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Makers and Takers: The Rise of Finance and the Fall of American Business

Rana Foroohar

3.96 · Rating details · 1,125 ratings · 148 reviews

Eight years on from the biggest market meltdown since the Great Depression, the key lessons of the crisis of 2008 still remain unlearned—and our financial system is just as vulnerable as ever. Many of us know that our government failed to fix the banking system after the subprime mortgage crisis. But what few of us realize is how the misguided financial practices and philo Eight years on from the biggest market meltdown since the Great Depression, the key lessons of the crisis of 2008 still remain unlearned—and our financial system is just as vulnerable as ever. Many of us know that our government failed to fix the banking system after the subprime mortgage crisis. But what few of us realize is how the misguided financial practices and philosophies that nearly toppled the global financial system have come to infiltrate ALL American businesses, putting us on a collision course for another cataclysmic meltdown.

Drawing on in-depth reporting and exclusive interviews at the highest rungs of Wall Street and Washington, Time assistant managing editor and economic columnist Rana Foroohar shows how the “financialization of America” - the trend by which finance and its way of thinking have come to reign supreme - is perpetuating Wall Street's reign over Main Street, widening the gap between rich and poor, and threatening the future of the American Dream.
Policy makers get caught up in the details of regulating “Too Big To Fail” banks, but the problems in our market system go much broader and deeper than that. Consider that:

· Thanks to 40 years of policy changes and bad decisions, only about 15 % of all the money in our market system actually ends up in the real economy – the rest stays within the closed loop of finance itself.
· The financial sector takes a quarter of all corporate profits in this country while creating only 4 % of American jobs.
· The tax code continues to favor debt over equity, making it easier for companies to hoard cash overseas rather than reinvest it on our shores.
· Our biggest and most profitable corporations are investing more money in stock buybacks than in research and innovation.
· And, still, the majority of the financial regulations promised after the 2008 meltdown have yet come to pass, thanks to cozy relationship between our lawmakers and the country’s wealthiest financiers.

Exploring these forces, which have have led American businesses to favor balancing-sheet engineering over the actual kind and the pursuit of short-term corporate profits over job creation, Foroohar shows how financialization has so gravely harmed our society, and why reversing this trend is of grave importance to us all. Through colorful stories of both "Takers” and "Makers,” she’ll reveal how we change the system for a better and more sustainable shared economic future. ...more

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Published May 17th 2016 by Crown Business

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Jul 03, 2016 BlackOxford rated it really liked it

Shelves: economics

The Ideology of Corporate Finance

Around the turn of the 20th century the economic power of the world shifted from capitalists who made things to capitalists who made money. The source of the change was the mid-19th century discovery of limited liability and its rapid dissemination into the corporate legal systems of Europe and North America.

Limited liability, the obligation of corporate shareholders only for their investment in a company and not for further debts of the company, is the foundatio The Ideology of Corporate Finance

Around the turn of the 20th century the economic power of the world shifted from capitalists who made things to capitalists who made money. The source of the change was the mid-19th century discovery of limited liability and its rapid dissemination into the corporate legal systems of Europe and North America.

Limited liability, the obligation of corporate shareholders only for their investment in a company and not for further debts of the company, is the foundation of financial power. Ultimately it is what allowed the great robber barons - Frick, Carnegie, Rockefeller - to control enormous corporate resources with very little of their own money.

This sort of control demands some sort of ideology in order to justify itself to those who are essentially its victims. Marx of course wouldn't do. But neither would the theories of liberal economics that presume intense competition among numerous more or less equal adversaries. During the first twenty years or so of the 20th century, just such an ideology began to be formulated. The American economist, Irving Fischer, is its Karl Marx. This is the ideology is Corporate Finance

The point of the new ideology was to provide a socially acceptable rationale for the power exercised by financial interests: commercial banks, merchant banks, insurance companies, but mostly corporate executives of non-financial companies who could personally benefit more from making money than from making things, even if the companies they ran were run into the ground.

The ideology of Corporate Finance got an enormous boost in its credibility after WW II when it became 'mathematicised' as a pseudo-scientific exposition which neatly disguised its purpose. By the 1970's Corporate Finance had escaped from its academic hot house and began infecting all business with its message that economic well-being depended on the "efficiency of capital". And this of course depended entirely on the financial expertise which was only available to those intimately knowledgeable in the ideology.

Makers and Takers is a documentary of the latest triumphs of Corporate Finance. It is depressing reading. Corporate Finance has coopted the entire world, even the Chinese Communist Peoples Republic subscribes to its insane principles under the tutelage of Goldman Sachs and Morgan Stanley [See: https://www.goodreads.com/review/show...].

It has become such a powerful mode of thinking that we no longer notice that it is just that, a way of thinking [See: https://www.goodreads.com/review/show...]. But it is a way of thinking which is explicitly and irrationally meant to benefit just that segment of society against which the electorate has recently rebelled in the USA and Britain. Perhaps there is hope after all. ...more

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Jun 08, 2016 Andrew Tollemache rated it it was ok

I was really looking forward to reading a good analysis of the perils of financialization, how it came to pass and what can be done about it. Unfortunately, "Makers and Takers" is not that book. Rana Foroohar, who is a long time financial journalist, has written a book that is filled with both factual errors (no, mutual funds were not invented in the 1970s nor did our debacle in Vietnam stem largely from Robert McNamara's background in system and data analysis) and shoddy, shoddy thinking.
Her I was really looking forward to reading a good analysis of the perils of financialization, how it came to pass and what can be done about it. Unfortunately, "Makers and Takers" is not that book. Rana Foroohar, who is a long time financial journalist, has written a book that is filled with both factual errors (no, mutual funds were not invented in the 1970s nor did our debacle in Vietnam stem largely from Robert McNamara's background in system and data analysis) and shoddy, shoddy thinking.
Her biggest mistakes are in her reasoning and argument development. Now "financialization" is a fuzzy concept that lends itself to numerous interpretations, Rana just includes just about everything from the "Innovators Dilemma" to general corporate mismanagement. Much can be said in criticism about the drive to literally focus on nothing but the stock price. It often leads to company managements making all types of poor decisions, but many choices that look clear cut and obvious now, were not so clear 20, 20 years ago.
Everyone hates "Too Big Too Fail" in banking, but no one really knows what to do about it. The Modern State has always had a preference for increasing centralization and consolidation in the capital markets so that it can mobilize capital and borrow for its own purposes. Both for warfare and welfare, the Modern State needs to borrow gobs of money. This is an old debate in the US dating back to the 1st and 2nd Bank of the United States. The Civil War ended that debate and for the next 50 years up to the founding of the Federal Reserve saw govts here and abroad move to consolidate and centralize their banking. Frankly as modern states go, the United States has less of a concentrated banking sector than most. She counters that argument by trying to lump in every financial asset people own into tabulating how big the financial sector in the US is, she adds in all real estate, money market and stock holdings. By adding the sum of what everyone owns into what counts as "financialization" she has made the concept meaningless. ...more

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Jul 10, 2016 Susan rated it it was amazing

Shelves: books-read-in-2016

What "Dark Money" was to political realities in 2016 - "Makers and Takers" is to the economic reality of the USA in 2016. Foroohar traces the 2008 crises, causes, loopholes remaining, tax advantages to corporations, examples of corporate "welfare," and assorted other Wall Street advantages and power over Congress and US economy as a whole.
Bankers and financialization of our economy is the driving force behind sluggish recovery, stagnant wages and growing income inequality that will not and cann What "Dark Money" was to political realities in 2016 - "Makers and Takers" is to the economic reality of the USA in 2016. Foroohar traces the 2008 crises, causes, loopholes remaining, tax advantages to corporations, examples of corporate "welfare," and assorted other Wall Street advantages and power over Congress and US economy as a whole.
Bankers and financialization of our economy is the driving force behind sluggish recovery, stagnant wages and growing income inequality that will not and cannot be remedied only by raising the minimum wage. The everyday trading back and forth of debt in various forms between one bank, one company, one hedge fund and others etc generates substantial income for bankers, and stockholders but does nothing for investment for the future of said companies themselves or America as a whole. This is NOT the way our economy used to work. It is the way it has worked since Wall Street slowly and methodically lobbied its way into a regulation elimination here and a loophole opened there until now Apple ( with all the cash is does have) is better off BORROWING money ( interest which is then tax deductible) to pay its stockholders rather than investing said borrowed money in new products or technology advances. The Apple Watch did not advance our lives the way the Mac, iPhone, or iPad did. When corporate funds are spent buying and selling debt between companies and doing whatever necessary to raise share prices to appease stockholders and NOT into new investment then you are going to have inequality in income and lack of advances America was once known for.
I am sure Elizabeth Warren understands each and every word of this book and applauds it for its easy read for those not schooled in high finance. In actuality problem is quite simple - rich have the money and are trading it back and forth with each other for fees while not caring what happens to economy as a whole. Market speculation and casino betting on stocks is at the heart of our economy.
It has been said - the stock market is only legalized gambling and this book explains exactly how that analogy is not that far off in truth. ...more

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Mar 15, 2017 Diego rated it it was amazing

Shelves: economics-capitalism, finance, favorites

There are 2 types of CEOs, the short term greedy vs long term innovator. It must take balls to not please your shareholders in the short term. Financialization is a company culture and political disease. It destroys a productive company or manufacturer. And the American MBA education is breeding this greedy thought process.

Two ways that people will think about financial engineering, either it's good business because you are growing the stock price, making money, and pleasing Wall Street, or, it' ...more

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Jun 16, 2017 Andrew rated it really liked it

Shelves: united-states-of-america, economics-business-finance

Makers and Takers: The Rise of Finance and the Fall of American Business, by Rana Foroohar, is an interesting look at the changing landscape of American Business and macroconomic finance. The book examines the post-2008 economic crisis economy in the United States, and examines what the author terms as the "financialization" of the American economy. This means the movement toward financial products and rentier behaviour by corporate and government entities. Corporations appear to be seeking mone Makers and Takers: The Rise of Finance and the Fall of American Business, by Rana Foroohar, is an interesting look at the changing landscape of American Business and macroconomic finance. The book examines the post-2008 economic crisis economy in the United States, and examines what the author terms as the "financialization" of the American economy. This means the movement toward financial products and rentier behaviour by corporate and government entities. Corporations appear to be seeking monetary gain by dealing in increasingly complex financial vehicles and systems, becoming "bank-like." This means they utilize shareholder buybacks and distribute cash out of their coffers to increase corporate shareholder value. This may increase their temporary value on the market, but it does little to increase their actual economic strength or encourage corporate growth.

Indeed, Foroohar looks at a number of prominent examples; from General Electric and their recent closing of their once powerful banking department, to the entry into the futures market of large financial firms like Goldman Sachs, who are driving up the price of raw materials like aluminum, corporations are increasingly looking to short-term financial instruments to boost immediate profit, with little thought or oversight into longer term strategic thinking. Foroohar terms these firms "takers" as they do not contribute to economic growth, but instead encourage inflationary tactics that produce financial bubbles - artificial increases in a goods value above what its real value is. Forhoohar decries the current situation, and instead wished to see companies move toward becoming "makers" - entities that invest in R&D, economic growth, and labour and wage increases for employees - all situations that would lead to strong economic performance at the corporate level. However, the power of shareholder activism in the US - an abnormality in global business trends - leads companies to shy away from a more powerful economic performance, and encourages financial schemes to raise the value of a companies market index.

Makers and Takers was an interesting book in a similar field as many post-recession business books. It is heavily critical of US shareholder activism and the control stock prices have on the minds of US business managers and politicians. Examined through a number of various categories, this financialization of economic growth has led to worrying asset bubbles, poor innovation from US companies, and slow stagnation of US market-growth compared to global competitors. One needs look no further than Apple, the electronics conglomerate, which is more focused on financial payouts to stockholders than R&D, to see a decline of innovation market level. As a cosumer, it is clear that Apple products are currently underperforming, and the decline in corporate R&D investment in the company is quite observable. Foroohar looks at many other examples, suffice to say, that this is a comprehensive analysis of the damage of putting finance first at the corporate level. It was an interestng read, and easily reccomendable to anyone looking for a good post-recession read on business economics. ...more

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Sep 25, 2017 Charles J rated it it was ok

Imprisoned inside this book is a good book screaming to get out. Buried alive, like the Man in the Iron Mask, this Hidden Book offers worthwhile insights into, and criticism of, the crony capitalism that has choked the free market out of our finance system. But the Hidden Book has disappeared from view under the crushing weight of authorial ignorance and an idol of, or rather an entire marble temple erected to, Elizabeth Warren. So each time the author of “Makers and Takers,” Rana Foroohar, yet ...more

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Jul 30, 2016 D.L. Morrese rated it really liked it

It is quite obvious that there is something fundamentally wrong with our economic system, a system in which the CEO of a corporation is paid several hundred times the wage of its average worker. A system in which the wages of workers have remained flat despite decades of productivity growth. A system in which well over half the wealth of the nation is held by 1% its people. A system in which (as the author tells us) "the top twenty-five hedge fund managers in America make more than all of the co It is quite obvious that there is something fundamentally wrong with our economic system, a system in which the CEO of a corporation is paid several hundred times the wage of its average worker. A system in which the wages of workers have remained flat despite decades of productivity growth. A system in which well over half the wealth of the nation is held by 1% its people. A system in which (as the author tells us) "the top twenty-five hedge fund managers in America make more than all of the country's kindergarten teachers combined."

But unjust wealth distribution is not the only problem. Our financial system as it exists today may actually be detrimental to our economy.

In this book, Rana Foroohar (a business writer for Time Magazine and a CNN economic analyst) argues that Wall Street financiers have warped the system to their benefit. They have successfully pushed the idea that making money, rather than making goods, creating jobs, or providing services, is the primary job of any business. They see money as the ultimate gauge for measuring the value of all things, and they treat it almost like a commodity to be traded and manipulated as if it has some intrinsic value.

It doesn't, of course. Money is simply a tool, a means to facilitate the trade of goods and services. It is, at best, a representation of the value produced by makers who build, grow, and create things that have real value. When banks loan money to makers, they provide a legitimate service. Loans can help business get started. They can help makers make.

But our financial system has mutated beyond simple banking. It has become a system that allows money manipulators to become takers. These takers provide nothing of real value to our economy themselves, but they can skim a great amount of wealth from those who do. Worse, they exert pressure on businesses to maximize short-term monetary gains over long-term growth and innovation. If an expenditure (such as R&D or worker benefits) is unlikely to increase quarterly profits, it's less likely to be made. Money spent on growing a business is money that can't be given to investors.

This isn't a comforting picture. It seems fairly obvious to me that a system that gambles on debt, places quarterly profits above long-term benefits, that skims wealth from those who create it and then hordes that wealth rather than recirculating it back into the real economy, is destined to fail. It has before, most recently in 2008. The government bailed out the financiers then, but the government is heavily in debt now as well, a fact that can also be attributed to the influence of the financiers. Wall Street controls a great deal of wealth, which is used to further the interests of financiers in the halls of government and in the offices of businesses. It promotes policies and practices that allow it to squeeze wealth from the economy like water from a sponge. This can continue only as long as the wealth being created by makers exceeds the wealth being squeezed out by takers. As long as this is true, economic growth can still happen, although much slower than it might be otherwise. When the takers squeeze out as much as goes in, the economy will stagnate. It may collapse.

At the end of this book, Foroohar suggests some strategies to prevent takers from squeezing dry our economy. These include simplifying our economic policies, better regulation of financial services, and a few philosophical changes about what businesses and banking are actually for. I wish I could say that I thought these might happen, but I fear that they won't. The influence of the financial system is too great. Countering that would take more courage from our politicians and greater interest from voters than they have demonstrated in the recent past. ...more

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Jul 30, 2016 Scott Lee rated it it was amazing

I'm not an expert on any of the things that Foroohar covers. I've taken basic (i.e. High School/A.P. level) economics, taught a semester or two at that level, and try to follow what I can of what's happening at the intersection of business and politics--especially banking and politics. I've found Foroohar's columns in Time well-balanced and well-argued and was excited to see she'd written a book.

I don't know enough to challenge this book or to really read it critically. Okay, not true--I'm an E ...more

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Jun 02, 2016 Herzog rated it it was amazing

Shelves: financial

I always enjoy Rana Foroohar's columns. I find them concise and insightful. This book is in that same tradition. She sets the Paul Ryan analysis of "makers and takers" on its head, identifying the financialization industry as the true takers and those enterprises contributing to society's progress as the makers. Along the way, she even-handedly addresses issues critical to our capitalist system - the financialization of our businesses, the failures of American business education, the problems wi ...more

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May 22, 2016 Lada rated it really liked it

Holy crap! This book really scared me. At times it seemed contradictory, e.g. privately financed firms do better because they are not beholden to increasing short-term shareholder value, but firms not going public is bad because then we don't know what they're up to. I think this is because stats and opinions were thrown about in a simplified way to make particular points. In any case, if you want something to freak you out, try this book. It will do so very methodically. ...more

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Sep 27, 2016 Joel rated it did not like it

Shelves: economics-finance-business, economics, investing

Rich in footnotes, but devoid of logic. Takes non-sequitur to a whole other level, but hey, it's backed up with stats. As a reporter, Foroohar is great at collecting stories, but is clueless about what's actually going on. And when the details get too complicated, like any good journalist she falls back on evocative adjectives to get you enraged, but not actually understand the roots of the problem, never mind the appropriate solutions.

Some examples:

Page 2, paragraph, paragraph starting with "Wh Rich in footnotes, but devoid of logic. Takes non-sequitur to a whole other level, but hey, it's backed up with stats. As a reporter, Foroohar is great at collecting stories, but is clueless about what's actually going on. And when the details get too complicated, like any good journalist she falls back on evocative adjectives to get you enraged, but not actually understand the roots of the problem, never mind the appropriate solutions.

Some examples:

Page 2, paragraph, paragraph starting with "Which gets us to..." She throws in terms like "buy off", "fattening dividends", "goose the company's lagging share price", "tactic", "paper wealth", "maneuver", "cash hoard". And that's just one short paragraph. All these are designed to get the reader incensed at what amounts to essentially a share buyback. I get it, the author doesn't like the idea of share buy backs, but rather than analyze the pros and cons of various forms of returning capital - actually educate her readers, her goal is simply to demonize capitalism. The author is actually against returning capital at all; she would rather the company invests in R&D. But she doesn't get that freeing up the capital allows the investors to shift the money into other investments that will yield a higher return. If the company had more productive things to invest the money in, it would. The author proposes that they don't return the capital and instead waste it on their own R&D rather than let the capital seek out the most productive use. Fancy terms like "financialization" aside - the author doesn't understand the basics of how finance works.

Page 9, section titled "The Lifeblood of Finance". First she talks of a decrease in lending. The stat she throws in (hey, it's got a footnote, so it must be credible!) is that "ordinary" bank deposits grew from 50 to 70 percent of GDP, compared to trading which grew fivefold as a share of GDP. There is so much wrong with this that I don't even know where to begin. Deposits don't make us a share of GDP. GDP represents consumption and investment spending (mostly). Deposits don't factor into it. It would make more sense to speak of "ordinary" deposits as a share of all deposits. She doesn't explain what she means by "ordinary", but I suppose she's again trying to incite the "ordinary" reader against the banking industry. Again with the emotionally charged language devoid of any actual meaning. And I don't see how this statistic says anything about the decrease in lending she starts the paragraph discussing. To top it all off, the very next paragraph starts by saying "With the rise of... securities and trading... Came a rise in debt of all kinds." Huh? Didn't she just say lending was DOWN? She does this throughout the book. She starts by pointing to some aspect of finance you're supposed to be angry about, and then throws in a random statistic just to confuse you so that you don't have time to think about the illogic of what she's saying.

Another example, page 20: she's talking about how finance need to be more strongly regulated. Then she says "It won't happen anytime soon. Even now, finance continues to grow as a percentage of our economy. Leverage ratios are barely down from... 2007... Assets in the informal lending sector, which includes shadow banking, grew globally by $13 trillion..." What is she talking about? How does she go from arguing that there's not enough regulation to finance growing as a percentage of the economy to leverage ratios to shadow banking. I get that all these things are thrown at the reader in quick succession is a designed attempt to arose anger, but there is no logical sequence to her argument. How does one thing follow from another other than just saying "Bad banking! Bad finance!"? It's unbelievable that this author has been reporting on finance for decades, but doesn't understand the first thing about it!

The book is full of conflated logic like this: page 19 implying (using the classic correlation equals causation fallacy) that the rise of 401(k)s in the '70s led to subsequent slowing in growth. Or right before that, about how "financialization" is destructive because it encourages cost cutting outsourcing, which is bad because, wait for it, Rana Plaza, Bangladesh, and cost cutting technology, which is also bad because of (if you though she couldn't outdo herself) flash trading and computer-generated algorithms used in complex securities. Last I checked, spending less money rather than more was good business, not bad banking. Oh, and why is using computers to value derivatives bad? Because it resulted in repeated market crashes, wiping out trillions of dollars of wealth. Simply not true. But it sure roils your blood. Here's another one, page 22: "70 percent of mergers... end in disappointment." What does disappointment mean? I don't know, you have to follow footnote 72. But it sure makes you angry at those greedy bankers! Mergers equals bad.

Those are just some examples, but the book keeps going with this kind of logic. The author had been covering finance for decades, but none of that seemed to teach her the first thing about finance. All she knows how to do it throw snippets and anecdotes at you, and sound smart by quoting statistics (all extensively footnoted), but not follow any coherent logic. This book will make you stupider for reading it. ...more

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Dec 27, 2016 John rated it it was amazing · review of another edition

This is one of the three best books of the year for me. Rana Foroohar traces the change that has overcome both main street and wall street in the past 30 years. A full 20 per cent of the text is references, so it is definitely not just another political diatribe.

It is difficult to summarize a book of this complexity, but let me use Apple computer and how it has changed from the technical powerhouse it was under Steve Jobs to the poster child of current CEOs , Tim Cook. Jobs' vision was to make This is one of the three best books of the year for me. Rana Foroohar traces the change that has overcome both main street and wall street in the past 30 years. A full 20 per cent of the text is references, so it is definitely not just another political diatribe.

It is difficult to summarize a book of this complexity, but let me use Apple computer and how it has changed from the technical powerhouse it was under Steve Jobs to the poster child of current CEOs , Tim Cook. Jobs' vision was to make the good tech and money would follow. Cook follows a different recipe: use the money to make more money and downgrade research and development. In 2013, he borrowed 17 billion dollars while having $145 billion in banks around the world. Why? Because he needed money to bolster Apple stock by buying it back and increasing dividends at the same time. He didn't want to pay taxes on the money stored off shore and interest for a blue chip is cheap. In 1982 Reagan and friends created legislation that allowed this "buy back of stock" by corporations. Before that time, it was considered cheating the fair value of the stock.

Second reason why Cook did what he did concerns Bill Clinton's signing legislation to exclude excessive CEO compensation if it is based on performance. CEOs get huge bonus packages that are based on the performance of the stock, not products. So, the short term view of "performance" plays the tune. Not Good for a strong long term economy.

There is not enough space in this review for too many examples, but one begs for the light of day. After the stock market crash of 1929, in 1933 the Glass-Stegall bill regulating banks was created for good reason. It was just 37 pages long and prohibited prohibited banks from engaging in both commercial and investment activities. There was a long period of stability and no "bubbles". Fast forward to the 1980's and 90's, where the financial sector (4% of US jobs and 25% of corporate profit) worked their way with Congress. In 2008, the too big to fail banks securitized home loans and sold them to unsuspecting US and European retirement funds. The banks are only required to leverage at the rate of 5%. Go try to buy a home with 5% down and see how far you get. Then public moneys were expended to make it all good.

In 2008, to avoid another banking crisis, Dodd-Frank was passed. After the financial sector got through with the best Congressmen that money can buy, it ended up at 2,319 pages. Good luck with enforcing that. But, here comes the next go round under Donald Trump and he is appointing the same Wall street types that caused 2008. It's hard to watch.

Because of the tax code, debt is favored over equity. Short term over long term also prevails. Corporate America spends less on R&D, workers, factories as a percentage of profit than private companies in the current climate. It isn't a matter of going after the one percent at all, it is about the country investing in sustainable energy, infrastructure and our young people's education. The government funded the research that invented touch screens, GPS, voice activation and the internet. The day of socializaion of risk and privitization of profits for the financial sector needs to end. Read Rana Foroohar's book and you can draw your own conclusions. ...more

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Sep 12, 2020 Rick Wilson rated it liked it

Shelves: new-consensus

There is a concept in statistics called “overfitting a model” where instead of having mostly good split on your data, you try to account for every single outlier and data point that you have. Rana Foroohar overfits financilization to just about every political and business problem in the past 50 years. Apparently the crash of 2008 is Henry Ford’s fault. Or perhaps we could blame Fra Luca Pacioli and Leonardo da Vinci for inventing double entry bookkeeping. Or perhaps the ancient Egyptians for th ...more

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Jul 13, 2016 Ben rated it really liked it

Shelves: nonfiction

Objective, politics-free & well-researched look into the scary place the U.S. economy has become.

The author walks through the causes & origins, they why, the how, and finally her recommended fixes as to how to reverse course from a first-world economy that once was a bastion and in many ways has gotten worse and slowed to a crawl, tech innovation aside.

For economic/finance novices she does well in walking through easy-to-understand examples of the core topics.

I've been in both industries -- tha ...more

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Oct 20, 2016 Michael Russell rated it it was amazing · review of another edition

This is likely the most important & informative book I’ve read this year.

It think the title may intimidate some readers as it suggests financial wonkiness- but please don’t let it deter you.

It’s extremely readable, and the use of anecdotes to illustrate points gives it a Macolm Gladwellian tone.

I genuinely could not put this book down… I was hoping for train delays and rainy days in, just so I could get through more if it.

I’ll re-read this and gift this many, many times. Everyone should read ...more

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Jan 14, 2017 Mark Desrosiers rated it really liked it

Shelves: economics, dystopia

A frightening and illuminating analysis of the apocalypse that occurs when a wafer-thin stratum of humans finds out that making money is easier than making things. This sort of thing is not widely reported for a variety of reasons (e.g. our media is owned by the very financial interests this book investigates), so establishment journalist Faroohar often comes across as extremely radical -- which I suppose she is.

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Jun 25, 2016 Shirley rated it it was amazing

Shelves: economics, business, united-states

Good read, an excellent primer on the effects of financialization on the general economy. A must read if you wish to understand the important issues leading up to the 2016 US election, and choices and reforms that need to be made afterwards.

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Jul 04, 2016 Terry rated it did not like it

A disappointingly superficial look at an important topic. Full of overstatements ("Apple puts more effort into financial engineering than their core business"). Short on any new insights or suggested remedies. Don't waste your time. ...more

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Jan 09, 2019 Anthony Tang rated it it was ok

Shelves: read-a-bit

Didn’t finish, kinda bland IMO. Interesting concepts though, the overarching idea was that the U.S. financial system is bad for business because it focuses more on short-term trends than on long-term innovation.

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Jul 02, 2016 Charles rated it it was amazing

This book will scare the reader as it explains many things about the performance of the American economy, specifically the nature of the recovery since the financial collapse of 2008. Unemployment is down, tightening the pool of available workers, yet with the exception of the top few percent wages are stagnant. Furthermore, most of the people are not rebuilding the wealth that they lost in 2008 and 2009, saving rates remain low and few are building up their financial cushion.
The problem that This book will scare the reader as it explains many things about the performance of the American economy, specifically the nature of the recovery since the financial collapse of 2008. Unemployment is down, tightening the pool of available workers, yet with the exception of the top few percent wages are stagnant. Furthermore, most of the people are not rebuilding the wealth that they lost in 2008 and 2009, saving rates remain low and few are building up their financial cushion.
The problem that Foroohar so convincingly states is the pervasive power of the finance industry. It is no longer acting as an engine of serving customers as they acquire debt that will aid them as well as the overall American economy. Rather, the finance industry is now operating to serve no one but themselves, charging enormous fees and feeling no need to operate in the best interests of their clients.
The finance industry is bleeding all others, both large and small, in order to further expand their own coffers. Even the largest companies sometimes cower at the power of a financial company that is engaged in a monopolistic practice. This is demonstrated with great force starting on page 185, where a situation where Coca-Cola was unable to acquire the aluminum needed to make cans. It turns out that Goldman Sachs cornered the supply of aluminum and was not only charging high prices for the aluminum but was also adding on exorbitant fees for the delivery. Yet, when it became clear that Goldman Sachs had fleeced Coca-Cola, the Coke executives declined to pursue any counter action for fear of retaliation. This is monopolistic extortion rather than high finance. Coke is currently ranked at 58 on the Fortune 500 list of companies, so they are capable of exerting great power.
Fortunately, this example also demonstrates a possible solution to what is clearly a path to another financial collapse. Companies like Coke would be easily recruited allies in the move to regulate the financial industry, for they would know that it could happen again.
This is one of the most revealing books about what is wrong with the modern business world, it should be required reading in college programs in business and finance. It also turns the arguments about “makers and takers” made by Republican candidates for high office on its head, showing that the takers are the wealthy while the makers are the regular workers.
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Sep 18, 2016 Fernando Rodriguez-Villa rated it liked it

Shelves: nonfiction

We're overdue for a thoughtful, comprehensive and well-documented examination into the ways in which the modern financial sector has undermined and hampered actual business and economic progress. This book is almost that. It has a methodical structure and highlights crucial (and crippling) flaws in our attitudes towards corporate governance, market regulation, asset management and more. Nevertheless, Faroohar arrives at some of her conclusions prematurely. A reader with an academic or profession ...more

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Aug 28, 2017 Joseph Brigante rated it it was amazing

Wow. I was not aware of much of what was in this book. I must say it has changed my perspective on a number of things when it comes to finance, and corporate America. The history that this book goes into is particularly illuminating.

This book is probably not for everyone, but if you are even a little interested by the title, or the topic matter I can easily recommend,

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Dec 29, 2018 Jackson Matthews rated it it was amazing

Intensely aggravating and informative. Most of us do not have much say in how our pensions are invested, but after reading this I am supposing it is some legislator's favorite lobbyist. We really do need some transparent, accountable change to the system. People who just shuffle money around look like shell-gamers for a reason. ...more

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May 22, 2020 Dr. Tobias Christian Fischer rated it liked it

Good fun title but I dislike the American focus. It would be great to have a global perspective on the topic and say more than:

the richer get rich, the poorer get poorer.

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Nov 25, 2019 Sean Estelle rated it liked it

Shelves: project-research, new-consensus-reading-list

I feel like I've been in an extended conversation with someone on the conservative end of Elizabeth Warren's policy team for too long after reading this. There's certainly some good explainer information on various and sundry elements of the finance industry here, as well as a couple of good proposed solutions - but the whole time, I wanted to yell through the book at Foroohar "don't you see where this expansion of profit-seeking and greed comes from? It's inherent in the system!!". Unfortunatel ...more

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Jun 01, 2016 Donnell rated it really liked it

Everyone should read this book.

Foroohar explains the economy we live in--a form of capitalism that has developed into an entity that is eating itself.

It all began sometime back around the time of the Reagan administration and developed as bankers and others realized that money could be made by moving money around. No need to fret about making anything when this easier way to get rich existed. But then there were all those pesky regulations. Those rules were keeping the economy from being the be ...more

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Jan 11, 2017 Jen Watkins rated it really liked it

While I am dubious of some of the statistics and their usage in this book, the theme, that finance produces no value and pulls attention away from innovation and the things people need, is one I take to heart. I will recall the makers vs takers framework when I hear of the next banking scandal.

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Dec 05, 2016 Aravind Bharadwaj rated it did not like it

A one-sided, ill-informed narrative that force fits data to suit the author's views, often bordering blatant misrepresentation. Some representative points that I found to be skewed are:
- The treasury earned an 8.5% return on the TARP program, which the author conveniently omits.
- Financial services is not one big blob of service providers that need to be "slaves to businesses". Financial services include real services such as banking and lending, but also services such as financing, which inher ...more

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Sep 01, 2016 Matt Papes rated it really liked it

This is a very insightful book that talks about "financialization" of our economy and how Wall Street has really been taking more of its share of the GDP than it deserves and how Main Street is the loser. Her hope in writing it is that once we get clear on this phenomenon we can then take action to ensure the finance gets back to serving what she calls the real economy instead of vice-versa. One small example: the mortgage interest deduction. This first encourages taking on debt (good for financ ...more

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Apr 18, 2017 Michelle rated it did not like it

Shelves: non-fiction, money, gave-up-on

Maybe it was a failure to translate journalistic writing into a book, or maybe Foorhar was just overly excited about her subject, but reading this book felt like being whacked over the head every few minutes with her thesis. Instead of letting each vignette tell its story, she spelled out exactly how evil these financiers were at every turn. I started reading Glass House instead, and it's much more enjoyable. ...more

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About Rana Foroohar

Rana Foroohar

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Rana Foroohar is a Iranian-American assistant managing editor for Time magazine. In the past, she was an economics and foreign editor at Newsweek, where she had previously worked as a London-based correspondent covering Europe and the Middle East. For this reporting, she received the German Marshall Fund's Peter R. Weitz Prize for transatlantic reporting.
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“Today financial capitalism is fraught with special interests, corporate monopolies, and an opacity that would have boggled Smith’s mind. Let me be clear: despite my criticism of our existing model of financial capitalism, this book isn’t anticapitalist. I am not in favor of a planned economy or a turn away from a market system. I simply don’t think that the system we have now is a properly functioning market system.” — 0 likes

“Managing Our Way to Economic Decline,” could” — 0 likes

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