John Pierpont Morgan

Wall Street’s Inefficiency
April 13, 2012

Thomas Philippon, a New York University economist, has reached the remarkable conclusion that despite having gobbled up the American economy—total compensation in the financial sector (profits, wages, and bonuses) now represents an unprecedented 9 percent of GDP—Wall Street is no more efficient at “transferring funds from savings to borrowers” than it was in 1910, when finance’s share of the GDP was about half what it is today.