> I think this illustrates another pernicious effect of excessive inequality: where does it lure talent? The best and brightest, lured from speculation to ads to blockchain to AI to...
Basically the finance industry is pivoting away from actually investing in real businesses to more and more elaborate paper pushing schemes (that make them money, but actually weaken the economy):
> Unlike Dawes’s Fidelity Fiduciary Bank, a modern investment bank mostly earns its money in a way that not even the bravest lyricist would set to music: providing advisory services, executing complex financial engineering schemes, trading stocks and bonds, managing other people’s money, issuing credit cards and so on. Assets get bought and sold, divided and packaged, and the bank collects fees at each step.
> David Solomon, the chief executive of Goldman Sachs, could not sing to young Michael about the many productive uses to which he might put the tuppence because Goldman Sachs rarely invests in anything at all. Fostering economic progress appears to be beside the point.
> Less than 10 percent of Goldman’s work in 2024, measured by revenue, was helping businesses raise capital. Loans of Goldman’s own funds to operating businesses accounted for less than 2 percent of its assets. At JPMorgan Chase the figures were 4 and 5 percent; at Morgan Stanley, 7 and 2 percent. Even the efforts at helping to raise capital are misleading, because less than a tenth of it goes toward building anything new. The rest funds debt refinancing, balance sheet restructuring and mergers and acquisitions.
> These are symptoms of financialization. That’s the term for making financial markets and transactions ends unto themselves, disconnected from — and often at the expense of — the societal benefits that support human flourishing and are capitalism’s proper purpose. Chief among those benefits are good jobs that support families, and products and services that improve people’s lives.
Why do you think large companies refinance debt? So they can invest in productive areas of the business.
If debt refinancing became illegal or widely impractical due to an interest rate spike, you’d quickly see how much of the productive economy it’s fueling!
> If debt refinancing became illegal or widely impractical due to an interest rate spike, you’d quickly see how much of the productive economy it’s fueling!
You're missing the point. Read the article.
And no one is saying "don't refinance debt." The passage you're reacting to was making the point "less than a tenth of [the capital banks raise] goes toward building anything new."
> Why do you think large companies refinance debt? So they can invest in productive areas of the business.
The article is talking about banks and the finance industry, not non-financial companies.
Also, if you think they were restructuring debt to invest in productive areas of their businesses, don't you think more than 10% of the capital banks raise would be going to building something new? If you read the article, it spends a lot of time talking about how much money goes into "mergers and acquisitions" and how it's a waste.
Sorry, what is the argument that when a company refinances debt—replacing current cash obligations with larger future cash obligations—they’re not going to use that current cash flow to build something new, or at least hire more people than they would have otherwise?
AFAIK, manufacturers refinance debt to build more/better factories all the time, for example.
Or finance. There was a pretty brutal takedown published recently: The Finance Industry Is a Grift. Let’s Start Treating It That Way. (https://www.nytimes.com/2026/02/06/opinion/capitalism-indust...).
Basically the finance industry is pivoting away from actually investing in real businesses to more and more elaborate paper pushing schemes (that make them money, but actually weaken the economy):
> Unlike Dawes’s Fidelity Fiduciary Bank, a modern investment bank mostly earns its money in a way that not even the bravest lyricist would set to music: providing advisory services, executing complex financial engineering schemes, trading stocks and bonds, managing other people’s money, issuing credit cards and so on. Assets get bought and sold, divided and packaged, and the bank collects fees at each step.
> David Solomon, the chief executive of Goldman Sachs, could not sing to young Michael about the many productive uses to which he might put the tuppence because Goldman Sachs rarely invests in anything at all. Fostering economic progress appears to be beside the point.
> Less than 10 percent of Goldman’s work in 2024, measured by revenue, was helping businesses raise capital. Loans of Goldman’s own funds to operating businesses accounted for less than 2 percent of its assets. At JPMorgan Chase the figures were 4 and 5 percent; at Morgan Stanley, 7 and 2 percent. Even the efforts at helping to raise capital are misleading, because less than a tenth of it goes toward building anything new. The rest funds debt refinancing, balance sheet restructuring and mergers and acquisitions.
> These are symptoms of financialization. That’s the term for making financial markets and transactions ends unto themselves, disconnected from — and often at the expense of — the societal benefits that support human flourishing and are capitalism’s proper purpose. Chief among those benefits are good jobs that support families, and products and services that improve people’s lives.