Throughout the recent election, politicians painted Wall Street banks as the reigning lords of the American economy, such that Bernie Sanders urged we break up the banks in order to protect the little guy, the American Main Street. Rana Foroohar argues that this trend of “financialization” has incentivized companies to engineer their balance sheets and their bottom lines – corporate short-termism — to the detriment of real job creation and long term growth. Hillary Clinton would agree. We discussed.

Foroohar was an assistant managing editor at Time and the magazine’s economics columnist, and starts soon at the Financial Times as chief business columnist and associate editor. She is also a global economic analyst for CNN.

Her book is Makers and TakersThe Rise of Finance and the Fall of American Business, short-listed for the Financial Times/McKinsey & Co Book of the Year prize.

 

Please Support Our Sponsor!

Podcast listeners: Now become a Ricochet member for only $2.50 month! Join and see what you’ve been missing.

Members have made 6 comments.

  1. Profile photo of Valiuth Member

    Great podcast. I wish these would come out with more frequency. While Ricochet is a political website I really do enjoy the podcasts that are less about politics and current events. Keep up the good work.

    • #1
    • January 9, 2017 at 7:20 am
    • LikeLike
  2. Profile photo of connorfamilyr1 Coolidge

    Great content! I agree with Valiuth, need more wonkish and think tank stuff more often on Ricochet. I added Rana Foroohar’s book to my reading list.

    I think President Reagan was great and President Clinton was ok, but I hate to look backwards for solutions. They were working with the problems and society of the 80s and 90s. Those days are gone and the globe and country are different now. GOP must adapt.

    I would like conservative leaders and think tanks to be offering new solutions. I think the one advantage Republicans have is doing things on a local level and testing as many different solutions as possible. I think people are tired of large sweeping, one size fits all policy.

    Trump wasn’t my first pick, but I am hoping for the best. I have been pleasantly surprised by the cabinet picks so far.

    • #2
    • January 9, 2017 at 10:17 am
    • LikeLike
  3. Profile photo of MHillis Member

    Interesting listen. I like the Political Economy podcasts because they do a good job of having very constructive and interesting dialogues with people from the center left as well as the right. More, please!

    • #3
    • January 9, 2017 at 12:24 pm
    • LikeLike
  4. Profile photo of Vectorman Thatcher

    What James and his guest Rana didn’t mention is the Elephant in the Living Room:

    What is money?

    We have gone through various bubbles throughout the Federal Reserve’s lifetime: Savings and Loan bailouts, Lehman Brothers, etc. There were no other bubbles left except for the present zero interest rate to keep the Federal Government somewhat afloat.

    Since the Fed is loaning money to banks at ridiculously low interest rates, it’s almost like shooting ducks in a barrel for the mega bank groups to make great returns. Indeed, in a town of 300,000 not noted for great growth, many banks are adding new local branches. In a sane world, there should be less need for physical locations with internet banking and ATM’s.

    • #4
    • January 9, 2017 at 1:43 pm
    • LikeLike
  5. Profile photo of Sal Member
    Sal

    Finance, being an extremely abstract business can be easy for outsiders to caricature. The title of the book is an illustration of this temptation.

    There are many examples of the real-world value of finance. The British navy that defeated Napoleon on the seas benefited from the deep capital markets that existed in England and not in France. The American advantage in innovation is supported by the most developed venture capital system in the world; by far. I see this first hand as a seed-stage investor in startups who was in international finance for decades (see https://angelinvestboston.com).

    Let’s look at some alternative explanation for the data cited. Perhaps finance receives a disproportionate share of the profits because it is so highly regulated that innovative competitors cannot enter. All of the post-crisis regulations have contributed to further concentration of assets in even more systemically significant banks.

    The stagnation of American wages can have many reasons; some quite unexpected (see http://www.econtalk.org/archives/2017/01/_mandating_bene.html ). Another reason is America’s decline in international rankings in education. The trillions sitting offshore would be repatriated in one year if the US had a competitive corporate tax regime.

    I hope future discussions of this topic on your excellent program are more broad ranging and nuanced.

    Sal

    • #5
    • January 9, 2017 at 3:06 pm
    • LikeLike
  6. Profile photo of Patrick McClure Member

    OK, I’m laying here post myelogram, listening to podcasts I haven’t tried before. As an economics layman I approached this one with trepidation. I was delighted to discover the discussion could be understood by someone w/o a degree in finance or economics.

    • #6
    • January 10, 2017 at 1:28 pm
    • LikeLike