Joe: Alright Lewis, I want to throw a few numbers at you. The financial industry—Wall Street, banking, all of it—makes up about 7% of the U.S. economy. Any guess what percentage of jobs it creates? Lewis: Huh. Okay, 7% of the economy... I'll say it's probably a bit less, since it's so automated. Maybe 5% of jobs? Joe: Good guess. It's 4%. Now for the kicker. What percentage of all corporate profits in America do you think that 7% of the economy takes home? Lewis: Whoa. Okay, if it's a kicker, it's got to be disproportionate. I'll go high. 15%? Joe: Twenty-five percent. Lewis: Come on. That can't be right. Let me get this straight. 7% of the economy, 4% of the jobs, but 25% of the profits? That math is completely broken. It sounds less like an industry and more like a casino where the house takes a massive cut from every other business. Joe: You’ve just perfectly summarized the central question of the book we're diving into today: Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar. It’s a book that digs into how that broken math became the reality of our economy. Lewis: And Rana Foroohar isn't some academic economist in an ivory tower, right? She's a top-tier journalist for outlets like the Financial Times and CNN. She's on the ground, talking to these people. Joe: Exactly. And that journalist's eye is what makes this book so powerful. It was published in 2016, right in the thick of the post-financial crisis hangover, and it captured the public mood so well it was shortlisted for the Financial Times and McKinsey Business Book of the Year Award. It’s less about complex economic models and more about the stories and people behind this massive shift. Lewis: So it’s the story of how the casino got built. I'm in. Where do we start? Joe: We start with a mindset. A kind of "cognitive capture" that explains how this all began to feel normal, even to the people in charge.

Joe: Foroohar opens with a chillingly perfect anecdote. It’s 2013, years after the financial crisis, and she’s at an off-the-record briefing with a former Obama administration official, a key player in the crisis response. The topic is the Dodd-Frank financial reform bill. Lewis: Okay, so this is the guy who was supposed to be fixing the system. Joe: Right. And a reporter asks him if the regulations were overly influenced by Wall Street lobbyists. The official denies it. So Foroohar chimes in, citing academic research that showed 93% of the public consultations on a key part of the reform, the Volcker Rule, were with the financial industry itself. She asks him, "Why were the meetings almost exclusively with bankers, and not, say, small business owners, consumers, or homeowners?" Lewis: That’s a great question. What did he say? Joe: This is the jaw-dropper. The official looked genuinely bewildered and replied, "Who else should we have taken them with?" Lewis: Wow. That's... terrifying. It's like the fox isn't just guarding the henhouse, he's teaching a class on henhouse security and no one thought to invite the chickens. Joe: That's the 'cognitive capture' she talks about. The worldview of finance became so dominant that even the regulators couldn't imagine consulting anyone else. But this mindset didn't just stay in Washington. It infected the very heart of American business. The most powerful example she uses is General Motors. Lewis: The ultimate "Maker" company, right? Building cars, the backbone of American industry. Joe: For a time, yes. But Foroohar argues that GM became a place where the "bean counters" won out over the "car guys." And the tragic result of that was the ignition switch crisis. Lewis: I remember that. It was a huge scandal. Joe: It was a catastrophe. The issue was a faulty ignition switch that could easily be bumped out of the 'on' position, shutting down the engine, power steering, and, crucially, the airbags while the car was in motion. It was a defect linked to at least 124 deaths. Lewis: Just horrible. What was the root cause? A complex, expensive engineering problem? Joe: The root cause was a part that cost 57 cents. Lewis: Fifty. Seven. Cents. Joe: Yes. Internal documents showed that engineers had proposed a fix, but it was rejected because it would add a few pennies to the cost of each car. The Valukas Report, which investigated the scandal, found that the problem was a culture of silence and cost-cutting above all else. Decisions weren't being made by engineers who understood how a car was built, but by managers obsessed with financial metrics handed down from on high. Lewis: Hold on. So a decision that cost pennies led to a billion-dollar fine, massive recalls, and people dying? How does that make financial sense, even for a 'bean counter'? Joe: It doesn't, in the long run. But that's the point. The culture had become so focused on short-term cost savings and hitting quarterly targets for Wall Street that long-term risk, product quality, and even human lives became abstract externalities on a spreadsheet. Foroohar connects this directly to the rise of MBA programs that, since the 80s, have increasingly taught financial engineering and shareholder value theory over the nitty-gritty of actually running a business and making great products. Lewis: So the business schools are basically training the next generation of Takers, not Makers. It's a self-perpetuating cycle. The schools produce graduates who think this way, they go to Wall Street and demand these metrics, and the companies contort themselves to meet those demands, no matter the cost. Joe: Exactly. And this cycle doesn't just stay within corporate boardrooms. It spills out and affects all of us in very real, tangible ways. Let's talk about the price of a can of soda.

Lewis: A can of soda? Okay, I'm intrigued. How does a faulty ignition switch at GM connect to my beverage? Joe: Through the financialization of everything. Foroohar tells the incredible story of what happened to the aluminum market. Around 2010, companies like Coca-Cola and MillerCoors noticed something strange. The price of aluminum was going up, and it was taking forever to get deliveries, even though there was no actual shortage of the metal. Lewis: That sounds fishy. What was going on? Joe: Goldman Sachs was going on. In 2010, the investment bank bought a company that owned a network of warehouses in Detroit where aluminum is stored. They then devised a brilliant, if ethically bankrupt, scheme. They exploited a loophole in the regulations of the London Metal Exchange, which required a minimum amount of aluminum to be moved out of warehouses each day to prevent hoarding. Lewis: Okay, so how did they get around that? Joe: They paid trucking companies to move the aluminum from one of their warehouses... to another one of their warehouses, just across town. They were creating massive, pointless traffic jams of metal, fulfilling the letter of the law—"moving" the aluminum—while completely violating its spirit. This created an artificial bottleneck, causing wait times for delivery to skyrocket from six weeks to over sixteen months. Lewis: That's insane! They created a fake shortage. It's like a Bond villain's plot, but for aluminum. And this was legal? Joe: It existed in a gray area of complex regulations that they, as insiders, knew how to exploit. The result? The price premium on aluminum shot up. Goldman profited massively from storage fees and likely from trading derivatives based on the price moves they themselves were engineering. And that cost, according to one estimate, was passed on to American consumers to the tune of about $5 billion. It made everything from your Coke can to your beer can to parts of your car more expensive. Lewis: My mind is blown. That is the definition of a "Taker." They produced nothing. They innovated nothing. They just shuffled metal around in a circle and skimmed billions of dollars out of the real economy. Joe: And if you think that's bad, wait until you hear what Wall Street did with the housing market after the 2008 crash. We all know the story of how risky financial products blew up the housing market. But the "Taker" story doesn't end there. Lewis: Oh, I have a feeling I know where this is going. Joe: In the wake of the crash, with millions of families facing foreclosure, private equity firms, most notably Blackstone, saw a massive opportunity. They swooped in and spent billions buying up tens of thousands of single-family homes at bargain-basement prices, often in cash, outbidding regular families. Lewis: So they profited from the wreckage. Joe: They became the largest single-family home landlord in the entire country. The American Dream of homeownership was repackaged and sold back to Americans as a rental product, with Wall Street as the landlord. And then came the final, financializing twist. Lewis: There's more? Joe: Of course. Blackstone then bundled the rental income from these thousands of homes into a brand-new financial security and sold it to other investors on Wall Street. Lewis: Wait. So they helped cause the crash with securities backed by risky mortgages. Then they profited from the wreckage by buying up the homes people lost. And now they're packaging those rent payments into a new financial product to sell? That sounds dangerously familiar. Joe: It's the same playbook. It shows how finance has become a closed loop. It's no longer about funding the creation of new things in the real world. It's about turning every aspect of our lives—our homes, our commodities, our companies—into a tradeable chip in a game that only they can win.

Joe: So you see the pattern. Whether it's a 57-cent car part, a can of aluminum, or a family home, the logic of financialization is the same: the underlying 'thing' and its real-world purpose don't matter. What matters is how it can be used as an asset on a balance sheet, a piece in a complex financial game. Finance has become dangerously detached from the real economy it was meant to serve. Lewis: It really feels like we're all just living in their simulation, and they're the ones with the cheat codes. The stories are infuriating. What's the big takeaway here? Are we just supposed to be angry and cynical? Joe: Anger is an understandable reaction, but Foroohar's ultimate point is more constructive. She argues that this isn't an accident of nature or some inevitable outcome of capitalism. It's a system we designed. We designed it through the laws we passed, the tax codes we wrote, the way we structured business schools, and the people we chose to listen to. Lewis: That official's quote comes back to mind: "Who else should we have taken them with?" Joe: Exactly. And because we designed it, we can redesign it. The first and most crucial step, she argues, is to change the narrative. It's about all of us—citizens, consumers, employees—recognizing that finance is supposed to be a utility, like the power company. It should be a boring, stable system that provides capital to the 'Makers' so they can innovate and build. It should not be the glamorous, high-stakes center of the universe. Lewis: That’s a powerful reframe. It’s not about destroying finance, but about putting it back in its proper place. Taming it. Joe: Precisely. It's about shifting our collective values back from short-term extraction to long-term, sustainable creation. It’s about remembering that an economy's health is measured by the well-being of its people and the quality of what it produces, not just the number on a stock ticker. Lewis: It makes you wonder, what are we valuing more in our own lives and in our society? The act of making things, or just the act of making money? A question for all of us to think about. Joe: A perfect place to leave it. This book is packed with so much more—on retirement, taxes, the revolving door in Washington—but this central idea is the engine driving it all. We'd love to hear your thoughts. Find us on our socials and let us know what you think. Lewis: This is Aibrary, signing off.