The missing link in the inequality debate is not financial stability, but financial domination of the broader economy, what has come to be called “financialization.” Financialization, as a new Demos report demonstrates, is not only measurable by risk and volatility or by the mere expanding volume of financial activities; rather, it should also be measured by how the non-financial economy—the economy of jobs and wages, production and enterprise growth—is increasingly distorted by institutionalized financial incentives and the pursuit of financial returns. Financialization is about the growing misalignment of managers and business models and strategies, at the expense of workers and their communities, broader social needs and goals, and even long-term investors. Any presidential candidate who is serious about reducing inequality and restoring opportunity in America should begin the debate here.
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