Income inequality If you re rich you re getting much richer but if you re in the bottom 25 you re getting nothing Remember that the service sector is growing and it is divided between rich and poor Low degree of unionization Jobs in service rarely unionized Deindustrialization 45 Post WWII 12 today Retail and skilled professionals do not belong to unions Educational inputs service sector has caused education to go up People have realized that the higher level of education the less likely you are to be unemployed and the more likely you are to make more money There are more and more people entering college Components of financial services Commercial banking everything except for home loans Largest component Involved primarily with commercial loans Investment banking Stock market securities McFadden Act 1927 Savings and Loans Fannie and Freddie Largest source of home loans Insurance Commodification of Risk The regulation of finance Began in the 30s after Great Depression Federal Reserve stabilized interest rates Decentralized fragmented The deregulation of finance Began in the 80s we forget the less we learned Federal Reserve changed policy to slow money growth in order to slow inflation Led to domination of banking by a few giants The Financial Crisis of 2007 2009 Great Recession Deregulation and lax government oversight set the stage Derivatives contracts derived from other values e g stocks bonds or commodities Financialization of mortgages subprime lending Anyone could go to a mortgage company and say that they could put them in a 250k house they weren t able to pay for the house they Response was federal interventions designed to aid the economy Keynesian revival The Location of Producer Services of business and professional services jobs in the US are located in large urban areas Agglomeration economies play a large part in explaining this tendency Tokyo London and New York the 3 major stock markets overlap in time zones so that you can trade all day every day Chapter 9 Transportation and Communications History of Transport First Step Water transport Houston is located where it is because of its access to waterways Second Step Railroad transport They grew cotton in BCS because of the fertile soil and they could transport it to Houston because of the railroads Aggie North is different than true north because BCS is not built North South it is built according to the railroads which run NW to SE