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Financialism

Some Wealth Is Real—Based on Actual Products and Services That Fill a Need—Then There Is Financialism

One of the things that really bothers me about this economy is that, increasingly, it is based not on satisfying real needs, but on playing games with finance. According to an essay by Ezra Wasserman Mitchell:

Financialism is a system in which the real economy plays a secondary role to the financial economy, in the process stripping future real economic profits for present consumption. While it bears similarities to the process often identified in the economic literature as “financialization,” it differs both in historical scope and in its suggestion that financialism differs fundamentally from capitalism.

Let me give you several examples:

  • Executives in such “gamed” industries as pharmaceuticals, insurance, or rental real estate get together and decide what level of profit they want for the coming year. In order to achieve their goals, they raise prices to achieve goals that are based on how much money they want—not how much money they can reasonably be expected to earn in the course of business.
  • Crypto-currencies like Bitcoin represent financial speculations divorced from providing products and services. It’s not so much the finger pointing at the moon so much as it is a finger pointing at a finger pointing at the moon.
  • Bank charges and airline nickel-and-dime fees can cause real economic pain that is far removed from the actual value of the services being accounted for.

This came home to me today when I discovered that the forms of insulin I must take for my Type 2 Diabetes have been removed from Anthem Blue Cross’s drug formulary. Outraged, I called Blue Cross and suggested they accompany their “drug not in formulary” notices with ads for cemetery plots and mortuaries. That didn’t go over well with them, but I was pissed. Evidently, if Anthem Blue Cross saw their projected profit as more important than they basic services they provided.

 

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