Makers and Takers: The Rise of Finance and the Fall of American Business, by Rana Foroohar
Five out of five stars
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.