This is an article I wrote for the Tax Justice Network. It looks at why market power (or, put more crudely, monopolies) is a bigger problem for Europe than most people think; where the connections are between monopolies and tax havens, and why Europe needs to build an antimonopoly movement to rival what’s going on in the United States — and which builds on the successes of bodies like the Tax Justice Network.
Updated: Oct 30, 2019
The IMF’s September 2019 issue of Finance & Development is about dark money, money laundering, and all that stuff. It features an article of mine, about how to tackle tax havens. Now The Guardian has an article looking at the City of London’s role as a global centre for tax haven activity, with a similar but shorter set of recommendation.
The core premise goes the heart of the Finance Curse: shrink the City of London (in smart ways): this will not only curb the tax haven racket – but it will increase Britain’s prosperity. The classic win-win.
The IMF article goes far beyond the UK. Here’s (maybe) the most arresting sentence:
We are now at the start of the most significant period of change to the international corporate tax system in a century
For the avoidance of doubt, the IMF editors let me say what the hell I wanted to say. So I’m quite proud of my latest.
With a whole lot of new US material that isn’t in the UK edition, spread across several chapters, plus a full new chapter on the financialisation (sorry, financialization) of hogs in Iowa, which has turned out to be a classic, extraordinary, finance-curse story.
The cover text is here. It’s due out in early November.
There will also be Japanese, Finnish and Taiwanese editions.
With, hopefully, more to come.
And it’s going to be made into a film. Early days, though.
Updated: this new Scottish analysis complements the blog nicely.
I’ve just co-written a submission to a UK parliamentary inquiry on Britain’s regional economic imbanances. The submission looks at at how financialisation is contributing to the staggeringly large divide between wealthy parts of London (and associated areas,) and the rest.
The widely-believed story is that London is the financial-centre engine of the British economy, showering jobs and tax revenues on the entire country. In the words of Boris Johnson, then Mayor of London, now Prime Minister,
“A pound spent in Croydon is of far more value to the country than a pound spent in Strathclyde. You will generate jobs in Strathclyde far more effectively if you invest in parts of London.”
(Seriously, he said that.)
(Cross-posted from the Tax Justice Network.)
The Finance Curse is a concept first developed by the Tax Justice Network. It is a relatively simple idea — and also an original and powerful multi-level critique of the modern global economy.
Here we frame it in a number of simple ways.
1. Shrink Finance
We all need good finance. A financial sector has a useful core surrounded by a toxic, predatory part. This should be entirely uncontroversial, especially following the global financial crisis.
It seems sensible, then, to shrink finance down to its useful core. A fast-growing strand of academic research, known as Too Much Finance, backs this up.
Here’s a startling picture from the real world, illustrating the excess bloat (source.)Continue reading
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
I’ve got a Long Read article in The Guardian this morning, entitled The finance curse: how the outsized power of the City of London makes Britain poorer. It’s a serialisation for the Finance Curse book. The illustration at the top reflects the finance curse well, and it’s based on this sentence:
The finance curse (obviously) affects different kinds of countries in different ways. Take the Cayman Islands, for instance. It has has on some measures the world sixth largest banking centre, and wealth that accrues locally could theoretically be divided among just 65,000 people to make everyone rich. That’s very different from a large economy like Britain’s, where the wealth from a somewhat larger City of London could theoretically be divided among a population a thousand or so times larger than that of Cayman. Continue reading