By Rana Foroohar
In looking at the forces that brought our current administration to power one thing is clear: much of the population believes that our economic system is rigged to enrich the privileged elites at the expense of hard-working Americans. This is a belief held equally on both sides of political spectrum, and it seems only to be gaining momentum.
A key reason, says Financial Times columnist Rana Foroohar in Makers and Takers, is the fact that Wall Street is no longer supporting Main Street businesses that create the jobs for the middle and working class. She draws on in-depth reporting and interviews at the highest rungs of business and government to show how the “financialization of America”—the phenomenon by which finance and its way of thinking have come to dominate every corner of business—is threatening the American Dream.
Now updated with new material explaining how our corrupted financial system propelled Donald Trump to power, Makers and Takers explores the confluence of forces that has led American businesses to favor balance-sheet engineering over the actual kind, greed over growth, and short-term profits over putting people to work. From the cozy relationship between Wall Street and Washington, to a tax code designed to benefit wealthy individuals and corporations, to forty years of bad policy decisions, she shows why so many Americans have lost trust in the system, and why it matters urgently to us all.
Through colorful stories of both “Takers,” those stifling job creation while lining their own pockets, and “Makers,” businesses serving the real economy, Foroohar shows how we can reverse these trends for a better path forward.
Steve Denning on Forbes wrote:
"[Foroohar] isn’t peddling a vision of neo-socialism, à la Thomas Piketty or Bernie Sanders. Her argument is that finance for the sake of finance is bad for business—and capitalism as a whole.“
Chris Lehmann on In These Times wrote:
"Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar (Crown Publishing, 2016) is a masterly account of the disproportionate power that the financial sector exercises in the economy and the disastrous consequences this has for society as a whole. [...] The book vividly describes a horrifying array of problems including massive share buybacks aimed at manipulating corporate share prices, persistent short-termism in corporate decision-making, a focus on extracting rather than creating value, crippled investment in innovation, declining real corporate performance, stagnant wages for most citizens, loss of jobs, secular economic stagnation, growing income inequality and the apparent inability of government economic policy to resolve these problems. [...] The book’s solution is 'a dramatically different balance of power between finance and the real economy— between the takers and the makers— to ensure better and more sustainable growth.' This proposal overlooks the fact that 'the real economy' itself has been very active in creating the problems. In fact, the deeper cause of these horrifying economic dysfunctions is the poor performance of corporations themselves."
"Casual browsers might mistake Rana Foroohar’s Makers and Takers for a Tea Party manifesto. The phrase is most famously identified with House Speaker Paul Ryan, who warned in 2010 that 'takers'—i.e., people who receive more in federal benefits than they pay in taxes—were poised to become the majority of Americans, eclipsing the 'makers'—the business owners and financiers who create hardy economic value.
But Foroohar, an economics columnist for Time and analyst for CNN, inverts Ryan’s callow sloganeering to devastating effect. Makers and Takers is a closely argued, richly reported anatomy of the sluggish, unequal and crisis-prone state of the U.S. economy under the dictates of financialization—the tax giveaways, financial-sector deregulation, securitized debt, etc., that are celebrated by figures such as Ryan. [...] Fortunately, Makers and Takers does not shy away from these difficult questions or the broader implications of their answers. The 'oligopolistic interests' at the helm of Wall Street are 'remaking our unique brand of American capitalism into a crony capitalism more suited to a third-world autocracy than a supposedly free-market democracy.' When a veteran Time economics hand is sounding like a Bernie Sanders surrogate, we should all be alarmed."
The Dangers of Financialization
An interview by the Institute for New Economic Thinking:
About Rana Foroohar
Rana Foroohar is Global Business Columnist and an Associate Editor at the Financial Times. She is also CNN’s global economic analyst. Prior to joining the FT and CNN, Foroohar spent 6 years at TIME, as an assistant managing editor and economic columnist. She previously spent 13 years at Newsweek, as an economic and foreign affairs editor and a foreign correspondent covering Europe and the Middle East. Hopkins School of International Affairs and the East West Center. She is a life member of the Council on Foreign Relations and sits on the advisory board of the Open Markets Institute. Foroohar graduated in 1992 from Barnard College, Columbia University.
Table of Contents of Makers and Takers
- The Fall of Business (Bean Counters versus Car Guys - Frederich Winslow Taylor, Robert McNamara, and the Financialization of Industry)
- What an MBA Won't Teach You (How Business Education Is Failing American Business)
- Barbarians at the Gate (Apple, Carl Icahn, and the Rise of Shareholder Activism)
- We're All Bankers Now (GE and the Story of How American Business Came to Emulate Finance)
- Financial Weapons of Mass Destruction (Commodities, Derivatives, and How Wall Street Created a Food Crisis)
- When Wall Street Owns Main Street (Private Equity, Shadow Banking, and How Finance Reaped the Benefits of the Housing Recovery)
- The End of Retirement (How Wall Street Ate Our Nest Eggs)
- The Artful Dodgers (How Our Tax Code Rewards the Takers Instead of the Makers)
- The Revolving Door (How Washington Favors Wall Street over Main Street)
- How to Put Finance back in Service to Business and Society