How Finance Ruined Business

Three years ago, your can of Coke suddenly cost a few pennies more. The culprits? The clever bankers at Goldman Sachs. According to a Senate panel, they gamed the global aluminum market, warehousing tens of thousands of tons of the metal in Detroit and delaying delivery to customers like Coca-Cola. The bank was able to ratchet up the price on its supply, netting several billion dollars in the process. The best part: Goldman didn’t do it as a hedge against other investments. The bank did it to make money for itself, at the expense of everyone else.

Maneuvers like this are legal, but they’ve become more distasteful in the wake of the 2008 collapse, giving birth to the coinage of a term. “Our economic illness has a name: financialization,” writes Time business and economics columnist Rana Foroohar in Makers and Takers: The Rise of Finance and the Fall of American Business. The book offers a blistering critique of how Wall Street’s zero-sum thinking came to dominate and then hobble the U.S. economy. She isn’t peddling a vision of neo-socialism, à la Thomas Piketty or Bernie Sanders. Her argument is that finance for the sake of finance is bad for business—and capitalism as a whole.