My Review of "A Force for Good"

5 out of 5 stars

This book looks at the financial crash of 2008 and offers ways to reduce the odds of one happening again. The author, John G. Taft, has a fine education and experience to qualify him for such a book, and the book offers lots of details, with opinions from many noted people like Sheila Bair, John Bogle, etc.

The book says the word, finance is derived from the Latin word, finis, meaning end, and the Latin term meaning goal. So, finance is intended to reach an end, a goal, inferring a longer term objective. Taft sees one of the main reasons for the crash was too much short term thinking, driven largely to increase the stock price, especially since executives are rewarded with stock options. Plus, since the stock price is driven higher when the company exceeds analyst estimates, rather than real results, it is a phony way to value a stock, especially no matter what real or estimated results are, the CEO can just offer positive 'guidance.

So, the author says executive pay should not be depended on short term moves in stock prices. Further, the author says a company's mission should be not just for the benefit of stock holders, but put clients/customers first. Historically, investment houses, like Goldman Sachs, were partnerships, with the added incentive to put the client first because assets of the partners were at risk, too. He recommends a "fiduciary capitalism" where banks have an explicit fiduciary role. Also, he advocates a "sustainability capitalism" where a corporation also should include financial negatives and positives for how a company has affected the environment, too.

He thinks there also should be super fiduciaries which try to hold companies to such standards, even sustainability concerns.He sees CALPERS, the CA pension system and the Bill and Melinda Gates Foundation as examples.

I recommend this book for any CEO or high ranking government official and anyone who is interested in the 2008 crash and ways to improve our form of capitalism.