Dissonance between Manufacturing and Financial Sectors

We are well aware that dissonance between Korea’s manufacturing and financial sectors was one of the major causes of the 1997 financial crisis.

We have seen how some countries have gutted its manufacturing sector primarily for the benefit of the banks.

Regardless of types of capitalism, there are close ties between the state and the banking system.

In the case of Japan, the mismanagement of the banking sector, the stock market/real estate bubbles and bad fiscal policies have fuelled its grave debt despite its solid manufacturing sector.

The U.S. financial system is interwoven into its federal government. We have seen the rise and fall of the U.S. manufacturing base. In the case of U.S., finance had 41% of the S&P 500’s profits.

China’s banks are a system of political patronage. The state owns the means of production as well.

Keeping the productive capacity intact and a balance between manufacturing and financial sectors is the wealth of a nation.