An acerbic and scathing indictment of the pernicious practices, perilous ventures and impetuous outlook that has almost become symptomatic of Wall Street. Ms.Rana Foroohar’s “Makers and Takers…” (The Book”) is an essential reading for grasping the mechanics of Wall Street which brought the entire global financial machinery to the brink of ruin. Laying out bare the consequences of ‘financialization’ that has permeated and penetrated the very economic fabric of global society in general and the American way of business in particular, Ms.Rana Foroohar with the help of a few incisive examples demonstrates the dangerous manner in which the world of finance is held ransom by a handful of greedy, oligarchic cartels who account for more than a quarter of the economy’s wealth while barely making a dent in the creation of jobs and the empowerment of people. What I personally found to be most arresting in this wonderful book, is encapsulated in the following key points:
1. Being in the field of International Taxation in general and Transfer Pricing, in particular from the past ten years, the Chapter which caught my obvious attention was the one dealing with tax avoidance. Utilising a plethora of available options as well as overt and covert legislative loopholes, corporates engage in rampant acts of tax avoidance. Taking advantage of a blurring but recognized line between tax avoidance and tax evasion, global conglomerates engage in myriad financial calisthenics and legal gymnastics to scout for the most amenable low tax jurisdictions, incredibly complex and unbelievably convoluted corporate structures and ‘tax payer friendly’ tax administrations. The result as Ms.Foroohar brilliantly elucidates are brazen but incomprehensive corporate shenanigans such as Corporate Inversions, Double Irish Dutch Sandwich Structures and deferral of incomes;
2. The lucid and clear exposition of the entire deregulation of finance, which led, initially, in a repeal of the formidable Glass-Steagall Act, and consequently (and more unfortunately) in the creation of esoteric financial instruments such as derivatives – Warren Buffet’s famous ‘weapons of mass destruction’;
3. An insight into the advent of ‘shareholder activism’ by which unhampered primacy is accorded to maximising shareholder value rather than investing in the business to produce more goods or to render more services. The examples of activist investors like the compulsive Corporate raider Carl Icahn and the influence he wields over technology giants such as Apple is a real eye opener!
4. The advent of “Taylorism” that put economy over empathy and margins over men is captured in a stupendous manner with reference to the famous or rather infamous Ignition Switch fiasco that had General Motors in an embarrassing bind. The financialisation that caused a once manufacturing behemoth such as General Motors to transform itself into a gargantuan financial services peddler also sent ripples of shockwaves across General Motors as due to a combination of obsession towards numbers and an obstinacy in favour of lateral communication and integration led to a number of preventable motor accidents and avoidable deaths;
5. The perfidious presence of corporate and political lobbyists as highlighted by Ms. Foroohar deserves special mention. Unashamed lobbying and unimpeded political funding ensures that the laws and regulations are tweaked to serve the interests of the top 1 percent of the rich at the unfortunate expense of the remaining 99 percent. The watering down of the Dodd-Frank legislation following the devastating financial recession is a moot point;
6. Accumulation of debt. The fact that the burden of debt is much more now than it was even during the Great Recession as highlighted by Ms.Foroohar bears monument to the potential crisis that may yet be looming around. ‘Too Big to Fail’ institutions have become ‘Obscenely Too Big to Fail” mega structures that are mere euphemisms for a ticking time bomb
Drawing upon two decades of experience as a journalist tracking the nuances and intricacies of finance and the economy, Ms.Foroohar brings such precious experience to bear in this wonderfully compelling and essential book. In a world marred by insatiable greed that sacrifices altruism and faith at the altar of crony capitalism and hoarding of wealth, it is encouraging to note that voices of reason still continue to resonate. Once such voice being that of Ms.Rana Foroohar.