This is what Kevin Drum logically asks. I’m running off to a meeting, so my answer will be telegraphed:
1. Rent extraction from profit-making firms. The wage share has fallen, but the profit share hasn’t risen correspondingly. The reason is that finance has found ways to extract the difference. Exactly how is a longer story, but it’s at the core of what “financialization” means in practice.
2. Externalities. In a lot of trading activity there are external costs that are not accounted for, especially the cost of public backstopping in the event of insolvency. Finance has gotten better at playing the risk/reward game by externalizing the risks.
Have to go.