Financialization #1

A point I made in my review of Financialization (Mar 11) was as follows: "In the latest 40 years or so, transaction costs for trading stocks and other securities fell dramatically. That plus the number of individuals doing transactions rising due to 401(k) plans and IRAs has raised the volume of trading. The rise in the volume of trading has raised the number of people employed in the infrastructure for trading, which is part of the financial sector."

I'm reading another book -- Financialization and the US Economy by Orhangazi. Unlike Financialization, the author isn't so biased and presents some data. The average daily volume of shares traded on the New York Stock Exchange rose from about 19 million in 1975 to 1,602 million in 2005. That's about 84 times.

Financial sector employment as a percent of total employment rose from around 3% in the 1950's to more than 5% in the mid-1980's, but fell to about 4.7% by 2006. It was even lower around 2000-01 while the stock market dropped sharply and many brokers were laid off.