One, a strong regulatory push towards financial product simplification and fee reduction.
Two, a move towards low-cost utility banking via “public options.” A recent example was the de facto nationalization of the mortgage market after the 2008 crash, which brought about the stabilization of the housing market and simplified, low-margin products. Another excellent idea is Elizabeth Warren’s push for a Postal Bank that would take advantage of the Post Office’s extensive branch network and implicit government guarantee to offer low-cost retail banking services.
Last, a large increase in public infrastructure investment. Not only is it desperately needed in a country whose physical plant has been left to rot for thirty years, but it would also largely cut FIRE out of the loop, at least at the Federal level.
Hurrah, we have solved the problem.
But it’s hard to be optimistic about any of this happening. The massive socioeconomic gap between regulators and the nominally regulated means that the former worry mostly about getting future gigs with the latter. Obama is no friend of public options of any kind, and has in fact announced plans to reprivatize the mortgage market at the earliest opportunity. Warren’s Postal Banking proposal has been received as little more than a Senatorial eccentricity. When it comes to infrastructure, the political choice appears to be between cutting and cutting more. Polls do tell us that all of these measures would be enormously popular, but that is an increasingly irrelevant detail when it comes to US policy.
I highly recommend reading the whole article. The rent economics was something new to me and it makes sense.
Anyone know of any counter points to this that I must read? LMK.