Antonio Allen
BA-316-BL
3/30/2015
Financial Issue Paper

Could our economy possibly be suffering because the industry is not looking at the bigger picture and instead looks at short term goals? That is the belief of some as Rana Foroohar states in her article for Time, “…because finance looks for quick growth rather than long-term rewards” (Foroohar). Her response is to that of a paper written by Stephen G. Cecchetti, a professor at Brandeis International Business School and a senior economist from BIS, Enisse Kharroubi asking why the financial sector growth out crowds the real economic growth. From another perspective comes the view that financialization has brought a systematic transformation to the capitalist economy. A four part interview printed on Truthout with Costas Lapavitas takes a look on the brighter side of how the industry has been doing great things for the economy over the past few decades. Foroohar says that because the industry invests in industries such as real estate and construction instead of in industries with more life behind them like technology or pharmaceuticals that is another reason for economic growth to be put on the back burner. Finance tends to rise from “…lower capital investment in the real economy, greater inequality, and the demise of more productive industries.” (Foroohar). This puts into perspective just why the economic growth seems to be non-existent while financial firms continues to rise. There is also the interesting point shown in the paper written by Cecchetti and Kharroubi, “…that when skilled workers work in one sector it generates a negative externality on the other sector.” (Kharroubi). This is interesting because it looks at how we are swaying the sectors back and forth when choosing to join the finance world or into more productive industries. This is bad news for the economic growth because it seems as