Yves Smith — Focus on TBTF Banks Misses How Even More Powerful Private Equity Kingpins Are Moving More into Unregulated Parts of Banking

Increasing inequality is being driven by rising compensation for corporate CEOs and rising stock prices based short term performance based on gimmicks like "maximizing shareholder value" rather than on improving fundamentals long term through strategic management and innovation. 

The entrepreneurial basis of business is being lost, as Joseph Schumpeter foresaw as the demise of capitalism. 

The driving force of capitalism is supposedly the incentive provided by innovation, which results in capital being constantly not only replace or expanded but upgraded in terms of productivity, which is the real basis of growth. 

This is used to justify unlimited accumulation of wealth as an entrepreneurial incentive. 

However, unlimited accumulation of wealth result ing from rent-seeking is the antithesis of this incentive to innovate, and it has the opposite effect, undermining capital preservation and formation, productivity through innovation, and growth in real terms as a result of cannibalization for pecuniary gain of a minority. 

his has the further consequence of undermining society by institution of privilege of wealth and political capture through the power that accumulation of unlimited wealth bestows.

Naked Capitalism
Focus on TBTF Banks Misses How Even More Powerful Private Equity Kingpins Are Moving More into Unregulated Parts of Banking
Yves Smith