Monthly Archives: December 2018

The brain drain and the finance curse

One of the symptoms (and causes) of the finance curse is the ‘brain drain’ out of other sectors – industry, tourism, agriculture, government, etc. – into overpaid financial jobs. As one academic paper summarises:

“Finance literally bids rocket scientists away from the satellite industry. The result is that erstwhile scientists, people who in another age dreamt of curing cancer or flying to Mars, today dream of becoming hedge fund managers.”

The attached graph from the same paper shows one finance-cursed result: this brain drain is bad for the economy. Now the Financial Times has just written an article entitled ‘The best reader comments and contributions of 2018,” which contains a contribution almost exactly confirming this analysis, but on a personal level: Continue reading →

Unpicking the City of London’s tax contribution

Prem Sikka

The City of London publishes regular reports showing the sector’s “contribution” to the British economy, in terms of taxes paid and jobs created.  The Finance Curse analysis shows these numbers to be useless — for the simple fact that they show a gross contribution, airbrushing out the costs, instead of what policy-makers need: the net contribution, after the costs of oversized have been taken into account.

The first systematic attempt to put a number to the net figure was by Andrew Baker, Gerald Epstein and Juan Montecino. They came up with a negative number: oversized finance has cost the UK economy a cumulative $4.3 trillion over 20 years.

And there’s another question here: are the gross figures put forward by the City of London even correct?  Continue reading →