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
This page mostly refers to a site called Fools’ Gold, which I set up before writing the Finance Curse book. It collates the thoughts of leading thinkers on the subject of what ‘national competitiveness’ might mean. There is an awful lot of woolly thinking out there on this subject. Much of it is rests on what economists call the “fallacy of composition” – the mistaken idea that what is good for one sector of the economy must be good for the economy as a whole. Continue reading
One of the big component of the (currently forthcoming) research by Andrew Baker, Gerald Epstein and Juan Montecino is a factor called “misallocation costs” — that is, the costs that the distorted incentives prevalent in the financial sector inflict on the wider British economy. One of the big factors of misallocation is the distortion of lending. Financial institutions seem to far prefer to lend to whizzy financial schemes than to lend to the rest of the economy.
It’s quite hard on a casual search to find out how much money UK-resident banks lend to the various different sectors of the economy, even though this is one of the most important measures of the usefulness of the City of London to the UK economy. Continue reading
The front cover of the Finance Curse book, to be published in October 2018.
You can pre-order it here.