Do we really need Wall Street?

"Since the promulgation of Hammurabi's Code, in ancient Babylon, no advanced society has survived without banks and bankers," says John Cassidy in The New Yorker. But even post-bailout, Wall Street no longer seems to play much of the banks' traditional role in creating value. Worse still, its sky-high — probably too-high — salaries attract the "bright young people who used to want to start up their own companies," or create the next "iPhones, Home Depot, and Lipitor." So how can Wall Street justify its existence? Here's an excerpt:

Lord Adair Turner, the chairman of Britain's top financial watchdog, the Financial Services Authority, has described much of what happens on Wall Street and in other financial centers as "socially useless activity" — a comment that suggests it could be eliminated without doing any damage to the economy. In a recent article titled "What Do Banks Do?," which appeared in a collection of essays devoted to the future of finance, Turner pointed out that although certain financial activities were genuinely valuable, others generated revenues and profits without delivering anything of real worth — payments that economists refer to as rents....

Turner's viewpoint caused consternation in the City of London, the world's largest financial market. A clear implication of his argument is that many people in the City and on Wall Street are the financial equivalent of slumlords or toll collectors in pin-striped suits. If they retired to their beach houses en masse, the rest of the economy would be fine, or perhaps even healthier.

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Read the entire article in The New Yorker.