Simon Youel

I agree with much of what Oren Cass says here. A growing and increasingly sophisticated financial sector can benefit the economy by reducing frictional costs associated with the flow of capital, and so improving the efficient allocation of capital. But only up the a point. Beyond that point, increasing the sophistication of the financial markets and lowering frictional cost further has small and diminishing returns for investors in the real economy. It however hugely benefits speculative capital flows, which increasingly drive the overall direction of finance. As that happens, capital flows in the real economy are likely to be more and distorted by rising volumes of speculative flows, the result of which may be that finance becomes increasingly harmful for the real economy even as it becomes increasingly profitable for bankers. I say this with some reluctance. I spent much of my career running bond trading and capital markets desks for major Wall Street banks, but while my friends and I were very profitable and extremely well paid, I’d have real trouble today arguing that our contributions to global growth exceeded our cost to the economy. nytimes.com/2026/02/06/opini…