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Blue Skies, Pipe Dreams, and the Lure <strong>of</strong> Easy Money 29<br />
In its place has arisen an industry that creates little <strong>of</strong> real value<br />
and contributes only to the prosperity <strong>of</strong> a few. Manufacturing<br />
accounted for just about 30 percent <strong>of</strong> GDP in 1950. By 2003, it had<br />
shrunk to less than 13 percent, and by 2009, 11 percent. Over the<br />
same time frame, the fi nancial services sector has doubled, from<br />
10 percent <strong>of</strong> GDP in 1950 to around 20 percent today. Its pr<strong>of</strong>i ts<br />
have grown even faster; fi nancial services generated a whopping 40plus<br />
percent <strong>of</strong> U.S. corporate pr<strong>of</strong>i ts in recent years. 19 As Arianna<br />
Huffi ngton writes in Third World America, the fi nancial sector is<br />
“supposed to serve our economy, not become it.” 20 At the same time,<br />
power in the fi nancial sector has concentrated to a degree not seen<br />
since the days <strong>of</strong> the robber barons—a fact the fi nancial reform bill<br />
has done nothing to address. Bank <strong>of</strong> America’s assets are equal to<br />
16 percent <strong>of</strong> GDP, and JPMorgan Chase’s, 14 percent. 21<br />
Economists have a term for this: fi nancialization. The word<br />
refers to the reduction <strong>of</strong> nearly anything <strong>of</strong> value—from home<br />
mortgages to life insurance—to a tradable commodity. But it also<br />
describes the dangerous degree to which the fi nancial sector has<br />
come to dominate our economy. The broader economy is now<br />
subservient to fi nance. Public companies march to the tune <strong>of</strong><br />
maximizing shareholder pr<strong>of</strong>i ts and short- term results, prompting<br />
them to seek the lowest cost labor, even if it means slashing benefi<br />
ts and shipping American jobs and expertise overseas. Over the<br />
past decade, we have imported $4.3 trillion more manufactured<br />
goods than we have exported, and 5.6 million manufacturing<br />
jobs have vanished. 22 The ballooning trade defi cit (excluding oil<br />
imports) has caused the displacement <strong>of</strong> 5.6 million jobs in 2007<br />
alone, according to one study. 23 Meanwhile, American wages have<br />
actually declined even as productivity has soared—defying a historic<br />
relationship under which the two measures have moved in<br />
more or less lockstep. Real average hourly earnings (not including<br />
benefi ts) are at roughly 1974 levels. 24<br />
This is not a path to prosperity. We are destroying the middle<br />
class and outsourcing our future. The credit has stopped<br />
and there is no economic engine to pull us out <strong>of</strong> our malaise.<br />
Without a more diversifi ed, productive economy, we will not be<br />
able to grow ourselves out <strong>of</strong> our economic rut.