Wall Street Works, But Isn’t It Awfully Expensive?
Essentially, the architects of the Japanese system looked at the classic capitalist economy and reached the exact same conclusion as the average member of the Western world: that most of it is rational, but that an absurdly high proportion of national income is wasted rewarding the tiny elite that performs the capital-allocation function. Wall Street types do their jobs reasonably well, but why not replace them with elite bureaucrats who will perform the same function for $90,000 a year apiece, rather than people who earn ten, or even a hundred, times that? After all, one can teach bureaucrats the same technical skills of economic analysis. In the Japanese view, investment banking is a business which, because of its structural monopoly on extremely valuable information, tends to produce grossly excessive returns for those engaged in it. The capital allocation function is irrationally priced because the intrinsic bottlenecks of information make it impossible for new entrants to drive do
