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 →
Update: several great new reviews since this was written, including Martin Wolf’s selection among Financial Timesbest books of 2018:
A splendid polemic against modern finance . . . hard-hitting, well written and informative.
I’ve got an article in the Financial Times, entitledBrexit offers London’s rivals a poisoned chalice. It argues that France and Germany are slavering at the thought of luring British bankers after Brexit, and warns them to be careful what they wish for, because of, well, the finance curse. (It’s been out for a couple of weeks, but I was in Iowa when it came out and constantly travelling since then.)
Underneath the articles there are (of course) a number of angry comments, and I’ve now set up a page on this site in the FAQ section to respond to those, and also to an article about the Finance Curse in the Schumpeter column in the Economist, by a correspondent who I’m convinced cannot have read the book. This page is a work in progress.