4 ms·

It's a shorthand way of saying 'industry X has become completely financialiized' ie it makes more money from financial shenanigans than providing the product or

It's a shorthand way of saying 'industry X has become completely financialiized' ie it makes more money from financial shenanigans than providing the product or service recorded on it's business registration.

derbOac 3y ago
> it makes more money from financial shenanigans than providing the product or service recorded on it's business registration This seems to describe a lot of sectors of the economy, unfortunately
- A_D_E_P_T 3y ago
  FIRE is the largest slice of GDP (~20%), followed by services and government: https://www.statista.com/statistics/248004/percentage-added-to-the-us-gdp-by-industry/ https://www.statista.com/statistics/248004/percentage-added-... Legal services alone are about 3% of GDP. This understates things, perhaps, as it's unclear whether it captures the financialization of non-finance sectors. (e.g. auto leasing, and what the article in the OP describes.) Needless to say, this is historically unusual. And you don't need to go very far back in time to find a period where manufacturing was 25% of GDP and FIRE just 10%.
  - oblio 3y ago
    Real estate has ballooned everywhere and I wonder what the real GDP growth is without it, since it should be a basic service everyone gets and the real value offered in many cases doesn't contribute anything to actual progress.
AnimalMuppet 3y ago
It's a clickbait way of saying it. "Just a bank" doesn't fly airplanes. It may own them, but it doesn't fly them. "Just a bank" doesn't sell tickets. Doesn't have a department that finds lost luggage. Etc. But "airlines are financialized now" doesn't capture eyeballs in the same way.
- TeMPOraL 3y ago
  > "Just a bank" doesn't fly airplanes. It may own them, but it doesn't fly them. I don't know. Big companies sometimes do silly stuff - even if this day it's mostly outsourced to marketing agencies. It wouldn't surprise me to learn that some bank somewhere is operating a de-facto airline for some reason that somehow makes them money...
  - AnimalMuppet 3y ago
    Was, not is. And "banks", not "bank". The banks either did this themselves or had a company that did it for them. They physically flew checks to the city of the bank they were written on, because flying the plane was cheaper than one day's interest on a billion dollars worth of checks. This stopped, IIRC, back in the 1990s, once electronic settlement got fast enough.
seanhunter 3y ago
It may be used as a shorthand for saying that, but it is completely wrong and lazy. Yes these companies are doing some advanced funding and rewards stuff. No that doesn't make you a bank. "What is a bank? A bank is a financial institution that is licensed to accept checking and savings deposits and make loans. Banks also provide related services such as individual retirement accounts (IRAs), certificates of deposit (CDs), currency exchange, and safe deposit boxes. There are several types of banks including retail banks, commercial or corporate banks, and investment banks." - https://www.investopedia.com/terms/b/bank.asp https://www.investopedia.com/terms/b/bank.asp Notice how none of that is to do with how much money is made from financial shenanigans vs products and also there is no mention of running loyalty programs etc. Every time there is one of these articles ("Starbucks is just a bank" was another recent offender) it's worth actually referring to the definition of a bank and reminding yourself that unless the article is in The Economist, the FT or the WSJ, the journalist themselves probably has absolutely no idea what a bank is, or does.
- pseingatl 3y ago
  Forget the term "bank." If you use the term "financial institution" instead, you'd be surprised how encompassing it is.
  - seanhunter 3y ago
    What about the term “airline”? You’d be surprised how well it describes what an airline does. Yes big companies have big financial and treasury functions. Maybe that’s surprising to some folks, but not to anyone who’s actually worked in any kind of industry. Trying to fund your activities is one of the most important parts of any business and companies who get really good at that even sometimes find ingenious ways to make it generative of PNL in and of inself. That doesn’t make them banks or financial institutions. My favourite example was one a friend told me that he had learned at business school doing an MBA. They did a study on Bailey’s Irish Cream (the liqueur). It came about apparently because there were big government subsidies to support dairy farmers and support Irish whiskey producers. So the farmers and distilleries where producing far more than they could sell in order to collect the subsidies. The genius inventor of Bailey’s came up with the business idea of getting the producers of cream and whiskey to pay him to take their excess inventory which he then turned into the liqueur which he sold for a profit. So he had a manufacturing business where he was getting paid by every part of his own supply chain.
konschubert 3y ago
If they stopped flying planes, would they stay in business? If the answer is no, then they are not a bank. A bank doesn't need to fly planes to be in business

derbOac 3y ago

> it makes more money from financial shenanigans than providing the product or service recorded on it's business registration This seems to describe a lot of sectors of the economy, unfortunately

A_D_E_P_T 3y ago
FIRE is the largest slice of GDP (~20%), followed by services and government: https://www.statista.com/statistics/248004/percentage-added-to-the-us-gdp-by-industry/ https://www.statista.com/statistics/248004/percentage-added-... Legal services alone are about 3% of GDP. This understates things, perhaps, as it's unclear whether it captures the financialization of non-finance sectors. (e.g. auto leasing, and what the article in the OP describes.) Needless to say, this is historically unusual. And you don't need to go very far back in time to find a period where manufacturing was 25% of GDP and FIRE just 10%.
- oblio 3y ago
  Real estate has ballooned everywhere and I wonder what the real GDP growth is without it, since it should be a basic service everyone gets and the real value offered in many cases doesn't contribute anything to actual progress.

AnimalMuppet 3y ago

It's a clickbait way of saying it. "Just a bank" doesn't fly airplanes. It may own them, but it doesn't fly them. "Just a bank" doesn't sell tickets. Doesn't have a department that finds lost luggage. Etc. But "airlines are financialized now" doesn't capture eyeballs in the same way.

TeMPOraL 3y ago
> "Just a bank" doesn't fly airplanes. It may own them, but it doesn't fly them. I don't know. Big companies sometimes do silly stuff - even if this day it's mostly outsourced to marketing agencies. It wouldn't surprise me to learn that some bank somewhere is operating a de-facto airline for some reason that somehow makes them money...
- AnimalMuppet 3y ago
  Was, not is. And "banks", not "bank". The banks either did this themselves or had a company that did it for them. They physically flew checks to the city of the bank they were written on, because flying the plane was cheaper than one day's interest on a billion dollars worth of checks. This stopped, IIRC, back in the 1990s, once electronic settlement got fast enough.

seanhunter 3y ago

It may be used as a shorthand for saying that, but it is completely wrong and lazy. Yes these companies are doing some advanced funding and rewards stuff. No that doesn't make you a bank. "What is a bank? A bank is a financial institution that is licensed to accept checking and savings deposits and make loans. Banks also provide related services such as individual retirement accounts (IRAs), certificates of deposit (CDs), currency exchange, and safe deposit boxes. There are several types of banks including retail banks, commercial or corporate banks, and investment banks." - https://www.investopedia.com/terms/b/bank.asp https://www.investopedia.com/terms/b/bank.asp Notice how none of that is to do with how much money is made from financial shenanigans vs products and also there is no mention of running loyalty programs etc. Every time there is one of these articles ("Starbucks is just a bank" was another recent offender) it's worth actually referring to the definition of a bank and reminding yourself that unless the article is in The Economist, the FT or the WSJ, the journalist themselves probably has absolutely no idea what a bank is, or does.

pseingatl 3y ago
Forget the term "bank." If you use the term "financial institution" instead, you'd be surprised how encompassing it is.
- seanhunter 3y ago
  What about the term “airline”? You’d be surprised how well it describes what an airline does. Yes big companies have big financial and treasury functions. Maybe that’s surprising to some folks, but not to anyone who’s actually worked in any kind of industry. Trying to fund your activities is one of the most important parts of any business and companies who get really good at that even sometimes find ingenious ways to make it generative of PNL in and of inself. That doesn’t make them banks or financial institutions. My favourite example was one a friend told me that he had learned at business school doing an MBA. They did a study on Bailey’s Irish Cream (the liqueur). It came about apparently because there were big government subsidies to support dairy farmers and support Irish whiskey producers. So the farmers and distilleries where producing far more than they could sell in order to collect the subsidies. The genius inventor of Bailey’s came up with the business idea of getting the producers of cream and whiskey to pay him to take their excess inventory which he then turned into the liqueur which he sold for a profit. So he had a manufacturing business where he was getting paid by every part of his own supply chain.

konschubert 3y ago

If they stopped flying planes, would they stay in business? If the answer is no, then they are not a bank. A bank doesn't need to fly planes to be in business