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Fault Lines
Book

Fault Lines

How Hidden Fractures Still Threaten the World Economy

Raghuram G. Rajan
Princeton UP, 2010

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Editorial Rating

9

Qualities

  • Innovative

Recommendation

Dismissing the 2008 recession as an inevitable free market setback might seem simple, but economist Raghuram G. Rajan doesn’t take the easy path. He makes a compelling case that the weak links in the global economy remain both visible and fixable. In a provocative analysis unhindered by ideological boundaries, Rajan argues against such government interventions as propping up the U.S. housing market. Yet he urges Americans to create a more generous safety net for unemployed workers facing a “jobless recovery.” Rajan’s more challenging suggestions, such as rebalancing the international economy or changing global monetary institutions, may not shift policy makers’ actions, but he argues persuasively that failing to do so will mean deeper fault lines in the next crisis. getAbstract recommends his book to those who want a clear-eyed economic analysis.

Take-Aways

  • “Fault lines” mar the U.S. and world economies. These weak spots, or pitfalls, lie hidden below the surface in prosperous times, but become obvious during crises.
  • The U.S. labor market’s wage gap and its shortage of educated workers are fault lines.
  • The export imbalance that mars the economies of China, Japan and Germany also constitutes a fault line.

About the Author

Raghuram G. Rajan teaches finance at the University of Chicago Booth School of Business. The former chief economist at the IMF, he won the 2003 Fischer Black Prize.

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