Hear: The Pros And Cons Of Financial Innovation

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It's not working. User47/Planet Money Flickr pool hide caption

itoggle caption User47/Planet Money Flickr pool
Iraq market

It's not working.

User47/Planet Money Flickr pool



On today's Planet Money:

Congress has been arguing for months now about the best ways to overhaul the American system of financial regulation. It's a tough conversation, because regulation can be bad in a couple of ways.

First, regulation can be ineffective, in which case it fails to prevent the outcomes it was designed to block or causes more problems than it solves. Second, regulation can overreach, in which case it stifles financial innovation.

After newfangled financial products nearly brought down the global economy last fall, you might think it's not so bad to stifle financial innovation. But financial innovation has also led to prosperity. Atlantic writer Mike Konczal and Columbia Business School economist Charles Calomiris argue the case for (and against) Wall Street creativity.

Bonus: Blog comment of the week.

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Reacting news that wages have gone almost stagnant, S W Moof writes:

Nearly flat?

Funny, since I don't know a single person who has actually seen a raise in the last 12 months, or even seen their benefits stay flat. My company is even docking us $100 a month if our spouse's work to help cover the added cost of their healthcare (this is new as of this fall). Best I can tell as a salaried schmuck I am down about 18% this year due to a 10% paycut, cancelled bonus program, and furloughs. If you toss in the forced vacations that have ruined this year's AND next year's plans it's up past a 20% cut in pay and benefits this year. Threats of cut programs and further layoffs are being used frequently to get folks to work more hours as well.

My guess is that those Goldman-Sachs bonuses are skewing the curve and hiding the story of what the bottom 90% are really feeling.

We're thinking it's tongue-in-cheek on the Goldman part, but clearly people are feeling their paychecks are at risk of shrinking.



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