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

I have to give this book five stars because of the depth it goes to on two important subjects - the financialization of American business and its impact on income distribution, and it is good reading. The "but" comes from her beginning and end going back to painting the large commercial banks as the villains when the normal ones had very little to do with the 2008 financial crisis as did the Glass-Steagall Act. Specifically;. Early on she talks about the large increase in financial types among the America's richest people, and in the latest Forbes real-time ranking of billionaires more than 130 of the 1,800 plus billionaires fit this description, but not one was a commercial banker. A 101 year old David Rockefeller might fit that description, but I think his money came from elsewhere. Sandy Weill was at the bottom of the list, but he is more a deal maker and insurance type. Admittedly Jamie Dimon of JPMorgan and Goldman Sachs' Lloyd Blankfein flirt with the bottom of the list but that would be just 2 spots on the 130 plus if they get back into the rankings..Then the only big bank she talks about in more than passing is Citigroup, which is not a normal universal national bank. Before merging with Travelers and Salomon Brothers, it got two-thirds of its revenue and income from non-American subsidiaries. Then by merging with Salomon Brothers it became one of the big six in investment banking. This merger was the source of its problems, but if Salomon Bothers had been on its own, the Feds would not have been able to rescue it - and it would have been a second Lehman Brothers. The other big banks - JPMorgan, Wells Fargo and Bank of America - had little to do with the pre-2008 problems, albeit Bank of America bought its share with its Countrywide purchase.. At the end she does a good job of suggesting solving the financial problem would be helped greatly by tax reform and several other things - and how difficult this is with a polarized congress and overwhelmed regulators; but she also seemed to feel strongly that a reinstated Glass-Steagall and breaking up the banks were important first steps. Does she really want to see Salomon Brothers, Merrill Lynch, Bear Stearns on their own again, in this polarized world with regulators dealing with things beyond their control? The heavy hand of a JPMorgan, Bank of America and Wells Fargo may be the best thing we have going for us relative to avoiding the next crisis.This is a bit of nitpicking, and it is still an important and much needed book.

This is the 200-somethingth review, so cut to the chase: this is a good survey of the impact of the financialization on the US economy. Its main strength is that it highlights many facets of the problem. It’s not a fun book to read; it’s crammed with details and doesn’t necessarily make them all hang together clearly. But if you stick with it you’ll get a good — and unsettling — overview.The author (RF) defines financialization as “the trend by which Wall Street and its way of thinking,” which she terms “short-term [and] risky,” have come to “permeate not just the financial industry but all of American business” (@5). She covers numerous aspects of this problem, including: how firms like Apple spend more on buying back their own shares than on R&D, how investment banks like Goldman Sachs hoard physical commodities like aluminum and drive up prices, how private equity firms now control most of the US rental housing market (that one was new to me), how fund managers are helping themselves to Americans’ retirement savings, as well as how financialization has distorted MBA education, the tax code and Washington regulators. I admit I didn’t pay much attention to her proposed solutions: I lack the faith of most American business journalists that big corporate capitalism can provide solutions. But RF’s diagnosis is valuable because it’s so wide-ranging.While some reviewers found the book easy to read, I found it more average in that regard: passionate, quite serious, with some arresting anecdotes, but otherwise fact-filled and at times very jumpy in its timeline. It doesn’t go into depth on many topics of interest: e.g., it’s not the go-to book to understand the derivatives involved in the 2008 financial meltdown (read some chapters of Janet Tavakoli, instead). There are a few celebrity-journalist touches, such as an awkward passage describing how corporate raider Carl Icahn entertained RF with his voice impressions (@121), but these don’t become overwhelming. Immediately before picking up this book I’d read “And the Weak Suffer What They Must?” by the former finance minister of Greece, Yannis Varoufakis. That book covers a different topic (the evolution of the global financial system, and especially the Euro) but shares some features of this book, such as a choppy timeline and name-dropping personal anecdotes. Nonetheless, Varoufakis is a clearer and more thorough expositor of complicated economic ideas, while inserting a good deal of charm and humor. He is a professor who obviously cares about teaching, while RF is a very busy journalist: that contrast may give you some idea of what to expect from this book.A consequence is that the book omits a few simple explanations that might help readers to fit more pieces of the puzzle together. One is that transactions on the stock market generally don’t bring any money to the company whose shares are being traded — the money just trades hands between buyers and sellers. Despite what textbooks tell you about the important social role of the stock market, less than 1% of the annual value of all exchange-based equity trading around the world goes to companies as new capital to expand their businesses; the rest is gambling. So when RF mentions that "activist investors" don't deserve huge dividends from tech companies because they had no role in helping to create the companies' innovative technology or making their products (@124), the same is true of just about any poor zhlub who bought shares on the market: your money didn't help the company accomplish anything. It also might help readers to know that that the value of financial transactions, including on the stock, bond, derivatives and forex markets, is officially excluded from the definition of GDP, which represents the “real” economy of goods and services. The global annual value of trades on stock exchanges alone is bigger than global GDP, and when you consider the value of all trades in all sorts of financial assets, you get many multiples of global GDP. That, in a nutshell, is why rich people see financial markets as a much better place to make money than the real economy in which most of us work, earn money and spend.Some minor issues: RF omits to mention the role of stock analysts in driving both share prices and executive behavior, and to define such terms as “asset values” and “Chinese walls” (and "eating-club": it's a Princeton thing, apparently). Some of her history, especially in Chapter 3, seemed to me a bit off in a few details, too. Surely systems analysis originated not in finance (@75) but in engineering and military operations research: see S. Optner, ed., “Systems Analysis” (Penguin 1973). RF seems to suggest that managers in the 1950s were focused on stock price (@81); but as I recall from listening to grown-ups as a child in the early 1960s, investors cared most about dividends (and “clipping coupons” if they were bondholders), i.e., about a steady stream of income accruing from holding onto assets, not from making money by trading. Also, by equating the emphasis on the bottom line and accounting that prevailed in that era with “financialization” (@79), RF seems to be using the word in a different sense from her definition at the beginning of the book. Finally, I found at least one significant mistake: RF says that the 1919 Michigan Supreme Court case of Dodge v. Ford “enshrined in law” the notion that “companies ha[ve] a legal obligation to maximize profits for investors, and that their interests trumped those of anyone else” (@70-71). When it comes to the day-to-day operations of a company (as distinguished from sale of the company in certain M&A transactions), this is simply not true in any US state or major country of the world, with the possible exception of Michigan. Plenty of businesspeople do believe there is such a legal duty, which often leads to corporations acting like jerks; so it doesn’t help for this book to encourage that false impression.In sum, this isn't a book to read for its style, nor, aside from a few anecdotes, for its details. But for its big picture of how finance has invaded and destabilized so many areas of our lives, it's worth your time.

非常棒的书，值得购买

Muy recomendable. Una análisis del daño que los mercados financieros nos están haciendo.

Excellent book for understanding finance.

Having spent the last 45 years in manufacturing with a business which ended up in VC hands for the last 12 years I can relate very well to this book.Rana has confirmed the conclusion I was coming to latterly that manufacturing and all the people that it encompasses is just a vehicle for the few to make huge amounts of money. She quotes a number of statistics which are frightening in terms of demonstrating how a very small number of people are taking almost everything at the expense of everyone else. To anyone who cares about where the developed economies are going this is defiantly worth reading. The prognosis is not good and in spite of Rana providing a list of changes which would significantly improve the situation the chance of this happening currently seems low. Very worthwhile reading in my view as we need to know where we are heading as it will have a huge impact on us and our children.

There is an old sentence that says: God save me from my friends, from my enemies I do it by myself. Rana Foroohar gives to the feelings of a lot of people the data about the misuse of the global financial world and their consequences on the real world.