By Lynn Parramore, a senior research analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website
Rana Foroohar’s new book, Makers and Takers: The Rise of Finance and the Fall of American Business, addresses what Paul Ryan conveniently left out.
From the lips of Paul Ryan, Chief Spokesman of Blame-the-Poor politics, came a curious mea culpa just last week. Oops! He should not have referred to hard-working Americans trying to feed their families as “takers” (Mitt Romney gained attention for similar remarks in 2012, but his running mate Ryan had already been on the makers/takers theme for years). Ryan further admitted that when it comes to economic distress, he didn’t really know what he was talking about.
“There was a time when I would talk about a difference between ‘makers’ and ‘takers’ in our country, referring to people who accepted government benefits,” said the speaker. “But as I spent more time listening, and really learning the root causes of poverty, I realized I was wrong.”
Well, yes. But a question: If the takers aren’t standing in the unemployment line or rushing home from the second job to change diapers, then just where are they? Because an awful lot of America’s resources have gone missing. Like money that should be going to education, job training, healing the sick, retirement funds, infrastructure, and, you know — life.
Ryan didn’t quite get to that part. As he and the rest of the country’s pundits and politicians puzzle over this crazy political season, they might do well to get themselves a copy of Rana Foroohar’s forthcoming book, Makers and Takers: The Rise of American Finance and the Fall of American Business (to be released on May 17). The title was inspired by Ryan’s very own (now-disowned) rhetoric, the favorite shorthand for trickle-down myths that paint the rich as the creators of jobs and innovative products and the rest of the population as lazy good-for-nothings.
That line worked pretty well before the financial crisis. Now, not so much.
Foroohar, TIME assistant managing editor and economic columnist and global economic correspondent at CNN, has a pretty good idea where to find the takers. They are neither single moms in inner city housing projects nor unemployed white men in Appalachia.
They are the denizens of plush Wall Street offices, and they have pretty much absconded with the American Dream. Despite the remarkable ability of financiers to hide behind complexity and dodge the spotlight of the media, the regulators, and the law, Americans are copping onto the breadth and depth of the swindle. They have just about had it — which is why voters have been flocking in droves to the fiery Bernie Sanders, who wants to jail financial crooks and end to Too Big to Fail, and to Wall Street heckler Donald Trump, who describes hedge fund managers as worthless moneymen who ”get away with murder” and gleefully trashes uber-bankers like Jamie Dimon.
Foroohar has traced a seismic shift that has not only left Washington kissing the feet of Wall Street, but has turned previously normal and comprehensible activities, like making stuff and selling it, into insanely complicated financial death races where ordinary Americans are the road kill. This very shift has turned companies like Apple from makers of cool gadgets to a market-rigging megabanks, pharmaceutical companies into cold-blooded financial predators, and the American Dream of dignity, health, and the pursuit of happiness into a fantasy for large swaths of the population.
For Foroohar, “takers” is how you refer to people who do nothing of value for society and whose activities leave students crushed with debt, retirees living in RVs, capable workers struggling to land a third-rate gig, and sick people so many tasty morsels for financial vultures.
Through in-depth reporting, historical analysis, and consultation with a range of forward-thinking economic minds, including Institute chair Adair Turner, president Rob Johnson, and grantees like Joseph Stiglitz and William Lazonick, her book explains how our financial system stopped funding new ideas and projects and started extracting precious resources from Main Street. Her writing leaves a vivid impression that once the financial wizards get their way, nobody in safe — from the young college grad next door drowning in debt owed to predatory lenders to the child halfway around the world whose dinner fell victim to commodities speculation.
As I turned the pages, I began to imagine Big Finance as a giant exotic vine from some florid catastrophe movie that has grown out of control, creeping onto the roofs of our houses, reaching into the food on our plates, tightening its hold on our wallets — and even taking over our minds. I’m embarrassed to say how many times I hear phrases like “human capital” and “return on investment” issuing from my own lips — finance-originated concepts used to describe relationships and activities that have little to do with spreadsheets.
Foroohar follows the financial Cheshire Cat as he baffles and jumps through tax loopholes, spins through revolving doors, and sneakily gobbles up savings accounts. She shows how the trend of financialization — an ugly word for the ballooning of the financial sector relative to the overall economy — has led directly to the things that have Americans feeling so betrayed, like crappy McJobs, foreclosed futures, rampant volatility and insecurity, a stalled economy, and an increasingly painful gap between the rich and everyone else. Which is why things like the decline of the middle class and economic inequality have become front and center issues in the 2016 presidential campaign, no matter how much elites of both parties would prefer to change the subject.
As Foroohar warns, it matters who is president and whom that president listens to. It was Reagan’s advisors who brought America deregulatory fever and the rise of stock buybacks (once considered unlawful market manipulation in America), while Bill Clinton’s team later opened the floodgates of speculation with the repeal of Glass-Steagall. These presidencies were marked by people whose mindsets favored markets over the real economy. That had better not go on, because if it does, the angry season of 2016 may be the dress rehearsal for something much nastier four years down the road.
The good news is that the giant imbalance of power between finance and the real economy can be fixed, and we know a lot about how to do it. The bad news is that as long as the financiers have the power, they will do everything in their power to stop sensible and entirely doable reforms.
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WS simply exploits the ignorance of herd behavior, like any other predator. The more laws, the easier to do so.
Who’s rent have you discounted, who’s income have you increased, and how much carp do you own that you don’t need.
Like the excessive fees on my 401k, the pensions I have lost forcing my savings into said 401k, the fact I cannot vote my shares of my mutual funds, the force placed insurance after my HOI binder was “lost”.
The American public is finally wising up to the fact that the bankers are a criminal syndicate.
Wake up, quit transacting in a predatory environment.
WS of the west knows your employer, what you do for income, the pockets you line with rent, how much carp you have, and records what you say, whether your phone is on or off. Don’t fool yourself.
Great comments!
A book which really explains this well is by Donald Gibson:
Wealth, Power, and the Crisis of Laissez Capitalism
The Bubble and Beyond by Michael Hudson, too.
And especially, Killing the Host by the same Prof. Michael Hudson!
(Thanks!)
WS understands that the best return on investment is buying lawmakers. Way more profitable then having to invent, innovate or compete in a true marketplace.
WS creates nothing, unless one thinks the vapor on the left side of their balance sheet is real. It isn’t real until you take the cash, and if everyone (or even a significant subset of everyone) tried to do so at the same time we would see the mother of all bank runs.
WS does arbitrage. It manages the distribution of the growth in the money supply, mostly to itself.
That was the joke a couple of months ago when the lottery shot up so high. What would you do with a billion dollars?
I’d by me some legislators and make some r-e-a-l money.
Sadly though, a billion will not get you as much as it used to.
How many carp, maybe?
If you mean personal ownership then none, but just off here in ‘inner city’ London, just off ‘Murder Mile’, we have actual socialized fish ponds, also home to herons, swans, other sundry waterfowl and seasonal dragonflies. (Antidote pictures would have been forthcoming if I knew how to work what used to be called a ‘camera-phone’. Lambert, Yves, don’t suppose you accept drawings?)
I appreciate the general sentiment about rent and income — although ‘discounting’ one and ‘increasing’ the other doesn’t really go far enough, and what sort of person do you have in mind who can choose to do either? — but that sort of ‘”you own more [x] than you deserve” language is so often directed against the working/claimant/zero-hours contract class here (“my taxes paid for that welfare queen’s new sneakers!” etc) that the obvious bears repeating: yes, global consumption is grotesquely structured — in keeping with global production, go figure! — but if you look all the way around you (i.e. around the world), the problem is still that billions of people never get the chance to consume anywhere near enough.
Cash is not quite dead here, I spent a life reducing other people’s rent and increasing their income. Old school, before the new math, what was learned in the great depression, the last time WS hit the wall. WS can replace ignorance, but it cannot replace work.
Funny, I walked into a bank this morning and the tellers were grilling grandma about the legitimacy of her transactions, in a community of pot doctors buying houses and cars with suitcases of cash.
What do you have against Carp? They’re lucky.
Interesting related op-ed by Thomas Edsall in the NYT yesterday that looks at the circumstances that have Ryan and some Republicans attempting yogic contortions to maintain obeisance to the elite Republican princeps while trying conciliation with the rough trade that has bolted and formed up behind Trump.
Other non-elected Republican opinion makers have begun to spew unbecoming paroxysms of rage, lacerating the confused, formerly contained but now wandering, blue collar herd for their very existence.
From Edsall’s article quoting the National Review’s Kevin Williamson diplomatically explaining the Trump phenomenon vis a vis the formerly faithful, “They failed themselves. If you spend time in hardscrabble, white upstate New York, or eastern Kentucky, or my own native West Texas, and you take an honest look at the welfare dependency, the drug and alcohol addiction, the family anarchy — which is to say, the whelping of human children with all the respect and wisdom of a stray dog— you will come to an awful realization. It wasn’t Beijing. It wasn’t even Washington, as bad as Washington can be.”
That kind of talk was once reserved for despised minorities, which is what the demographic has become. Also from the article, “While white voters with a high school degree or less have steadily declined as a share of the electorate — from 82 percent of adults 25 and older in 1940 to 29 percent in 2007 — they have repeatedly played a crucial role in determining the outcome of elections.”
Foroohar’s takers are, “How you refer to people who do nothing of value for society and whose activities leave students crushed with debt, retirees living in RVs, capable workers struggling to land a third-rate gig, and sick people so many tasty morsels for financial vultures.” She points out it is both Republican misdirection and Clintonian Democratic triangulators who are starting to pay the political price for policy that has resulted in (from the Edsall piece), “Between 1979 and 2005, the average real hourly wage for those with a college degree went up 22 percent and for those with advanced degrees, 28 percent. In contrast, average wages for those with only some college went up a mere 3 percent, actually fell 2 percent for those with a high school diploma, and for high school dropouts, declined a stunning 18 percent.”
What we’re hearing from Trump and Ryan may be the sound of the Republican party breaking up after finally hitting the shoals of the demographic ice berg that was spotted some time ago.
It was Carter who began the deregulation program that gathered steam under Reagan. There is no golden alternative. This is an international policy push going back to the time of the New Deal, a bargain that saved capitalism at minor cost to capital but wealth is like nose hair: take a little it hurts, take a lot it hurts.
Zzzzzzzzzzzzzzzzzzzzzzzzzzzzz.
Yes, indeed, Carter deregulated the natural gas industry, trucking and airlines industries, and fired the head of the National Geological Survey when he stated factually to reporters, when asked, if there was a natural gas shortage as Carter repeated (Carter was a Rockefeller guy, originally, lest we forget) — to which he responded honestly in the negative.
Carter also overturned the federal regulations against usury and usurious fees – – which allowed for Reagan’s administration to institute those Adjustable Rate Mortgages — a most usurious product!
Overlap / differences with Michael Hudson’s Killing the Host?
http://www.nytimes.com/2016/03/31/upshot/contractors-and-temps-accounted-for-all-of-the-growth-in-employment-in-the-last-decade.html?partner=rss&emc=rss
But anyone who cares about the future of work in the United States shouldn’t focus too narrowly on the novelty of people making extra money using their mobile phones. There’s a bigger shift underway. That’s a key implication of new research that indicates the proportion of American workers who don’t have traditional jobs — who instead work as independent contractors, through temporary services or on-call — has soared in the last decade. They account for vastly more American workers than the likes of Uber alone.
Most remarkably, the number of Americans using these alternate work arrangements rose 9.4 million from 2005 to 2015. That was greater than the rise in overall employment, meaning there was a small net decline in the number of workers with conventional jobs.
That, in turn, raises still bigger questions about how employers have succeeded at shifting much the burden of providing social insurance onto workers, and what technological and economic forces are driving the shift.
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Disposable workers, contingent workers, or most accurately – ill compensated workers. However you want to slice it, NOT only is American business hell bent on reducing wages, but so is government – it is a policy advocated and advanced by both political parties.
Rules that promote the rich getting richer because it is “good for business” and “increases GDP” are true – its just that these bromides have not been revised that now what is good for business is bad for employees and none of the rising GDP reaches anyone save the 1%
It’s strange for me to see this trend written about as though it were slightly novel. In the sciences, engineering and tech professions (outside of academia) contract work has been completely normalized for ~2 decades. It’s more common than a “real job” for most of us, most of the time. Even the ‘bosses’ are not as stably employed as their equivalents 20 years past. The guys who hire me for contracts now are commonly employees at small firms, working on JV projects that are funded by multiply-merged amalgams of large companies that 20 years ago…….employed all of us, directly. They’ve bounced from one small firm to another over the course of this century, and I’ve bounced along behind them. On contract.
Sorry, academia is also contract work only. Around 70% of post-secondary (college) education teachers, lecturers, & professors are contract workers. Most probably don’t even have a cubicle.
something to dream of someday, having your own cubicle. some guy in sf supposedly pay 400 a month to live in a cardboard box.
Sounds like Matt Taibbi’s Vampire Squid.
This is a nice reinforcement to the sound bite summary I’ve been sharing with others for years – Ayn Rand & co got it completely backwards! Us peons “make” it possible for the “takers” to hoover up an excess share of the gains.
The quaint term for “takers” is actually consumers. It’s a financial myth that the rich create jobs. Demand creates jobs. The rich provide capital. They’re middlemen, not the job creators they’ve been led to believe.
Amen.
What sort of regulation would have to be created to stop ‘normal’ businesses from participating in the casino? Would the Sanders trading tax have even a small impact?
Also too, feed me Seymour. Little Shop of Horrors was totally prescient, picket fence and all – and in the 50s even. It’s encouraging that Ryan has recanted, really, because it buries his former idiocy. He can’t go back. Nor can the fractured GOP. I think we are getting close to getting real. Why did it take so long? Because the terrors of climate change. maybe.
Ryan is steeped in the language of Randism. I remember reading once where Rand called the accepters of every ideology except her own by the name of “second handers”, on the theory that they got their ideology at second hand from someone else, as against getting Randism from the Great Prophet Rand herself.
If I remember correctly, then Ryan would probably be familiar with the epithet-of-dismissal “second hander”. If so, he could be irritated and offended by hearing himself referred to as a Second-Hander Rander. Perhaps all Randers would be offended the same the same way by the same epithet. Hopefully someone in a position to cast the Second-Hander Rander aspersion where Ryan is forced to hear it or see it . . . . will go right ahead and cast that aspersion.
“I began to imagine Big Finance as a giant exotic vine”
Not necessary to imagine – just come here to the South and see areas where kudzu has taken over. Over completely as in the trees are all dead.
If I lived just between the Mid South and the Deep South, in a place where both Kudzu and Water Hyacinth could live long and prosper . . . and be happy, and if I had several acres of land with a one-acre pond on it; I would put Water Hyacinth in the pond and plant Kudzu all around the edges. I would see which plant could out race the other. Could the water hyacinth keep growing faster than the kudzu could grow out over it? Or would the kudzu grow out over it faster than the water hyacinth could race ahead of the kudzu in budding new unshaded plants?
I can think of a gardening or micro-farming use for a hyacinth pond surrounded by kudzu too. Whenever the pond is just about covered by kudzu floating on a mat of water hyacinth, one could stand on the shore of the pond and reel in the kudzu vines which would drag in all the water hyacinth plants along with those vines. One could then feed this kudzu-hyacinth salad to livestock, or use it as the hi-N wet greenstuff component of big compost piles, etc.
is paul ryan trying to look presidential now, anticipating a brokered convention?
Is Paul Ryan on the make? Is he breathing?
Paul Ryan on the apology tour. Reality is that he can’t do anything in DC as the Freedom Caucus has rejected his budget (that after Paul rejected Obama’s budget). That brown stuff rolling down at him is not scent free.
His spoiler role is now at risk as Marco sent his misspelled letter to AK saying that he has not released his delegates in the first round. (the misspelled word was United States).
Stuff like this pisses me off to no end because it highlights a particularly abusive relationship in American society. The actual takers are doing an amazing good job of projecting themselves onto their victims and then using that projected image to tear them down. Gaslighting only makes it stick better, and we’ve all seen how good the mainstream media is at playing along with that. Just ask yourself, “Who owns them?”
Classic narcissistic disorder/sociopathy. And yes, it hurts.
Takers?
Because of government privileges* for the banks and other depository institutions, the liabilities they create (“loans create deposits”) are largely a sham except among themselves and other account holders at the central bank (eg. the US Treasury).
This means in practice that the banks and the most so-called creditworthy, which always includes the rich, whether worthy or not, can loot the purchasing power and investment opportunity of everyone else but especially of the poor, the least so-called creditworthy, via private credit creation.
*Chiefly, government provided deposit insurance and exclusive access to inherently risk-free accounts at the central bank. Also, the creation of fiat by the central bank for the benefit of the banks and the most so-called creditworthy instead of for the general welfare.
The bad news is that as long as the financiers have the power, they will do everything in their power to stop sensible and entirely doable reforms. Lynn Parramore [bold added]
Otoh, who will dare oppose reforms based on equal protection under the law such as abolishing government-provided deposit insurance and allowing inherently risk-free accounts for all at their central bank instead? And once those accounts are allowed, other privileges for the banking cartel will soon be questioned too such as why should they should have access to a lender/asset buyer of last resort since the payment system will no longer depend on their liquidity?
This omits a whole category of physically as well as financially destructive monster — the whole military-security-industrial-prison-etc. interlock. Seems to me the financial it’s can collapsevin a relative instant once the giant scam reaches a certain point. But the Empire’s and associated MSICP pieces have a horrible momentum and a yuge pile of weapons scattered about already — the multi trillion taking that keeps on taking until that final war of all against all.