The only problem I see with this is that private equity is just one method employed by the financial sector to generate high returns in a low-interest environment. The larger problem is that rent-seeking activities are allowed in GDP and/or that we view the very flawed inputs of GDP to be an accurate representation of our economy. Finance thrives because it’s engineered a skewed perspective of its contributions to the economy. “Growth” has become synonymous with the short-term status of the market, to the detriment of real production and the real, long-term fundamentals of research and development.
Without GDP reform, finance will move onto something else. Forget loopholes; they’ve rigged the statistics describing the whole show. We need statistics that reflect the actual contributions of the public sector, which drives the unchecked private sector and gets back pennies on the dollar in taxes. We need to take into account the status of our natural resources and our efforts to curtail the damage we’ve been doing.
For more reading:
- Mariana Mazzucato, The Value of Everything
- Joseph Stiglitz, People, Power and Profits
