about the jobs of the people that manufacture the oil filters?
    what about the mechanics that repair a bonanza of friction moving parts in an internal combustion engine and do the frequent maintenance and oil changes? There would be less jobs in the oil industry, and less need for jobs in the military to control the countries that have the profitable black gold...

    People that have jobs that could be replaced understandable lobby against the technology that would cause them to loose their jobs to prevent their obsolescence, there are cities where subways are automated and where you get tickets from a machine, the ticket machine and the jobs that make it would be useless in a RBE, but the point is that other cities have drivers that drive a subway like there use to be people driving an elevator, and these drivers do/would lobby against getting automated subways.

    there would be a significant reduction in literal prostitution since the need for money is an important component of that profession

    and thats just the tip of the iceberg
    Last edited by icewendigo; May 6th, 2014 at 11:34 AM.
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    Quote Originally Posted by icewendigo View Post
    "such as?"
    Most of the jobs in the banking, financial, and IRS/tax return services, cashiers, and other jobs that are inherently and directly related to a monetary system, for starters.
    Why do you see this as a problem? Most of the progress of the modern world, including the huge decreases in violence, lower child mortality, lowering rates of population growth, greater life expectancy were only made possible because of access to money and people's ability to invest in their futures and their kids and community's future. Access to money is a human need--one of the more important ones.

    The rest of your post came off more like an incomprehensible rant.
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    No, progress is made possible by access to production made by humans and machines using technical means and scientific methods.

    If you are on a deserted island, access to money is irrelevant, if its barren and you have $ bills you are screwed, you need food and shelter and other needs met when you basics are covered, if there is no resources, no machines and no humans, all the money is worthless. You need to access to production, not money. The fact that our CURRENT system is money based is not a reason for money to be a real objective need, it is circular reasoning to attribute a need for money, the same way fossilized dino turds are not essential for our well being, life or even quality of life, but would be required in a Fossilized Dino Turd system.

    "incomprehensible rant"

    Ok I can attempt to find an alternate explanation that might be more comprehensible to you. Ill give it a shot.

    There is little incentive to make one's business/job/profit-center obsolete, in our monetary system which creates conflicts of interest because most people are dependant on other people's dependence.

    In a moneyless society, Subway drivers would not oppose automated subway but many would work/help/advocate in making this a reality.
    Taxi Drivers are lobbying against car sharing initiatives, because it reduces their jobs, they are in a conflict of interest with respect to alternative modes of transportation and from a certain perspective are in a conflict of interest with respect to the very service they provide. In a resource based economy, taxi drivers would welcome/help in alternate transport options and automated driving technology that would make their jobs obsolete (reducing, or making them a hobby, like fishing used to be a life and death necessity, now it is a hobby for those that like it).

    I dont mind if people do not comprehend, I thought it was utopian pie in the sky myself initially, it took me months and years to understand what I understand now (but fail to communicate).
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    Quote Originally Posted by icewendigo View Post
    Shows the monetary system is decoupled from the real needs of humans, and that elimination of a lot of useless occupations in our current system by transitioning to a resource based economy would allow a reduction(distribution and automation) in the work load for useful goods and services.
    Useful? It's up for the indiviudal to determine "useful", not New Agers...
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    Quote Originally Posted by icewendigo View Post
    No, progress is made possible by access to production made by humans and machines using technical means and scientific methods.
    Nearly all the progress is only because of financing. The ability to pool resources, diversify risk during the 19th century led to the incredible wealth and huge improvements to the quality of life we've seen. A trend that continues even today in the developing world as they transition from simple economies where financial backing in difficult to obtain into one's where they can be invested in based on a market of risk. The Ripple Effect - Women Powering Work Through Microfinance And Entrepreneurship - Forbes

    If you are on a deserted island, access to money is irrelevant,
    Completely irrelevant scenario.


    Ok I can attempt to find an alternate explanation that might be more comprehensible to you. Ill give it a shot.

    There is little incentive to make one's business/job/profit-center obsolete, in our monetary system which creates conflicts of interest because most people are dependant on other people's dependence.

    In a moneyless society, Subway drivers would not oppose automated subway but many would work/help/advocate in making this a reality.
    Taxi Drivers are lobbying against car sharing initiatives, because it reduces their jobs, they are in a conflict of interest with respect to alternative modes of transportation and from a certain perspective are in a conflict of interest with respect to the very service they provide. In a resource based economy, taxi drivers would welcome/help in alternate transport options and automated driving technology that would make their jobs obsolete (reducing, or making them a hobby, like fishing used to be a life and death necessity, now it is a hobby for those that like it).
    Well thanks for trying. I think I realized that utopia ideas that didn't acknowledge human behavior were doomed to failure during my teenage years. The reality of your scenario is that those taxi drivers would be even more incentivised to destroy their competition because their driving is all they'd have to offer in the world instead of having the ability to get financing to get into another business, or educate themselves, or incorporate with other's resources, or diversify their risk by financing with many others into more than just taxi driving. It likely turns out like it has in history, a cesspool of low achievement and poor use of resources, or violence against competing interest or back on your island simply killing the dude with the biggest pile of coconuts because you want them (moneyless societies are remarkably brutal).
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    Quote Originally Posted by icewendigo View Post
    Shows the monetary system is decoupled from the real needs of humans, and that elimination of a lot of useless occupations in our current system by transitioning to a resource based economy would allow a reduction(distribution and automation) in the work load for useful goods and services.
    I don't exactly get what a "resource based economy" is. Do you have a simple toy model of such an economy?
    As is often the case with technical subjects we are presented with an unfortunate choice: an explanation that is accurate but incomprehensible, or comprehensible but wrong.
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    Quote Originally Posted by icewendigo View Post
    ... technology that would make their jobs obsolete (reducing, or making them a hobby, like fishing used to be a life and death necessity, now it is a hobby for those that like it).

    I dont mind if people do not comprehend, I thought it was utopian pie in the sky myself initially, it took me months and years to understand what I understand now (but fail to communicate).
    Errr, whut?
    Fishing is currently a huge industry that is both highly mechanized and highly capitalized even as fish stocks are being rapidly depleted. Sure people are allowed to hobby fish, but only for species of lower commercial value at times when they can do little economic damage to the real fishery.
    What made fishing into a sport was the devastating effectiveness of the highly capitalized fisheries, not the inefficiencies and waste that are always seen with large scale operations.
    You see the same thing with agribusiness and gardening.
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  15. #14  
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    "Errr, whut?
    Fishing is currently a huge industry that is both highly mechanized and highly capitalized even as fish stocks are being rapidly depleted. Sure people are allowed to hobby fish, but only for species of lower commercial value at times when they can do little economic damage to the real fishery.
    What made fishing into a sport was the devastating effectiveness of the highly capitalized fisheries, not the inefficiencies and waste that are always seen with large scale operations.
    You see the same thing with agribusiness and gardening."
    I think you have focused on the finger pointing at the moon and not the moon itself, what you say is true, but you have missed the point.
    If a caveman that fishes on his own for survival and his own food, walks in our world, in a city, most of the people he will encounter will not be professional fishermen that fish for their own needs or others, most of the people he would encounter would either not fish or hunt at all, and most of those that would, would do so as a leisure or hobby when they feel like it for the purpose of "having fun" as opposed to the caveman's perspective purpose where the purpose is "to survive".
    The point is that if automation makes human labour not necessary, it can still be performed not as a necessity but as a hobby. I know there are horse related "professionals", but from one perspective, the horse which was a necessity/useful transport has been replaced by mechanized transportation, you fly between NY and LA on a jet, not likely to ride a horse for that trip, but you can still ride around in a horse because you like it.

    I don't exactly get what a "resource based economy" is.
    RiverRat, the best thing you can do is watch videos about it. If you do watch videos up to a point, then we can discuss aspects of RBE. There is no prototype that I know of, it has yet to be designed (like pre-Wright Brothers flight, most people say human flight is impossible/utopian and those that recognize the value of the concept dont have a working prototype to point to yet).

    By the way, you can watch Zeitgeit Movement or The Venus Project videos, but its important to make the difference between these messengers/container and with their own version of what a RBE could be (which I dont necessarily agree with) and the general concept/message/content/idea of a RBE itself (which I do agree with).
    Last edited by icewendigo; May 7th, 2014 at 09:27 AM.
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    Some "financial service" jobs are useful, and others are totally counterproductive but exist because "the other guy has them".

    Example: Health Insurance actuaries. The reason one company has to have them is because their competitors have them. The insurance game these days is about targeting specific segments of the population and giving them tightly tailored rates. Everything focuses in on the young person with no health problems. The old and sick get covered by medicare or not at all.

    Now fairness isn't really the issue. It can be argued either way. The company I was with had previously just used a zip code system, and left age out of the calculation. Old people could get on their plans, and the younger people's contributions covered the old people. Like I said - it might have been less "fair" before, depending how you look at it.

    But what the old system clearly had going for it is it was CHEAPER. Using a simple rating system, they could hire fewer actuaries. Does the overall cost of healthcare go down if you snipe young and healthy clients? No. It goes down for those clients, but overall it doesn't. The cost just shifts from one place to another. Medicare picks it up.

    Does the cost go down if you hire fewer actuaries? Yes. Their salaries are a portion of the cost of healthcare. Hiring a big actuary staff is a lot of extra effort to achieve the same result.
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    For example: Some have literally opposed electric cars with minimal need for maintenance, because;
    Who exactly opposes and how?
    what about the jobs of the drivers that drive in a gas guzzling truck the gas to the gas station,
    what about the gas station employee? what about the jobs of the people that manufacture the oil filters?
    what about the mechanics that repair a bonanza of friction moving parts in an internal combustion engine and do the frequent maintenance and oil changes? There would be less jobs in the oil industry, and less need for jobs in the military to control the countries that have the profitable black gold...
    According to modern science rechargeable batteries cannot even closely approach energy density of gasoline. Also you have to take speed of charging in account. Electric cars are high-voltage cars and therefore are far from easy to maintain. To repair high voltage staff you need to have special license and equipment. Oil is used as a resource for chemical production not only as fuel.
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