Fault Lines：How Hidden Fractures Still Threaten the World Economy

RaghuramRajanwasoneofthefeweconomistswhowarnedoftheglobalfinancialcrisisbeforeithit.Now,astheworldstrugglestorecover,it'stemptingtoblamewhathappenedonjustafewgreedybankerswhotookirrationalrisksandlefttherestofustofootthebill.InFaultLines,Rajanarguesthatseriousflawsintheeconomyarealsotoblame,andwarnsthatapotentiallymoredevastatingcrisisawaitsusiftheyaren'tfixed.Rajanshowshowtheindividualchoicesthatcollectivelybroughtabouttheeconomicmeltdown--madebybankers,governmentofficials,andordinaryhomeowners--wererationalresponsestoaflawedglobalfinancialorderinwhichtheincentivestotakeonriskareincrediblyoutofstepwiththedangersthoseriskspose.HetracesthedeepeningfaultlinesinaworldoverlydependentontheindebtedAmericanconsumertopowerglobaleconomicgrowthandstaveoffglobaldownturns.HeexposesasystemwhereAmerica'sgrowinginequalityandthinsocialsafetynetcreatetremendouspoliticalpressuretoencourageeasycreditandkeepjobcreationrobust,nomatterwhattheconsequencestotheeconomy'slong-termhealth;andwheretheU.S.financialsector,withitsskewedincentives,isthecriticalbutunstablelinkbetweenanoverstimulatedAmericaandanunderconsumingworld.InFaultLines,RajandemonstrateshowunequalaccesstoeducationandhealthcareintheUnitedStatesputsusallindeeperfinancialperil,evenastheeconomicchoicesofcountrieslikeGermany,Japan,andChinaplaceanundueburdenonAmericatogetitspoliciesright.Heoutlinesthehardchoicesweneedtomaketoensureamorestableworldeconomyandrestorelastingprosperity.