The relationship between the financial economy and the real economy needs serious attention.

Not only has capital been sucked out of the real economy by the increasing craziness in the financial economy over 3 decades or so, but talent has also been diverted away from the real economy, as Matt Yglesias points out here. Well over 80% of Americans owe their livings to the real economy, and this diversion of important resources into the financial economy surely has contributed to the middle class income crisis. I don't have any answers, but we need to think about this.

Comments

[Christine]

If the US doesn't produce real products anymore, how can it invest money in the real economy? We would have to invest abroad. We are desperate for investment in our own infrastructure, which by all accounts is in a serious state of deterioration. If we were using products that we produced...iron, cement, etc, we could invest our own capital in our own economy. This summer any number of US projects were put on hold due to lack of materials that weren't available from overseas...airport runway repair in Durango, Colorado, road repair. This is insane and very dangerous.