- Apollo program: 4%
- Railroads: 6% (mentioned by the author)
- Covid stimulus: 27%
- WW2 defense: 40%
Slightly off-topic, but ~9% of GDP is generated by "financial services" in the US. Personally I think it's a more alarming data point.
And the industry itself greases the wheels of other industries. In other words without financial services like lending and payment processing there would be less spending and investment overall, so other industries would shrink along with it.
Banking used to really suck. Walk into an old bank building and it looks empty with spaces for a dozen tellers never actually used, this is a good thing as nobody actually wants to stand in line at a bank. People have largely stopped using cash because swiping a card is just more pleasant.
Meanwhile payment networks (Visa, Mastercard) have over a 50% profit margin, that’s a huge loss for the US economy. Financial services dropping to 1% of the overall economy would represent a vast improvement over the current system.
If it were, why do we have more than one company?
> I take your point that companies themselves are usually centrally planned internally
Well, sort of. It is true that companies exist solely for the reason of exploiting efficiencies in central planning. If central planning was always inefficient, companies wouldn't exist! But, as I alluded to earlier, no company has found central planning to be efficient in all cases. Not even the largest company in the world centrally plans everything. Not even close.
As with most things in life, a bit of balance will serve you well.
The Retail Bank's main function isn't providing cash either, it's keeping deposits which they loan out for profits. Whether you use cards or cash won't affect those margins.
Typically, central planning does not imply micromanagement. The "broad direction" you speak of is the central planning.
> Companies are reorganizing for efficiency all the time.
But, of course, companies wouldn't exist if markets were perfectly efficient. The sole reason for companies is to exploit the efficiencies of central planning. But, of course, just as if markets were perfectly efficient there would be no companies, if central planning was perfectly efficient there would only be one company, so... Like always, there are tradeoffs that we have to find balance in.
While LLM’s are nowhere near this capacity today, it’s likely future AI systems will be able to handle such complexities just fine. Competition + automation means the financial sector really is on a long term decline. Some things aren’t automated due to customer preference, but preferences change over time.
> The Retail Bank's main function isn't providing cash either, it's keeping deposits which they loan out for profits. Whether you use cards or cash won't affect those margins.
The margins on loans have decreased significantly as shown by much lower effective interest rates relative to inflation.
The effort associated with loans have been reduced significantly as credit checks, automated repayment, etc have reduced the risks and overhead. Competition between banks means their profits are a function of costs, thus driving down costs has reduced in the overhead on loans.