Raghuram Rajan was one of the few economists who warned of the global financial crisis before it hit. Now, as the world struggles to recover, it’s tempting to blame what happened on just a few greedy bankers who took irrational risks and left the rest of us to foot the bill. In Fault Lines, Rajan argues that serious flaws in the economy are also to blame, and warns that a potentially more devastating crisis awaits us if they aren’t fixed.
Rajan shows how the individual choices that collectively brought about the economic meltdown — made by bankers, government officials, and ordinary homeowners — were rational responses to a flawed global financial order in which the incentives to take on risk are incredibly out of step with the dangers those risks pose. He traces the deepening fault lines in a world overly dependent on the indebted American consumer to power global economic growth and stave off global downturns. He exposes a system where America’s growing inequality and thin social safety net create tremendous political pressure to encourage easy credit and keep job creation robust, no matter what the consequences to the economy’s long-term health; and where the U.S. financial sector, with its skewed incentives, is the critical but unstable link between an overstimulated America and an underconsuming world.
In Fault Lines, Rajan demonstrates how unequal access to education and health care in the United States puts us all in deeper financial peril, even as the economic choices of countries like Germany, Japan, and China place an undue burden on America to get its policies right. He outlines the hard choices we need to make to ensure a more stable world economy and restore lasting prosperity.
Awards and Recognition
- Raghuram G. Rajan, Winner of the 2013 Deutsche Bank Prize in Financial Economics, The Center for Financial Studies
- Winner of the 2010 Business Book of the Year Award, Financial Times and Goldman Sachs
- Winner of the 2011 Gold Medal in Finance/Investment/Economics, Independent Publisher Book Awards
- Winner of the 2010 PROSE Award in Economics, American Publishers Awards
- Winner of the 2010 Gold Medal Book of the Year Award in Business & Economics, ForeWord Reviews
- Finalist for the 2010 Paul A. Samuelson Award, TIAA-CREF
- Finalist for the 2010 Book of the Year Award in Business and Economics, ForeWord Reviews
- One of strategy+business magazine's Best Business Books of the Year for 2010
- Best Crisis Book by an Economist and Named one of Bloomberg News's Thirty Business Books of the Year for 2010
- One of Financial Times's Books of the Year in Business & Economics, Nonfiction Round-Up for 2010
- Finalist for the 2011 Estoril Global Issues Distinguished Book Prize