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The Finance Curse: How Global Finance is Making Us All Poorer
A searing indictment of global finance, exploring how the banking sector grew from a supporter of business to the biggest business in the world, and showing how societies might fight against financial hegemony
Financial journalist Nicholas Shaxson first made his reputation studying the “resource curse,” seeing first-hand the disastrous economic and societal effects of the discovery of oil in Angola. He then gained prominence as an expert on tax havens, revealing the dark corners of that world long before the scandals of the Panama and Paradise Papers. Now, in The Finance Curse, revised with chapters exclusive to this American edition, he takes us on a terrifying journey through the world economy, exposing tax havens, monopolists, megabanks, private equity firms, Eurobond traders, lobbyists, and a menagerie of scoundrels quietly financializing our entire society, hurting both business and individuals.
Shaxson shows we got here, telling the story of how finance re-engineered the global economic order in the last half-century, with the aim not of creating wealth but extracting it from the underlying economy. Under the twin gospels of “national competitiveness” and “shareholder value,” megabanks and financialized corporations have provoked a race to the bottom between states to provide the most subsidized environment for big business, have encouraged a brain drain into finance, and have fostered instability, inequality, and turned a blind eye to the spoils of organized crime. From Ireland to Iowa, Shaxson shows the insidious effects of financialization on our politics and on communities who were promised paradise but got poverty wages instead.
We need a strong financial system—but when it grows too big it becomes a monster. The Finance Curse is the explosive story of how finance got a stranglehold on society, and reveals how we might release ourselves from its grasp.
304 pages, Kindle Edition
First published May 21, 2013
137 people are currently reading
2271 people want to read
About the author
Nicholas Shaxson
12 books108 followersShaxson was born in Malawi and has lived at various times in India, Brazil, England, Lesotho, Spain, Angola, South Africa, Germany and the Netherlands. Since 1993 he has written on global business and politics for the Financial Times, Reuters, the Economist and its sister publication the Economist Intelligence Unit, International Affairs, Foreign Affairs, American Interest, the BBC, Africa Confidential, African Energy, and others.
Shaxson currently lives with his partner and their two children in Zürich, Switzerland.
Shaxson currently lives with his partner and their two children in Zürich, Switzerland.
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September 27, 2019
A bright light goes on while reading The Finance Curse. Nicholas Shaxson connects a number of phenomena around the world that collectively oppress billions of people. He likens it all to the petroleum curse, where developing nations’ citizens end up worse off for the discovery of oil. In this case, it is big finance running amok. Only this is global and far worse.
The book documents the decline and fall of all but the 1% thanks to the race to the bottom (the most commonly repeated phrase in it). It works at all levels: towns compete in a race to the bottom, so do counties, states and whole countries. Everyone is afraid of being abandoned by companies seeking less taxation, less regulation and more power, all in the name of competitiveness. They are winning it, everywhere – without becoming more competitive. The ones who suffer for it are the locals who are losing schools, clinics, clean water, parks, community - everything so that business can be more profitable. There is no trickledown; it is all one way by design.
The facts are stark. The median American is actually poorer than median Italian. Wages are stagnant, savings less than minimal. Outlooks are grim. Hope is rare. The reason is that nearly $23 trillion has been extracted (Shaxson’s word) and sequestered in offshore accounts.
Offshore is attractive is because of trusts. By putting assets in trusts managed by lawyers, neither the donor nor the inheritor can be called the owner. So not only are they hidden, but even upon discovery, taxing and justice authorities are unable to seize them or tax anyone. By this trick they exist outside the reach of any authority or law. This massive moneypile does not contribute to the economies or the welfare of citizens or countries. Rather, its missing in action status is detrimental to the state of affairs in the countries it was removed from. The 99% lower classes have to make up the difference in their taxes.
Possibly the most important chapter concerns Bretton Woods, the postwar agreement that separated nations, controlled finance and currencies, and allowed everyone to grow. Shaxson shows the greatest universal growth occurred in the fifties and sixties thanks to Bretton Woods: “The countries participating in the Bretton Woods system would collectively enjoy the strongest, most broad-based, and most crisis-free expansion in history, with growth running at nearly 4 percent in the advanced economies and 3 percent in developing nations, more than twice the rate that had been attained in a thousand years of history.” But since then: “Once this awesome intellectual land grab by corporate and financial interests began to enter mainstream politics in the late 1970s, it would lead inevitably to corruption, oligarchy, bank bailouts and the growth of international organized crime,” he says.
The finance business is all about wealth extraction, not wealth creation. The shenanigans are legendary. The current madness on Wall Street is share buybacks. Analysts are actually insistent that companies spend every dollar they can buying back their own shares rather than investing in upgrades or expansion. Shaxson uses the example of the venerable IBM, a company currently valued at $100 billion. It has spent $160 billion buying back its own shares rather than investing in itself. The return is, rather obviously, not so great. Similarly, the Trump tax cut has not resulted in general betterment as promised. Worker salaries have risen by $7 billion, it is true, but companies have also spent $850 billion buying back their own shares, with little to show for it.
Shaxson has not a single good word for London. It is the sleaze capital of the world, the home of all shady and underhanded schemes and scams. The USA (ie Wall Street) is in a constant race (to the bottom) with London to attract more financial firms. The result is near anarchy. Little oversight, no prosecutions and freedom of movement for cash mean all kinds of dirty money floods in to be laundered and made legitimate. The situation encourages criminality and rewards it handsomely. Scammers can fly in in the morning and be in business by the afternoon, he says. As Americans saw in the financial crisis, bankers are above the law and will not be jailed or sanctioned personally, no matter how many lives they destroy in their endless quest to hoard more money. The UK imposed no fines whatsoever for the financial crisis, though American authorities have fined several British firms. London is Shaxson’s poster child for what is wrong with the world.
It is all supposedly about competitiveness, but it really about hoarding cash. He quotes Paul Krugman as early as 1994: “A government wedded to the ideology of competitiveness is as unlikely to make good economic policy as a government committed to creationism is to make good scientific policy.”
He tackles situations like the Celtic Tiger period when the Irish economy soared – right into the pockets of Charles Haughey, the prime minister. But Ireland is no worse than USA, the biggest tax haven in the world. States like Delaware and Nevada collect companies like trading cards as they continue to offer more protection, less and less regulation, less prosecution and less taxation. Shaxson also exposes the lengths and depths of private equity, the new name for the disgraced LBO (Leveraged BuyOut) firms. In this case, vulture capital buys up a company with the company’s own money (so the buyers can’t be taxed), raised by asset sales and massive debt offerings. It then gets its money back by paying itself huge dividends, strips out any saleable assets like intellectual property, and closes the remaining shell, throwing hundreds or thousands out of work, but profiting handsomely for its trivial risk. This is currently the sad fate of almost the entire newspaper industry, Shaxson shows, closely examining a key player in the destruction of value in local journalism.
There is a fascinating portrait of Iowa, in which Big Ag has taken over farmers as if they were sharecroppers. They provide the raw materials, the financing, the sales deals – and control everything so that the farmer is trapped into sticking with them because of the debt they incurred in signing up. For example, they get ten-year contracts on sales of their pigs, but 20-year debt on their facilities, so they are frantic to re-up lest they be shut down and lose everything. At that point, Big Ag lowers its prices for their pigs and imposes new restrictions on the trapped farmer. Local banks and agencies all disappear, as the Big Ag companies run Iowa operations remotely, spending not a cent inside the state. This is why Iowa is angry.
Laws covering these situations are ignored, lessened, or repealed. Anything and everything must be made available for the smooth operation of big finance. Shaxson focuses in particular on antitrust laws that gave governments the power to regulate industry and protect customers. But no one fears antitrust any more. They just threaten to move. Customers are just a cost of doing business. Employees are a thorn in their sides.
The unusually excellent Conclusion alone is worth the price of admission. Shaxson is clear and sharp in his criticism and his solutions. US companies are already sitting on a $1.7T cash hoard – tax cuts will not stimulate investment by them, and in fact, investment is down despite the cuts and (record) low interest rates. Importantly, he says a tax is not a cost to an economy, it is a transfer within it. In other words, taxes are a good thing, not something to be jettisoned in the race to the bottom. “There is no tradeoff between financial regulation and economic growth. More democracy means more economic prosperity.” This of course flies in the face of everything we read, see and hear in the news every day, an indoctrination campaign to tranquilize the 99%.
The Finance Curse puts everything wrong with the political world into neat, tidy perspective. This is a rare book of substantive answers, even if Shaxson’s disgust shows from time to time. We now know the cause, the effect and the solution. Finance is by itself ruining the world. That’s big.
David Wineberg
The book documents the decline and fall of all but the 1% thanks to the race to the bottom (the most commonly repeated phrase in it). It works at all levels: towns compete in a race to the bottom, so do counties, states and whole countries. Everyone is afraid of being abandoned by companies seeking less taxation, less regulation and more power, all in the name of competitiveness. They are winning it, everywhere – without becoming more competitive. The ones who suffer for it are the locals who are losing schools, clinics, clean water, parks, community - everything so that business can be more profitable. There is no trickledown; it is all one way by design.
The facts are stark. The median American is actually poorer than median Italian. Wages are stagnant, savings less than minimal. Outlooks are grim. Hope is rare. The reason is that nearly $23 trillion has been extracted (Shaxson’s word) and sequestered in offshore accounts.
Offshore is attractive is because of trusts. By putting assets in trusts managed by lawyers, neither the donor nor the inheritor can be called the owner. So not only are they hidden, but even upon discovery, taxing and justice authorities are unable to seize them or tax anyone. By this trick they exist outside the reach of any authority or law. This massive moneypile does not contribute to the economies or the welfare of citizens or countries. Rather, its missing in action status is detrimental to the state of affairs in the countries it was removed from. The 99% lower classes have to make up the difference in their taxes.
Possibly the most important chapter concerns Bretton Woods, the postwar agreement that separated nations, controlled finance and currencies, and allowed everyone to grow. Shaxson shows the greatest universal growth occurred in the fifties and sixties thanks to Bretton Woods: “The countries participating in the Bretton Woods system would collectively enjoy the strongest, most broad-based, and most crisis-free expansion in history, with growth running at nearly 4 percent in the advanced economies and 3 percent in developing nations, more than twice the rate that had been attained in a thousand years of history.” But since then: “Once this awesome intellectual land grab by corporate and financial interests began to enter mainstream politics in the late 1970s, it would lead inevitably to corruption, oligarchy, bank bailouts and the growth of international organized crime,” he says.
The finance business is all about wealth extraction, not wealth creation. The shenanigans are legendary. The current madness on Wall Street is share buybacks. Analysts are actually insistent that companies spend every dollar they can buying back their own shares rather than investing in upgrades or expansion. Shaxson uses the example of the venerable IBM, a company currently valued at $100 billion. It has spent $160 billion buying back its own shares rather than investing in itself. The return is, rather obviously, not so great. Similarly, the Trump tax cut has not resulted in general betterment as promised. Worker salaries have risen by $7 billion, it is true, but companies have also spent $850 billion buying back their own shares, with little to show for it.
Shaxson has not a single good word for London. It is the sleaze capital of the world, the home of all shady and underhanded schemes and scams. The USA (ie Wall Street) is in a constant race (to the bottom) with London to attract more financial firms. The result is near anarchy. Little oversight, no prosecutions and freedom of movement for cash mean all kinds of dirty money floods in to be laundered and made legitimate. The situation encourages criminality and rewards it handsomely. Scammers can fly in in the morning and be in business by the afternoon, he says. As Americans saw in the financial crisis, bankers are above the law and will not be jailed or sanctioned personally, no matter how many lives they destroy in their endless quest to hoard more money. The UK imposed no fines whatsoever for the financial crisis, though American authorities have fined several British firms. London is Shaxson’s poster child for what is wrong with the world.
It is all supposedly about competitiveness, but it really about hoarding cash. He quotes Paul Krugman as early as 1994: “A government wedded to the ideology of competitiveness is as unlikely to make good economic policy as a government committed to creationism is to make good scientific policy.”
He tackles situations like the Celtic Tiger period when the Irish economy soared – right into the pockets of Charles Haughey, the prime minister. But Ireland is no worse than USA, the biggest tax haven in the world. States like Delaware and Nevada collect companies like trading cards as they continue to offer more protection, less and less regulation, less prosecution and less taxation. Shaxson also exposes the lengths and depths of private equity, the new name for the disgraced LBO (Leveraged BuyOut) firms. In this case, vulture capital buys up a company with the company’s own money (so the buyers can’t be taxed), raised by asset sales and massive debt offerings. It then gets its money back by paying itself huge dividends, strips out any saleable assets like intellectual property, and closes the remaining shell, throwing hundreds or thousands out of work, but profiting handsomely for its trivial risk. This is currently the sad fate of almost the entire newspaper industry, Shaxson shows, closely examining a key player in the destruction of value in local journalism.
There is a fascinating portrait of Iowa, in which Big Ag has taken over farmers as if they were sharecroppers. They provide the raw materials, the financing, the sales deals – and control everything so that the farmer is trapped into sticking with them because of the debt they incurred in signing up. For example, they get ten-year contracts on sales of their pigs, but 20-year debt on their facilities, so they are frantic to re-up lest they be shut down and lose everything. At that point, Big Ag lowers its prices for their pigs and imposes new restrictions on the trapped farmer. Local banks and agencies all disappear, as the Big Ag companies run Iowa operations remotely, spending not a cent inside the state. This is why Iowa is angry.
Laws covering these situations are ignored, lessened, or repealed. Anything and everything must be made available for the smooth operation of big finance. Shaxson focuses in particular on antitrust laws that gave governments the power to regulate industry and protect customers. But no one fears antitrust any more. They just threaten to move. Customers are just a cost of doing business. Employees are a thorn in their sides.
The unusually excellent Conclusion alone is worth the price of admission. Shaxson is clear and sharp in his criticism and his solutions. US companies are already sitting on a $1.7T cash hoard – tax cuts will not stimulate investment by them, and in fact, investment is down despite the cuts and (record) low interest rates. Importantly, he says a tax is not a cost to an economy, it is a transfer within it. In other words, taxes are a good thing, not something to be jettisoned in the race to the bottom. “There is no tradeoff between financial regulation and economic growth. More democracy means more economic prosperity.” This of course flies in the face of everything we read, see and hear in the news every day, an indoctrination campaign to tranquilize the 99%.
The Finance Curse puts everything wrong with the political world into neat, tidy perspective. This is a rare book of substantive answers, even if Shaxson’s disgust shows from time to time. We now know the cause, the effect and the solution. Finance is by itself ruining the world. That’s big.
David Wineberg
December 5, 2018
ومن الاقتصاد ما هو لعنة
بحسب المعجم الوسيط يُقال إن "فلان يتلاعن علينا" إذا كان يتماجن ولا يرتدع عن سوء. وفي الحديث: "اتّقوا اللاَّعِنَيْن" في النهي عن التّخلي في طريق الناس أو ظلّهم، واللعنة هي العذاب، فيقال: أصابته لعنة من السماء. ومن الاقتصاد ما هو لعنة غير أنها لا تأتي من السماء. "لعنة التمويل"، مفهوم يعني أنه بمجرد أن ينمو القطاع المالي متجاوزاً حجماً محدداً مناسباً، ومتعدياً أدواره المفيدة في خدمة الاقتصاد، فإنه يبدأ في إيذاء البلد.
لقد شغلت مسألة إضفاء الطابع التمويلي على الاقتصاد العالمى بعد الأزمة المالية- الاقتصادية في 2008، ودشنت نقاشاً يخص مسؤولية هذه الظاهرة عما حدث، ودعوات لإعادة تنظيم القطاع، إلى آخره. وبرغم أن هذه الدعوات الإصلاحية تفادت الأسباب الأعمق للأزمة في حركية الاقتصاد الرأسمالي العالمي وميل معدلات الربح والتراكم للتناقص، إلا أنها لم تلق أذنا صاغية، واستمر القطاع في النمو واكتساب المزيد من النفوذ.
يشابه الصحفي والناشط بشبكة العدالة الضريبي والخبير الدولي في المراكز المالية والملاذات الضريبية نيكولاس شاكسون بين مصطلح "لعنة التمويل لما يسمى بـ "لعنة الموارد الطبيعية"، ليشرح بشكل تفصيلي في كتابه الجديد الصادر في أكتوبر الماضي، كيف تعمل هذه اللعنة على الاقتصاد وتنزل أذاها بحياتنا جميعاً. المصطلح كان شاكسون قد صكه لأول مرة في كتابه الأشهر عام 2011 عن الملاذات الضريبية والمترجم للعربية.
يتحرك شاكسون في كتابه الجديد من أنجولا إلى بريطانيا مراراً متنقلاً بين لعنتي التمويل والموارد والشبه بينهما. في أنجولا، حيث كان شاكسون يعمل في التسعينيات كصحفي، كان السؤال الذي يتلقاه: كيف يعاني سكان بلد غني إلى هذا الحد من الفقر والبؤس؟ يقول الكتاب إن الإجابة كانت دائماً الفساد. لكن شيئاً أكبر كان يحدث. ففي بلدان غنية بالمعادن كأنجولا أحياناً ما تؤدي الوفرة إلى "نمو اقتصادي أبطأ، المزيد من الفساد والصراعات والسياسات السلطوية وفقر أكبر حتى من بلدان أقل غنى بالموارد. صحيح أن السياسيين والأغنياء يحولون المال الذي يقنصونه للخارج إلى حيث يصعب تعقبه لكن الفكرة هي أن توفر المزيد من المال قد يجعل بلداً وسكانها أفقر.
في أنجولا والبلاد التي تشابهها يزيد نفوذ قطاع واحد من الاقتصاد على غيره كما كان حال قطاع البترول، وبدلاً من أن يوفر التمويل لدفع باقي القطاعات فإن هذا القطاع تلقى كل الاهتمام ليسحب الحياة من الزراعة والصناعة. ولأنه هو القطاع الصاعد الغني فقد سحب كل العقول المتعلمة لتعمل به. كما أدت التدفقات المالية التي دخلت البلد وولدها البترول إلى رفع الأسعار "من السكن لقص الشعر" خالقة موجة أخرى من تدمير الصناعة والزراعة. كما أدت تذبذبات أسواق البترول إلى دورات مدمرة من الركود والكساد بسبب تقلبات الأسعار. لكن ما وجه الشبه الممكن بين وضع كهذا في أنجولا وبين بريطانيا؟
***
يشير كتاب شاكسون إلى مراسلات بينه وبين جون كريستنسن من شبكة العدالة الضريبية، وقت أن كان الأول مازال صحفياً في أنجولا، نبهته إلى أن بريطانيا ابتليت بلعنة أخرى ذات ملامح شبيهة. فقد تضخم فيها القطاع المالي والمصرفي لحد أن أصول القطاع البنكي تضخمت من نصف الناتج المحلي في السبعينيات إلى خمسة أضعافه في 2006 قبيل الأزمة العالمية وهو ضعف المتوسط الأوروبي. ولو توسع تعريف القطاع المالي لأصول شركات التأمين وغيرها من المؤسسات المالية فإن الرقم يصل لعشرة أضعاف. في بريطانيا أيضاً جذب القطاع علماء الصواريخ بعيدا عن الأقمار الصناعية. ويضيف شاكسون ساخراً: "لا عجب من فقر نوعية رؤساء وزراء بريطانيا مؤخراً". كما أدت تدفقات ما يسمى بمدينة لندن، أو مركز المال الشهير إلى قفزة سعرية في قطاعات كالعقارات وتعرض الاقتصاد لتذبذبات أسواق المال بطرق مدمرة، ليست أزمة 2007-2008 شاهدها الوحيد.
غيرت لعنة التمويل الكثير. يقول خبير الضرائب البريطاني إن الاقتصاد هنا كنهر تسير فيه مراكب محملة بثروات النفط أو المال وعلى مدى الطريق يُحصِّل حراس البوابات رسوما من المراكب العابرة إلى أن تنهي عليها حينما تصل المراكب لآخر النهر حيث يعيش معظم الناس. ورغم أن بريطانيا اقتصاد أكثر تنوعا بكثير من أنجولا إلا أن هذه اللعنة جعلت القطاع المالي في صراع مع باقي قطاعات الاقتصاد و"دائما ما ينتصر"، وهو ما يشهد عليه أفول الصناعة البريطانية. هذا القطاع صار مصمماً بطريقة تحول الثروة لأعلى على حساب الأغلبية. يشير شاكسون إلى أن الفارق بين المنافع التي قدمها المال للاقتصاد الأمريكي وبين أضراره كان هائلاً لصالح الأخير. تفادي أضرار القطاع المالي كان ليمثل دخلاً إضافياً بين 105 آلاف و184 ألف دولار لكل عائلة أمريكية، أو لكانت كل عائلة تمكنت من مضاعفة ثروة معاشها. وتشير دراسة أخرى من جامعة شيفيلد، تستخدم في عنوانها مصطلح لعنة التمويل، إنه بين 1995 و2015 تسبب القطاع المالي في بريطانيا في خسارة كل عائلة ما يصل ل 170 ألف جنيه إسترليني.
يجول شاكسون في كتابه تفصيلياً بين معجزة أيرلندا المتداعية، لشركات الاستثمار المباشر، لشركات المحاسبة العالمية الكبرى، مركزاً على تداعيات لعنة المال أكثر منه على أسبابها. "في عصر إضفاء الطابع المالي تحول رؤساء الشركات ومستشاروهم من خلق الثروة للاقتصاد إلى استخلاص الثروة من الاقتصاد باستخدام التقنيات المالية"، بحسب الكتاب. بل إن هؤلاء بفعل هذا النفوذ في الاقتصاد، الذي فاقم الثروة في القمة وترك الاقتصاد الذي يتعيش منه الأغلبية في ركود ودخولهم ونصيبهم من الثروة في تراجع مستمر، صار لهم الكلمة العليا في السياسة. فحينما يكون مصدر الثروة نفطاً أو غازاً أو ريعاً للمال، تتراجع فرص المساءلة والمحاسبة وتزيد فرص من يقنصون مراكب الثروة.
***
والحقيقة أن نفوذ القطاع المالي ليس قاصراً على مدينة لندن ولا نيويورك ولا الاقتصادات المتقدمة فقط. فيمكننا أن نلاحظ مع تزايد أهمية الديون وأنشطة الخصخصة والتوريق وغيرها، تصاعد نفوذ وأهمية القطاع المالي في بلد كمصر. يقول البنك الدولي إن الريع وأرباح الشركات الكبرى صار غالبا على الاقتصاد في مصر مزيجاً الأجور والإنتاج. كما تشير الحسابات القومية لعام 2012/2013، وهي آخر أرقام متاحة إلى استحواذ الفوائد على 17 في المائة من الدخل القومي بينما وصلت عوائد الملكية العقارية وغيرها لأربعين في المائة. في وقت تنخفض فيه الضرائب كثيراً على هذه الأنشطة. وغني عن البيان ما للقطاع المالي من نفوذ حالياً في مصر يحميه من أي إجراء حكومي يستهدف فرض ضرائب أو ترشيد هذا النوع من الأنشطة بينما تتوجه إدارة أصول الدولة لفتح باب أوسع لنشاطه من خلال الخصخصة وطروحات البورصة. وتشير الدراسات إلى تدفقات مالية كبرى تفقدها الموازنة سنوياً بفعل خروج الأموال من مصر إلى الملاذات الضريبية.
يحذر شاكسون من عملية تمويه كبرى تحاول اقناع الناس بأن هذا هو الوضع الطبيعي والأمثل (عندنا للحاق بركب التقدم)، داعياً إلى عملية تنظيف كبرى وإجراءات عميقة، لن تكون سهلة، ويسأل الكل: في أي جانب تقف؟
في قائمته لأهم الكتب في النصف الثاني من 2018، يقول مارتن وولف، محرر الاقتصاد في جريدة الفاينانشيال تايمز عن كتاب شاكسون إنه يمثل سجالاً رائعا مع التمويل المعاصر ومدينة لندن خصوصاً. "يدفع شاكسون أن التمويل المعاصر لا يشجع فقط التجنب والتهرب الضريبيين وإنما يمكن أيضاً ممارسات عصابات وفساداً اقتصادياً على نطاق واسع، وأخشى أنه على حق".
http://www.shorouknews.com/mobile/col...
August 11, 2019
I really wish I could give this book a better rating.
I dove in prepared to agree with the author and discover the nuance of what an overly robust financial sector does to economies, why, how and what to do about it. Some of that Shaxson did deliver and there were a few chapters I found quite engaging and informative, for example, the ones where he talks about the “Celtic Tiger” and offshore finance (makes sense, he authored an entire separate book on the topic of tax havens). His breakdown of some key economic ideas of the previous century, neoliberal thought etc. in the beginning of the book also struck me as quite fair and successful.
However, the further I went into the book, the more sensationalist, “finger-pointy” and comical Shaxson’s arguments and rhetoric became. He is quick with exclamations of mock horror at companies facing a possible need to file US tax returns, inexplicably insists on using words like “titan” to describe hedge fund managers or junk-bond-fueled raiders and labels anything even remotely complex in the financial world “squirrelly business”.
Perhaps, I am just a jaded corporate drone, but a lot of his fist-shaking leaves me shrugging my shoulders. There are many destructive aspects to contemporary global finance (oh wow, who knew?), I am trying to learn more about them, not get an earful of moralistic sensationalizations about pension funds getting swindled and taxes being avoided. Even when his general points are reasonable and true the tabloid language makes them next to impossible to absorb. Here is an especially egregious example of what so irks me:
If this kind of delivery is you cup of tea, you doubtless will enjoy the book much more than I did.
Shaxson does a fair bit of introductory explaining throughout the book, which some readers may find very useful, but I personally did not. He is very clear and brief in these summaries, but goes a little too far, for example, breaking down what bank balances are, which seems redundant in a book not targeted at children. I wish he spent time unpacking more complex concepts mentioned in the book, such as different kinds of trusts or some “typical” ways to structure chains of offshore corporations, rather than focused on the simpler foundational terms.
Lastly, while I find the whole idea of “the finance curse” compelling and its existence demonstrable, I am concerned Shaxson stretches it too far, for example, concluding the book with a chapter on CAFOs. Are they terrible? Yes. Are contemporary farming and agricultural practices horrid in general? Yes. Are they a manifestation of “the finance curse”? I am not convinced. The book does successfully demonstrate the bloat and questionable practices in the financial sector, but comes up short trying to expose its poisonous influence on the rest of the economy. Again, I am already in agreement with the author’s thesis, and I was hoping he would elegantly put relevant arguments into words, alas, he doesn’t accomplish that in this book.
Thanks to NetGalley for a digital ARC of this book.
I dove in prepared to agree with the author and discover the nuance of what an overly robust financial sector does to economies, why, how and what to do about it. Some of that Shaxson did deliver and there were a few chapters I found quite engaging and informative, for example, the ones where he talks about the “Celtic Tiger” and offshore finance (makes sense, he authored an entire separate book on the topic of tax havens). His breakdown of some key economic ideas of the previous century, neoliberal thought etc. in the beginning of the book also struck me as quite fair and successful.
However, the further I went into the book, the more sensationalist, “finger-pointy” and comical Shaxson’s arguments and rhetoric became. He is quick with exclamations of mock horror at companies facing a possible need to file US tax returns, inexplicably insists on using words like “titan” to describe hedge fund managers or junk-bond-fueled raiders and labels anything even remotely complex in the financial world “squirrelly business”.
Perhaps, I am just a jaded corporate drone, but a lot of his fist-shaking leaves me shrugging my shoulders. There are many destructive aspects to contemporary global finance (oh wow, who knew?), I am trying to learn more about them, not get an earful of moralistic sensationalizations about pension funds getting swindled and taxes being avoided. Even when his general points are reasonable and true the tabloid language makes them next to impossible to absorb. Here is an especially egregious example of what so irks me:
There’s a third reason for all the snaking chains of corporate complexity, which brings that other large stakeholder into view: the shambling, unloved, grouchy giant that invests in the roads, the courts, the education of workers, the sewage pipes under homes and office buildings, and the other essential things that underpin all of the titans’ profits. Government. After it has picked up the human flotsam from the lacerated pension pots and the layoffs, be they burned-out journalists or the victims of rogue doctors, the government is at least supposed to get a payback in the form of tax levied on corporate profits.
If this kind of delivery is you cup of tea, you doubtless will enjoy the book much more than I did.
Shaxson does a fair bit of introductory explaining throughout the book, which some readers may find very useful, but I personally did not. He is very clear and brief in these summaries, but goes a little too far, for example, breaking down what bank balances are, which seems redundant in a book not targeted at children. I wish he spent time unpacking more complex concepts mentioned in the book, such as different kinds of trusts or some “typical” ways to structure chains of offshore corporations, rather than focused on the simpler foundational terms.
Lastly, while I find the whole idea of “the finance curse” compelling and its existence demonstrable, I am concerned Shaxson stretches it too far, for example, concluding the book with a chapter on CAFOs. Are they terrible? Yes. Are contemporary farming and agricultural practices horrid in general? Yes. Are they a manifestation of “the finance curse”? I am not convinced. The book does successfully demonstrate the bloat and questionable practices in the financial sector, but comes up short trying to expose its poisonous influence on the rest of the economy. Again, I am already in agreement with the author’s thesis, and I was hoping he would elegantly put relevant arguments into words, alas, he doesn’t accomplish that in this book.
Thanks to NetGalley for a digital ARC of this book.
April 15, 2024
Each chapter starts with a promising chapter name but you find a pattern of repeatedly boring the reader with trivial information instead of technicalities behind the cheating involved in financial world. Though there are few insights provided but they are shredded all over the book in a disconnected manner ,lost in the bloated trivial content which leaves the reader finding it hard to gain insights that are valuable.
Often the author mentions about mergers and acquisitions which results in a fat dividend to the top management but the explanation behind this "fat dividend" is skipped which makes the book unappealing, leaving the reader just to believe the author's words without understanding the process.
Often the author mentions about mergers and acquisitions which results in a fat dividend to the top management but the explanation behind this "fat dividend" is skipped which makes the book unappealing, leaving the reader just to believe the author's words without understanding the process.
November 15, 2019
“I listened with great interest to what you had to say but I can assure you if you think Her Majesty’s Government is ever going to prosecute people of my class, you are utterly mistaken. We are a protected species.”
So said the director of one high street bank to Rowan Bosworth-Davies, after he had given a speech about money laundering within the City of London. And of course he was 100% correct. Shaxson takes a brave venture into the dark and disturbing world of financial, corporate and political corruption, and beware this is a right cast of horrors, featuring some of the most awful people you could imagine, with almost every one of them fully protected from the law by their immense wealth and privilege.
Shaxson pulls out some really fascinating historical details, starting back at the widespread corruption which swept through America in the 1800s in the era of the robber barons.
“Wall Street planned, financed and executed the entire independence of Panama…This episode brought down the Colombian government, created a new republic, shook the political foundations in Washington with corruption and gave birth to American imperialism in Latin America. Essentially, Wall Street interest had harnessed their government’s military resources to build and operate a mighty tollbooth at the choke point of one of the world’s great trade arteries.”
Of course the creation of Panama’s shipping registry was the country’s first major step towards the creation of a tax haven. He goes onto talk about other forms of ugly corruption, such as the great American streetcar scandal, where a consortium of oil, bus, car and tyre companies came together to buy up streetcars and electric mass-transit rail systems in 45 major US cities to kill them off.
He explains how it was thanks to the excellent journalist Ida Tarbell who first exposed Rockefeller for his corruption. After some shocking attempts to discredit and humiliate her. Tarbell's investigative work resulted in Standard Oil being broken up into 34 different companies. Although this proved to be short-lived after a meeting in 1928 in the Scottish Highlands in a secret deal to carve up the world’s oil industry.
“Offshore, crime, money and politics aren’t an aberration of the system; they are the system.”
Shaxson also discusses the resource curse, which is particularly bad in places like Angola, which is oil-rich and diamond-rich, yet their vast and lucrative natural resources attract the worst kind of people and result in the worst kind of circumstances where a tiny elite profit to excess at the expense of the vast majority. He shows the ways that this same rule applies to the many tax havens scattered across the globe.
“In the era of financialisation, the corporate bosses and their advisers, and the financial sector, have moved away from creating wealth for the economy, and towards extracting wealth from the economy using financial techniques.”
Shaxson takes us back to the origins of the London’s financial sector revolution. “Britain entered its greatest period of broad-based prosperity and economic growth at precisely the moment the City of London was at its lowest ebb.” Bretton Woods allowed the UK government to impose strict regulations on the finance sector and high taxes on the rich.
The finance industry wasn’t happy about this and so launched the doomed Operation Robot. Even though this was approved by the likes of Churchill, it still failed. Despite the remarkable prosperity the boys in London wouldn’t give up that easily, determined to overthrow the system, the answer arrived in 1956 when the Midland Bank began taking US dollars unrelated to commercial or trade deals. This soon drew the avaricious US bankers who saw an opportunity to flourish without government interference. “The City establishment had quietly turned Britain into an offshore tax and financial haven.” We learn that between 1963 and 1969 US bank deposits in London rose twentyfold and then from 1970 to 1980 it expanded a further tenfold.
“If we broke up the big banks tomorrow, would that end racism? Would that end sexism?” So said Hillary Clinton in 2016, in a bizarre speech, during the campaign for her second failed presidential bid. Not only does this sound like something Trump would say, but it also leaves us no doubt as to where the US is and how far removed from reality in terms of regulating the system it is.
In 2017 Amazon announced plans to build a second HQ and asked cities to submit bids with incentive packages. At least 238 locations had bid, with the highest offer coming from Maryland, offering $8.5 billion in tax credits and other benefits for a project which Amazon itself says will only cost $5 billion.
Elsewhere he discusses The New Deal, Mont Pelerin Society, Hayek, consultant culture, Charles Tiebout, Thorstein Veblen, Richard Bork (who taught both Clintons at Yale), Luxembourg and Jean-Claude Juncker, Charles Haughey and the Celtic Tiger, the Free-rider problem and the Big Four, an elite group of accountancy firms which enjoy a shockingly disproportionate amount of power and influence.
“Many other politicians have come to love neoliberalism because the ‘verdict of the market’ absolves them of responsibility for making hard choices, helping them sidestep troublesome notions like fairness or justice.”
Explaining the culture of many of the British tax havens, it basically boils down to “You can trust us not to steal your money, but if you want to steal someone else’s money, then you can also trust us to turn a blind eye.”
This is an absolutely fascinating book. It does get a little sluggish in the second half, but any writer who dares to write so frankly and clearly on any subject that traditionally thrives on opacity and secrecy will always get my attention. Shaxson has written a powerful and devastatingly insightful piece of work.
So said the director of one high street bank to Rowan Bosworth-Davies, after he had given a speech about money laundering within the City of London. And of course he was 100% correct. Shaxson takes a brave venture into the dark and disturbing world of financial, corporate and political corruption, and beware this is a right cast of horrors, featuring some of the most awful people you could imagine, with almost every one of them fully protected from the law by their immense wealth and privilege.
Shaxson pulls out some really fascinating historical details, starting back at the widespread corruption which swept through America in the 1800s in the era of the robber barons.
“Wall Street planned, financed and executed the entire independence of Panama…This episode brought down the Colombian government, created a new republic, shook the political foundations in Washington with corruption and gave birth to American imperialism in Latin America. Essentially, Wall Street interest had harnessed their government’s military resources to build and operate a mighty tollbooth at the choke point of one of the world’s great trade arteries.”
Of course the creation of Panama’s shipping registry was the country’s first major step towards the creation of a tax haven. He goes onto talk about other forms of ugly corruption, such as the great American streetcar scandal, where a consortium of oil, bus, car and tyre companies came together to buy up streetcars and electric mass-transit rail systems in 45 major US cities to kill them off.
He explains how it was thanks to the excellent journalist Ida Tarbell who first exposed Rockefeller for his corruption. After some shocking attempts to discredit and humiliate her. Tarbell's investigative work resulted in Standard Oil being broken up into 34 different companies. Although this proved to be short-lived after a meeting in 1928 in the Scottish Highlands in a secret deal to carve up the world’s oil industry.
“Offshore, crime, money and politics aren’t an aberration of the system; they are the system.”
Shaxson also discusses the resource curse, which is particularly bad in places like Angola, which is oil-rich and diamond-rich, yet their vast and lucrative natural resources attract the worst kind of people and result in the worst kind of circumstances where a tiny elite profit to excess at the expense of the vast majority. He shows the ways that this same rule applies to the many tax havens scattered across the globe.
“In the era of financialisation, the corporate bosses and their advisers, and the financial sector, have moved away from creating wealth for the economy, and towards extracting wealth from the economy using financial techniques.”
Shaxson takes us back to the origins of the London’s financial sector revolution. “Britain entered its greatest period of broad-based prosperity and economic growth at precisely the moment the City of London was at its lowest ebb.” Bretton Woods allowed the UK government to impose strict regulations on the finance sector and high taxes on the rich.
The finance industry wasn’t happy about this and so launched the doomed Operation Robot. Even though this was approved by the likes of Churchill, it still failed. Despite the remarkable prosperity the boys in London wouldn’t give up that easily, determined to overthrow the system, the answer arrived in 1956 when the Midland Bank began taking US dollars unrelated to commercial or trade deals. This soon drew the avaricious US bankers who saw an opportunity to flourish without government interference. “The City establishment had quietly turned Britain into an offshore tax and financial haven.” We learn that between 1963 and 1969 US bank deposits in London rose twentyfold and then from 1970 to 1980 it expanded a further tenfold.
“If we broke up the big banks tomorrow, would that end racism? Would that end sexism?” So said Hillary Clinton in 2016, in a bizarre speech, during the campaign for her second failed presidential bid. Not only does this sound like something Trump would say, but it also leaves us no doubt as to where the US is and how far removed from reality in terms of regulating the system it is.
In 2017 Amazon announced plans to build a second HQ and asked cities to submit bids with incentive packages. At least 238 locations had bid, with the highest offer coming from Maryland, offering $8.5 billion in tax credits and other benefits for a project which Amazon itself says will only cost $5 billion.
Elsewhere he discusses The New Deal, Mont Pelerin Society, Hayek, consultant culture, Charles Tiebout, Thorstein Veblen, Richard Bork (who taught both Clintons at Yale), Luxembourg and Jean-Claude Juncker, Charles Haughey and the Celtic Tiger, the Free-rider problem and the Big Four, an elite group of accountancy firms which enjoy a shockingly disproportionate amount of power and influence.
“Many other politicians have come to love neoliberalism because the ‘verdict of the market’ absolves them of responsibility for making hard choices, helping them sidestep troublesome notions like fairness or justice.”
Explaining the culture of many of the British tax havens, it basically boils down to “You can trust us not to steal your money, but if you want to steal someone else’s money, then you can also trust us to turn a blind eye.”
This is an absolutely fascinating book. It does get a little sluggish in the second half, but any writer who dares to write so frankly and clearly on any subject that traditionally thrives on opacity and secrecy will always get my attention. Shaxson has written a powerful and devastatingly insightful piece of work.
November 25, 2020
Warning: do not read this book just before bedtime. It’s not good for blood pressure, nor for sleep.
The author is angry about the financial world – how it’s run – in whose interests it’s run – and his anger is, alas, infectious.
I started this book pretty sceptical about the City and finance in general, and I ended up feeling downright furious. And I’ve already published a book of my own (a satire) about the iniquities of investment banking. I thought I’d expunged all my anger. Alas, I hadn’t.
Through the course of The Finance Curse, Shaxson mercilessly exposes a set of financial scandals and makes plain how one section of society simply live by a different set of rules to the rest of us dupes.
He is particularly eloquent when summarising Luxemburg, Ireland and London’s tawdry record in recent decades, with their fingerprints on many of the worst financial scandals.
But as well as the geographic finger-pointing, he is also superb when describing the precise mechanisms behind all the legal-but-scarcely-ethical, scams that are used by the financial elites. The great strength of the book lies in its targeting of…
- Offshore Trusts. There’s a scathing and often hilarious account of the history, workings, and tax-avoiding iniquities of private offshore Trusts. (Watch out for a gag about the ubiquitous and unbearable Patek Philippe watch adverts, which I found laugh-out-loud funny.
- Private equity. There’s a brilliantly clear explanation of how they use offshore accounting and dubious internal loans to reduce reported profits to near zero, scamming both the tax collectors and (…get this…) their own investors in the process.
- The auditing scandal. We’ve all known for ages there’s an insane conflict of interest, having the same firm provide other companies with both their audit and consultancy services. Look at Enron. Or Carillion. Or, frankly, any of the big corporate failures – and you generally find an auditor with their fingers in the consultancy till. Shaxson goes deeper, though, showing how far the Big Four’s tentacles reach. Essential reading.
- The Govt outsourcing scandal. I hadn’t realised just how much of a rip-off Private Finance Initiatives (PFI) are. Nor the degree to which the outsourcing companies (Capita, et al) are de-skilling government departments. Urgh.
There is one other element of this book to highlight: a fantastic summary of the Chicago School of economists (who they were and what they spouted), for which I am hugely grateful. This will be a reference point for me far into the future.
All in all: the author scores a straight 10 out of 10 for (1) passion, (2) explaining the exact mechanisms by which the scamming happens, and (3) providing a historical perspective (how we arrived at this state of affairs). At these moments, the author sets aside the fire and brimstone and delivers some of the clearest writing you’ll find anywhere in the genre of popular finance / economics.
I can see a few ways to make the book even more persuasive. Not enough to score this edition down from 5 stars, but still a few – which I’m putting here for in the interests of the next edition (you never know who’s reading... I can hope!)
Firstly, when the author goes from micro (…"this is how this terrible cheating finance mechanism works”…) to macro (…"here’s how it affects society as a whole, and why it’s damaging our economy”…), he goes from his safe zone of extreme competence to somewhere he’s clearly less comfortable. One of the other reviewers (much less sympathetic than me) calls his writing in these places “hand-wavy” and there’s an element of truth in this. The author is clearly hoping that the evidence he amasses at the micro level must immediately translate to the macro. To paraphrase: “here’s all this barrage of cheating that’s happening – that must surely be damaging our economy?”
But economics isn’t that simple. Like any complex system, you get ‘emergent properties’ at higher levels of organisation. And the thing that seemed awful at one level (…grasping businessmen for example…) may be a bonus on a higher level (…competitive and entrepreneurial economy…)
This is a non-trivial point. The whole purpose of the book is to explain how a bloated finance sector is a net drain on the economy, the way oil reserves are almost always a drain on the developing world economies which have them. That’s the promise of the title (The Finance Curse), and it’s the promise offered in the cover blurb.
We’re told in the Introduction about the alleged cost to the UK economy of the finance sector: $4.5 trn. But it’s never backed up in the book. We don’t even find out over what period of time that money has been (will be?) lost. The $4.5 trn figure is referred to again in the final chapter (‘The Evidence Machine’), but only in passing. There’s no breakdown of how that figure is arrived at. This is a shame as it stops the book from fully delivering on its core promise and its core premise.
For the next edition, I truly hope the author teams up with a macro-economist and inserts an additional chapter to cover these points. It would add tremendous heft to what is already a great book.
A couple of other points:
The book is negative in tone. There’s a lot to be negative about – I get that – but at times, so many things are criticised, it can leave the reader wondering what state of affairs should make us happy – if anything? Is there any form of economic exchange that isn’t inherently scam-prone? This negativity threatens to weaken the book’s arguments ( you might think: “what’s the point in doing anything, if we’re going to end up being scammed anyway?”) – which is a shame. Especially as the author is, outside of this book, such a positive agent for change. The post-war, Bretton Woods settlement (engineered by Maynard Keynes and others) is held up as a paragon of how global society should be organised. I suspect this thesis is sound. But it probably needs deeper explanation and analysis to ensure it stands up. The author needs to tackle and explain the financial shocks that happened during 1945-1975 (the period ended, after all, quite catastrophically, from an economic pov), to ultimately carry the argument.
In some of the detail, the author is a touch fast and loose with his arguments. A few additional reviews pre-publication would have tightened things up. As he is – quite rightly – a critic of the loose use of evidence by his City antagonists, he needs to be whiter than white. Examples:
- The author periodically switches between GDP and GNP to make points about the lack of growth in financially over-dependant economies. This switch may be justified – but the justification isn’t provided. This leaves a (probably unfair) whiff of suspicion that different indices are cited according to which one gives the right answer.
- The long years of Austerity under the Tory administrations are blamed solely on the iniquities of the credit crunch. The credit crunch has a lot to answer for, for sure, but there were also long years of fiscal laxity before the credit crunch, which must be partly to blame (…for example, all those ruinously expensive PFI contracts that the author correctly skewers).
- In a similar move, the author implies in the chapter on Ireland that the special economic zone set up in Dublin (the IFSC) is responsible for the towering debts that Ireland was shackled with after the credit crunch. But that’s a stretch: a bigger contributory factor was surely the property boom and the accompanying debt binge.
Here are a final few points, which aren’t criticisms but more suggestions for a future edition:
(1) The GDP fallacy: one of the finance sector’s biggest claims – but also one of its greatest vulnerabilities – is the contribution it allegedly makes to the UK’s GDP figures. To put it bluntly, the GDP books have been cooked to make banking and finance appear far more important to our GDP (and thus to our economy) than they in fact are. A quick point should help reinforce this: in 2009, after yet another sympathetic tweaking of GDP methodology, the finance industry’s contribution to GDP went up. It went up in 2009 in the wake of the credit crunch and the worst financial crash since 1929. That’s clearly a nonsense, and one that a book such as this should feast on.
(2) The ‘free market’ fallacy: I’ve often wondered why so few people ever make the simple point that the very phrase “free markets” has bamboozled proponents and opponents in equal measure over the years. It’s become equated with deregulation – the confusion lying in the word ‘free’. “Surely ‘free’ means free of regulation?” No. It means freedom of choice for consumers, and freedom for producers to enter the market. We all understand that our political freedom requires a huge body of Law and regulation to maintain. Thus it is with our economic freedom too. Without regulation, you don’t get free markets, you get monopolies (and the law of the jungle). Above all, the Chicago School failed to grasp this simple point – which is probably why they ended up arguing in favour of monopolies and effectively eating their own intellectual tail!
(3) Why does no-one ever draw a comparison between the modern financial sector of the 21st Century and British heavy industry (coal mining, ship building, steel works) of the 1970s? To me the parallel is so striking, it’s screaming for attention. Take these two sentences: “A vast, unwieldy sector, dominated by a few colluding fat cats, existing solely with the financial support of the government, generating a certain amount of prestige abroad and a huge amount of cost at home. Ripe for reform, if not outright closure, so that the economy can deploy the talent that is currently locked in unproductive industries to more productive ones.”
About which industry am I writing? Shipbuilding of the 1970s? Or the City in the early 21st Century? Exactly. Both.
I can’t imagine many people have read this far into this review. If you have, understand this: I’ve engaged this deeply with this book because I love it. If you’ve not read it yet, you simply have to.
The depravity that Shaxson finds in so many areas of our financial system can ultimately lead to only one thing: another crash – and probably on a scale to match 1929. If and when it happens, I’m glad we’ll have people around like Shaxson to help us reform the system afterwards – as inevitably we’ll have to.
The author is angry about the financial world – how it’s run – in whose interests it’s run – and his anger is, alas, infectious.
I started this book pretty sceptical about the City and finance in general, and I ended up feeling downright furious. And I’ve already published a book of my own (a satire) about the iniquities of investment banking. I thought I’d expunged all my anger. Alas, I hadn’t.
Through the course of The Finance Curse, Shaxson mercilessly exposes a set of financial scandals and makes plain how one section of society simply live by a different set of rules to the rest of us dupes.
He is particularly eloquent when summarising Luxemburg, Ireland and London’s tawdry record in recent decades, with their fingerprints on many of the worst financial scandals.
But as well as the geographic finger-pointing, he is also superb when describing the precise mechanisms behind all the legal-but-scarcely-ethical, scams that are used by the financial elites. The great strength of the book lies in its targeting of…
- Offshore Trusts. There’s a scathing and often hilarious account of the history, workings, and tax-avoiding iniquities of private offshore Trusts. (Watch out for a gag about the ubiquitous and unbearable Patek Philippe watch adverts, which I found laugh-out-loud funny.
- Private equity. There’s a brilliantly clear explanation of how they use offshore accounting and dubious internal loans to reduce reported profits to near zero, scamming both the tax collectors and (…get this…) their own investors in the process.
- The auditing scandal. We’ve all known for ages there’s an insane conflict of interest, having the same firm provide other companies with both their audit and consultancy services. Look at Enron. Or Carillion. Or, frankly, any of the big corporate failures – and you generally find an auditor with their fingers in the consultancy till. Shaxson goes deeper, though, showing how far the Big Four’s tentacles reach. Essential reading.
- The Govt outsourcing scandal. I hadn’t realised just how much of a rip-off Private Finance Initiatives (PFI) are. Nor the degree to which the outsourcing companies (Capita, et al) are de-skilling government departments. Urgh.
There is one other element of this book to highlight: a fantastic summary of the Chicago School of economists (who they were and what they spouted), for which I am hugely grateful. This will be a reference point for me far into the future.
All in all: the author scores a straight 10 out of 10 for (1) passion, (2) explaining the exact mechanisms by which the scamming happens, and (3) providing a historical perspective (how we arrived at this state of affairs). At these moments, the author sets aside the fire and brimstone and delivers some of the clearest writing you’ll find anywhere in the genre of popular finance / economics.
I can see a few ways to make the book even more persuasive. Not enough to score this edition down from 5 stars, but still a few – which I’m putting here for in the interests of the next edition (you never know who’s reading... I can hope!)
Firstly, when the author goes from micro (…"this is how this terrible cheating finance mechanism works”…) to macro (…"here’s how it affects society as a whole, and why it’s damaging our economy”…), he goes from his safe zone of extreme competence to somewhere he’s clearly less comfortable. One of the other reviewers (much less sympathetic than me) calls his writing in these places “hand-wavy” and there’s an element of truth in this. The author is clearly hoping that the evidence he amasses at the micro level must immediately translate to the macro. To paraphrase: “here’s all this barrage of cheating that’s happening – that must surely be damaging our economy?”
But economics isn’t that simple. Like any complex system, you get ‘emergent properties’ at higher levels of organisation. And the thing that seemed awful at one level (…grasping businessmen for example…) may be a bonus on a higher level (…competitive and entrepreneurial economy…)
This is a non-trivial point. The whole purpose of the book is to explain how a bloated finance sector is a net drain on the economy, the way oil reserves are almost always a drain on the developing world economies which have them. That’s the promise of the title (The Finance Curse), and it’s the promise offered in the cover blurb.
We’re told in the Introduction about the alleged cost to the UK economy of the finance sector: $4.5 trn. But it’s never backed up in the book. We don’t even find out over what period of time that money has been (will be?) lost. The $4.5 trn figure is referred to again in the final chapter (‘The Evidence Machine’), but only in passing. There’s no breakdown of how that figure is arrived at. This is a shame as it stops the book from fully delivering on its core promise and its core premise.
For the next edition, I truly hope the author teams up with a macro-economist and inserts an additional chapter to cover these points. It would add tremendous heft to what is already a great book.
A couple of other points:
The book is negative in tone. There’s a lot to be negative about – I get that – but at times, so many things are criticised, it can leave the reader wondering what state of affairs should make us happy – if anything? Is there any form of economic exchange that isn’t inherently scam-prone? This negativity threatens to weaken the book’s arguments ( you might think: “what’s the point in doing anything, if we’re going to end up being scammed anyway?”) – which is a shame. Especially as the author is, outside of this book, such a positive agent for change. The post-war, Bretton Woods settlement (engineered by Maynard Keynes and others) is held up as a paragon of how global society should be organised. I suspect this thesis is sound. But it probably needs deeper explanation and analysis to ensure it stands up. The author needs to tackle and explain the financial shocks that happened during 1945-1975 (the period ended, after all, quite catastrophically, from an economic pov), to ultimately carry the argument.
In some of the detail, the author is a touch fast and loose with his arguments. A few additional reviews pre-publication would have tightened things up. As he is – quite rightly – a critic of the loose use of evidence by his City antagonists, he needs to be whiter than white. Examples:
- The author periodically switches between GDP and GNP to make points about the lack of growth in financially over-dependant economies. This switch may be justified – but the justification isn’t provided. This leaves a (probably unfair) whiff of suspicion that different indices are cited according to which one gives the right answer.
- The long years of Austerity under the Tory administrations are blamed solely on the iniquities of the credit crunch. The credit crunch has a lot to answer for, for sure, but there were also long years of fiscal laxity before the credit crunch, which must be partly to blame (…for example, all those ruinously expensive PFI contracts that the author correctly skewers).
- In a similar move, the author implies in the chapter on Ireland that the special economic zone set up in Dublin (the IFSC) is responsible for the towering debts that Ireland was shackled with after the credit crunch. But that’s a stretch: a bigger contributory factor was surely the property boom and the accompanying debt binge.
Here are a final few points, which aren’t criticisms but more suggestions for a future edition:
(1) The GDP fallacy: one of the finance sector’s biggest claims – but also one of its greatest vulnerabilities – is the contribution it allegedly makes to the UK’s GDP figures. To put it bluntly, the GDP books have been cooked to make banking and finance appear far more important to our GDP (and thus to our economy) than they in fact are. A quick point should help reinforce this: in 2009, after yet another sympathetic tweaking of GDP methodology, the finance industry’s contribution to GDP went up. It went up in 2009 in the wake of the credit crunch and the worst financial crash since 1929. That’s clearly a nonsense, and one that a book such as this should feast on.
(2) The ‘free market’ fallacy: I’ve often wondered why so few people ever make the simple point that the very phrase “free markets” has bamboozled proponents and opponents in equal measure over the years. It’s become equated with deregulation – the confusion lying in the word ‘free’. “Surely ‘free’ means free of regulation?” No. It means freedom of choice for consumers, and freedom for producers to enter the market. We all understand that our political freedom requires a huge body of Law and regulation to maintain. Thus it is with our economic freedom too. Without regulation, you don’t get free markets, you get monopolies (and the law of the jungle). Above all, the Chicago School failed to grasp this simple point – which is probably why they ended up arguing in favour of monopolies and effectively eating their own intellectual tail!
(3) Why does no-one ever draw a comparison between the modern financial sector of the 21st Century and British heavy industry (coal mining, ship building, steel works) of the 1970s? To me the parallel is so striking, it’s screaming for attention. Take these two sentences: “A vast, unwieldy sector, dominated by a few colluding fat cats, existing solely with the financial support of the government, generating a certain amount of prestige abroad and a huge amount of cost at home. Ripe for reform, if not outright closure, so that the economy can deploy the talent that is currently locked in unproductive industries to more productive ones.”
About which industry am I writing? Shipbuilding of the 1970s? Or the City in the early 21st Century? Exactly. Both.
I can’t imagine many people have read this far into this review. If you have, understand this: I’ve engaged this deeply with this book because I love it. If you’ve not read it yet, you simply have to.
The depravity that Shaxson finds in so many areas of our financial system can ultimately lead to only one thing: another crash – and probably on a scale to match 1929. If and when it happens, I’m glad we’ll have people around like Shaxson to help us reform the system afterwards – as inevitably we’ll have to.
December 30, 2019
This is the fourth "Financial Times 2018 best books" that I've read. I have found all of them problematic and not especially worth recommending. This is the worst of the four I've read.
It starts by by suggesting that just as there is a "resource curse" -- countries with abundant natural resources often do worse than countries without -- there is also a "finance curse": countries with oversized financial sectors do worse than countries with non-oversized financial sectors. The author is British and (I believe) the book was originally published in Britain. So it is mostly targeted at British audiences and, based on the introduction, he seems to primarily arguing that Britain has been hurt by the outsized importance of London's financial district.
(Notice that phrase "it is no coincidence" where isn't supported by any data or arguments; that's something we'll come back to later.)
But even if the book is focused on Britain, I think everyone in every country should be at least a little concerned about the impact of the financial sector. Maybe Britain is on the "cutting edge" and lessons can learnt from it and applied to wherever you happen to be living.
So even though it is focused on Britain, I was still keen to read on!
As chapter after chapter passed I lost my excitement for the book. The chapters follow a similar pattern -- a topic is introduced who relationship to oversized financial sectors is murky, we are treated to a long history of how things got to this point, and then there are a few unsatisfying & lightweight analyses. This is not a book with data or charts or references. Going back to the introduction and that phrase "it is no coincidence". Well...how do you know?! Prove it! Don't just assert it. Don't just say it is obvious. Convince me. Somehow. With something.
At times it feels like the author is just talking about any bad thing a business does, even if it doesn't seem to have much to do with oversized financial sectors. One chapter is about how communities increasingly compete with one another to offer tax breaks & subsidies to businesses. Amazon and their recent search for HQ2 is mentioned. But...Amazon isn't part of the financial sector. I don't like the practice but I don't see what it has to do with oversized financial sectors?
Likewise, there is another chapter on how old-school anti-trust doesn't seem very effective in the modern business climate. This chapter is primarily about antitrust as practiced in the US. Again, it is hard to see what this has to do with oversized financial sectors (especially the oversized British financial sector).
The chapters feel disconnected from one another. If I skip the chapter on anti-trust in the US, do I really miss out on anything in later chapters? And most of these individual chapters have had entire books written about them. (Indeed, chapter 3, about Britain's tax havens has a book written by this author.) Not that you need book-length treatment for everything -- it would be a bit ridiculous to say "instead of reading this 1 book, go read these 11 other books". But these aren't particularly compelling chapters, either.
We'll be treated to an excerpt from a 1969 Bank of England memo but when it comes to modern day actions & consequences it all tends to be fairly hand-wavy. "A growing global 'wall of money' is constantly seeking and finding new ways to burrow into the many nooks and crannies of our economy." Okay but how much money are we talking about? What are the effects?
Overall, I got the impression that the author was generally more interested in telling the story of how things to how they are -- how British Virgin Islands became a tax haven, how Ireland got its low corporate tax rate, how Robert Bork convinced the world to change how anti-trust was pursued -- than to really delve into the consequences circa 2019.
Of course, it probably didn't help that many of these topics were things I already had at least passing familiarity with, so all of those history lessons were even more boring. Maybe someone who is less familiar would find them interesting or eye-opening?
I guess I just prefer more numbers & data in my financial non-fiction and less storytelling.
It starts by by suggesting that just as there is a "resource curse" -- countries with abundant natural resources often do worse than countries without -- there is also a "finance curse": countries with oversized financial sectors do worse than countries with non-oversized financial sectors. The author is British and (I believe) the book was originally published in Britain. So it is mostly targeted at British audiences and, based on the introduction, he seems to primarily arguing that Britain has been hurt by the outsized importance of London's financial district.
Something similar is happening in Britain ... These top-down wealth flows from the financial sector haven't exactly turned Britain into an authoritarian state but what has happened is that finance is often in conflict with other parts of the economy, and in these battles finance always seems to win out ... It is no coincidence that the decline of British manufacturing since the 1970s has been so much faster than in other industrial economies, at the same time as Britain's financial sector assets have grown so much larger as a share of the economy than in comparable Western nations.
(Notice that phrase "it is no coincidence" where isn't supported by any data or arguments; that's something we'll come back to later.)
But even if the book is focused on Britain, I think everyone in every country should be at least a little concerned about the impact of the financial sector. Maybe Britain is on the "cutting edge" and lessons can learnt from it and applied to wherever you happen to be living.
So even though it is focused on Britain, I was still keen to read on!
As chapter after chapter passed I lost my excitement for the book. The chapters follow a similar pattern -- a topic is introduced who relationship to oversized financial sectors is murky, we are treated to a long history of how things got to this point, and then there are a few unsatisfying & lightweight analyses. This is not a book with data or charts or references. Going back to the introduction and that phrase "it is no coincidence". Well...how do you know?! Prove it! Don't just assert it. Don't just say it is obvious. Convince me. Somehow. With something.
At times it feels like the author is just talking about any bad thing a business does, even if it doesn't seem to have much to do with oversized financial sectors. One chapter is about how communities increasingly compete with one another to offer tax breaks & subsidies to businesses. Amazon and their recent search for HQ2 is mentioned. But...Amazon isn't part of the financial sector. I don't like the practice but I don't see what it has to do with oversized financial sectors?
Likewise, there is another chapter on how old-school anti-trust doesn't seem very effective in the modern business climate. This chapter is primarily about antitrust as practiced in the US. Again, it is hard to see what this has to do with oversized financial sectors (especially the oversized British financial sector).
The chapters feel disconnected from one another. If I skip the chapter on anti-trust in the US, do I really miss out on anything in later chapters? And most of these individual chapters have had entire books written about them. (Indeed, chapter 3, about Britain's tax havens has a book written by this author.) Not that you need book-length treatment for everything -- it would be a bit ridiculous to say "instead of reading this 1 book, go read these 11 other books". But these aren't particularly compelling chapters, either.
We'll be treated to an excerpt from a 1969 Bank of England memo but when it comes to modern day actions & consequences it all tends to be fairly hand-wavy. "A growing global 'wall of money' is constantly seeking and finding new ways to burrow into the many nooks and crannies of our economy." Okay but how much money are we talking about? What are the effects?
Overall, I got the impression that the author was generally more interested in telling the story of how things to how they are -- how British Virgin Islands became a tax haven, how Ireland got its low corporate tax rate, how Robert Bork convinced the world to change how anti-trust was pursued -- than to really delve into the consequences circa 2019.
Of course, it probably didn't help that many of these topics were things I already had at least passing familiarity with, so all of those history lessons were even more boring. Maybe someone who is less familiar would find them interesting or eye-opening?
I guess I just prefer more numbers & data in my financial non-fiction and less storytelling.
November 26, 2025
Felt like I was reading a textbook at times, but I did enjoy it. I found the private equity part particularly interesting…………. 🙃🙃🙃
December 30, 2019
The Finance Curse is the reason I will not achieve my 2019 GoodReads Reading Challenge of 200 books, but it was worth it. This is a very detailed review of the myriad ways the finance industry is undermining democracy, good government, and the economy. It is a well-known truism that resource-dependent economies enrich those in power, impoverish the rest, and tend toward authoritarianism. Russia and its oligarchy are a perfect example of a petrostate of corruption and authoritarian rule by corrupt leaders. Nicholas Shaxson makes the argument that this happens in countries whose economices are dominated by finance as well and he proves his point.
So what happens to economies that become financialized. The finance, insurance, and real estate economic sectors explode, this is where finance happens, not in manufacturing. The point of finance becomes extracting value, not creating it. Companies are bought to take on debt, have their assets stripped, their employees laid off, and then allowed to go bankrupt. Asset mining is more profitable than making things. Worse, the ideology of finance become internalized in the culture, so people nod approvingly while their pockets are picked.
Shaxon meticulously documents how finance became such an international juggernaut and how it has completely gutted many industries, shuttering newspapers and family farms along the way. It seems they will roll through industry after industry, cannibalizing the productive side of the economy to feed the greed of financiers whose hunger for wealth is infinite.
I think The Finance Curse is one of those important books everyone who cares about democracy should read. I also think few will invest the time. I am a fast reader and it took me two weeks to read this. While nearly a fourth of its 384 pages are footnotes, the prose is dense with detail. Then it is also so depressing that I had to put it down after each chapter to shake off the despair.
What makes it even more despairing is that so little of the book is devoted to ways to address the plague of financialization and the suggestions are weak sauce. Campaign finance reform is offered as this unversal panacea, but fighting financialization requires far more than getting money out of politics.
Financialization is a cultural blight. An entire section of every major newspaper devotes itself to the business of finance with the premise that what’s good for finance is good for the country. There is no such attention for labor or industry. Finance is the be all and end all of the economy. The health of Wall Street is proof the economy is working even though wages are stagnant, bankruptcies increase, and homelessness is rampant. How the country serves the needs of finance has become more important than how it serves the people, not just to the government, but to the public. Farmers who have declared bankruptcy still think the economy must be good because the Dow broke a new record. Finance has not just captured the government and the economy, it has captured the culture. We need cultural weapons to fight a cultural cancer.
I received a copy of The Finance Curse from the publisher through Edelweiss.
The Finance Curse at Grove Press
Nicholas Shaxson on Twitter
https://tonstantweaderreviews.wordpre...
So what happens to economies that become financialized. The finance, insurance, and real estate economic sectors explode, this is where finance happens, not in manufacturing. The point of finance becomes extracting value, not creating it. Companies are bought to take on debt, have their assets stripped, their employees laid off, and then allowed to go bankrupt. Asset mining is more profitable than making things. Worse, the ideology of finance become internalized in the culture, so people nod approvingly while their pockets are picked.
Shaxon meticulously documents how finance became such an international juggernaut and how it has completely gutted many industries, shuttering newspapers and family farms along the way. It seems they will roll through industry after industry, cannibalizing the productive side of the economy to feed the greed of financiers whose hunger for wealth is infinite.
I think The Finance Curse is one of those important books everyone who cares about democracy should read. I also think few will invest the time. I am a fast reader and it took me two weeks to read this. While nearly a fourth of its 384 pages are footnotes, the prose is dense with detail. Then it is also so depressing that I had to put it down after each chapter to shake off the despair.
What makes it even more despairing is that so little of the book is devoted to ways to address the plague of financialization and the suggestions are weak sauce. Campaign finance reform is offered as this unversal panacea, but fighting financialization requires far more than getting money out of politics.
Financialization is a cultural blight. An entire section of every major newspaper devotes itself to the business of finance with the premise that what’s good for finance is good for the country. There is no such attention for labor or industry. Finance is the be all and end all of the economy. The health of Wall Street is proof the economy is working even though wages are stagnant, bankruptcies increase, and homelessness is rampant. How the country serves the needs of finance has become more important than how it serves the people, not just to the government, but to the public. Farmers who have declared bankruptcy still think the economy must be good because the Dow broke a new record. Finance has not just captured the government and the economy, it has captured the culture. We need cultural weapons to fight a cultural cancer.
I received a copy of The Finance Curse from the publisher through Edelweiss.
The Finance Curse at Grove Press
Nicholas Shaxson on Twitter
https://tonstantweaderreviews.wordpre...
December 30, 2021
By any measure it’s obvious that the financial sector “extracts” more wealth out of communities -- entire countries, for that matter -- than it gives back. You don’t have to know how it’s done to see the evidence: Just look at who consistently reap the largest salaries year-over-year. And for what? "Financial Services"?? Please.
“Financial engineering” is a euphemistic con, a deceptive way of disguising parasitic chicanery as justly rewarded business innovation. As Paul Volcker once said, the only significant innovation banks have made for decades was introducing ATMs. Every time I hear about some brilliant young college grad getting seduced into working as a quant or derivatives designer on Wall St. I think it's a shame and total waste of talent -- not much better than the many young engineers who put their minds to work on the next weapons system.
When you start to ask “how” financial extraction actually works, the story usually starts getting hard to follow pretty quickly. But Nicholas Shaxson is a tremendous reporter and writer who knows how to bring his readers along. In fact, I can’t think of a better explanation of what the “financialization” of the economy means, what’s driving it, and how it damages us and our society.
There aren't too many books about capitalism that hold your attention as well. How many people gave Piketty’s “Capital” five stars on Goodreads actually read that entire doorstopper? That’s not to suggest that Picketty’s book wasn’t important or didn't deserve the attention it got. It did, but more for the depth of research Picketty conducted than for his means of communicating the results. I got so much more out of “The Finance Curse” that there’s simply no comparison.
Thus, I would put "The Resource Curse" on the top shelf, where I keep Jane Mayer’s “Dark Money,” Nancy McLean’s “Democracy in Chains,” Chris Leonard’s “Kochland,” Naomi Klein’s “The Shock Doctrine,” David Korten’s “When Corporations Rule the World,” Steve Coll’s “Private Empire,” Ralph Nader et al's "Taming the Giant Corporation" and other recent classics books on corporate capitalism.
Anyway, back to the topic of “extractivism.” “The Finance Curse” is a reference to “the resource curse,” the notion that countries whose economies are largely dependent upon extracting and exporting oil or valuable minerals almost universally end up saddled with corrupt governments, widespread poverty and misery, and sometimes a cycle of coups and violent upheavals. Just as much damage, although often subtler, has been caused by finance. (Although to be fair, the oil industry's "invisible" damage is also inestimable -- esp. the destruction passed off to future generations...)
Shaxson knows enough about oil and finance to draw the analogy. His first book was “Poisoned Wells: The Dirty Politics of African Oil” and his second book, “Treasure Islands,” was about offshore tax havens, a kind of prequel to this book.
The irony is that finance probably does more damage than these dirty industries (except in a few cases), but it’s more diffuse and the damage isn’t as easy to see as the messes oil companies have created in places like Nigeria and the Ecuadorean Amazon. And where they don't outright demolish weakened businesses, the damage that private equity, tax dodging trusts, hedge funds and other financial predators create isn't always easy to trace back to its source. Offshore tax havens and new multi-layered legal/financial vehicles, special purpose entities and other forms of speculation and obfuscation are extremely difficult to untangle.
The fundamental problem stems from the shift towards neoliberalism that followed the “Golden Age of Capitalism” in the decades that immediately followed WW II.
The hollowing out of the productive economy cannot simply be written off as the consequence of free trade and technological change. Or even tax competition. There's more to it than that.
The chapter on Iowa and what Big Meat is doing to farmers and rural communities is an example. In most of its 99 counties, Iowa has seen an explosion in CAFOs and extinction of small independent farms. Sure, blame Giant Ag companies that have forced farmers into serfdom. But their enablers include various financial operators.
Shaxson is a Brit. He came briefly to Iowa to look at the Ag sector. So perhaps he can be forgiven for not reminding his readers that a century ago people responded to the big industrial trusts and banks with more effective means than pitchforks. They organized to demand an equitable democratic banking system – demands that led to the FDIC and Farm Credit System. (Christopher Shaw writes this history in "Money, Power, and the People")
Another thing about financial predation is that it cuts across many sectors in the same communities. For example in Iowa, like many states, private equity also had a mostly invisible hand in driving deregulation and consolidation of radio news stations, a story told in the excellent documentary “Corporate FM.” I remember very little talk about private equity’s role in driving media consolidation back in the early 2000s, when the media reform movement peaked. As movements, we didn’t quite go that deep. That I know. But we saw the damage: Clear Channel cut station staff then started to pipe in national programming, including a steady stream of pro-war propaganda before the invasion of Iraq. For some communities, the damage was direct. In Minot, ND, after the station scooped up by Clear Channel was emptied of staff, there was no one left to answer the phone when first responders called to request an emergency broadcast warning after a train carrying deadly anhydrous ammonia derailed and gassed the town. One person was killed and many more went to the hospital.
This is just one example of why we need to keep financial companies from controlling businesses involved in essential services. There are many other examples that led Rep. Garcia and Rep. Tlaib to introduce the “Protecting Consumers From Market Manipulation Act,” which would amend the Bank Holding Company Act by prohibiting large non-financial firms from deriving 5 percent of their revenue from financial activities and restricting banks' ability to own commodities.
Because the connections aren’t always clear, the precise cost of “financialization” is not measurable. In one study, economists at UMass (PERI) estimated that by 2023 our supersized financial sector will have cost the US economy a cumulative $13 to $23 trillion since 1990.
I don't fault Shaxson for missing these or other specific examples of finance-driven gutting of other businesses. There is plenty of evidence here to make the general point and plenty of threads that readers can pursue further, with tightly referenced footnotes.
But he does give a tour of other examples of "financialization" - including the riverside tax-free zone in Dublin that powered Ireland's reputation as the “Celtic Tiger,” a primer in how secretive offshore (and onshore) trusts are used to keep wealth in the family and insulated from taxes, and The City of London (the financial center inside London, treated as an autonomous district) that drives the worst tax avoidance and corrupt money flows in the world -- not just through the City itself, but via its involvement in designing the laws and business vehicles and strategies used to park giant piles of money on small islands. The financial centre's elegant staid architecture houses a festering nucleus of global corruption that keeps politicians in the U.S. from advancing bank transparency laws (because, well, if you do that here, everyone will move their money there).
One sidebar note that occurred to me again: Many people mistakenly believe that corporations are LEGALLY required to maximize profits. Not true. (Law Prof. Lynn Stout debunks this myth directly in her book, “The Shareholder Value Myth.”) So then why do companies act like it is true? Partly because maybe some execs believe it. Partly because of the pressures they are under. Telescope back, however and look at the big picture: Neoliberal economics created its own cult of magical thinking that rationalized a masculine and competitive business culture of “short-termism.” Milton Freedman is usually cited here for his 1970 NYT magazine article, “The Social Responsibility of Business Is to Increase Its Profits.” (note that he cites "social responsibility" - not fiduciary duty under the law). I.e. serve shareholders, not the communities they operate in, workers they employ, or (by paying their taxes) the governments that support the infrastructure and services they rely upon. After Michael Milken, Ivan Boesky and other junk bond shysters crashed savings and loan banks and other businesses another important though less well-known proponent of shareholder primacy stepped up as the “intellectual savior” of that myth in the early 90s: Harvard Business School Prof. Michael Jensen published a couple of seminal papers that argued that the interests of shareholders, managers and the company were all aligned. Corporate America just needed a new breed of superstar owner-managers in a financial “market for corporate control” that would boost efficiency across the system. By pursuing profits for themselves they would be doing good for shareholders and others who depended upon the company for employment and spin-off advantages. In the early 90s, soon after Jensen’s paper, executive compensation shifted to reflect his “pay for performance” philosophy: Executives were rewarded with stock options whose value would rise precipitously with the value of the company. (Of course that incentivized execs and their professional enablers aka "gatekeepers" at accounting firms and banks to juice short-term performance – often by cooking the books, as we saw at Enron, WorldCom and a dozen other companies a decade later).
And when cable television entered the picture, it added a kind of cultural dimension to the phenomenon, as more and more business observers paid closer and closer attention to the stock market. Corporate executives soon learned to hit quarterly targets (see “The Number” by Alex Berenson). Jensen, meanwhile, said that firms should also borrow heavily, because the “discipline of debt” would make them focus even more intensely on the profits necessary to service that debt. How to get those profits? Financial engineering, destructive mergers and acquisitions (bankers and lawyers always there to help out in exchange for the usual fee-raking), etc. R&D on a technology that might take 5-10 years? No -- let the VC guys do that. We can always borrow and buy them when they're about to launch an IPO.
The point is, the "finance curse" is a kind of magical mode of parasitism facilitated by a class of professionals and the rules they have managed to embed in obscure regulatory corners (or the absence of any regulations that would impede systemic risk-taking). It is systemic, multi-dimensional and, importantly, global. Money travels faster and further (and in greater secrecy) than any commodity grown or manufactured.
A sample of Shaxson's limpid prose: I’m sure Neoliberalism has been defined as accessibly elsewhere, or maybe as accurately:
“Neoliberalism is an outgrowth of classical liberalism, which dates back a couple of centuries. There’s political liberalism, which is all about citizens having equal democratic rights in a system of sovereign law, and there’s economic liberalism, which starts from Adam Smith’s “invisible hand,” by which free exchanges or trade in properly functioning – that is, unsabotaged – markets are supposed to make society better off overall. The more liberal (or free) the exchange, in this view, the better for society as a whole; government’s role is to provide basic functions like defense, to enforce property rights, and to keep a watchful eye out for monopolies, but otherwise to get out of the way. … Neoliberalism put these ideas on steroids and gave them a rather large twist. Its starting point was the theory that government amasses ever more power and heads toward tyranny. … Hayek’s most famous book, The Road to Serfdom, laid this all out. Competition and the price system were the only legitimate arbiters of what was good and true, he said. And soon this became a neoliberal mantra. Cut taxes, deregulate, privatize, and launch all these pieces into competition with one another, then let it rip. … In this framework, explained the writer Stephen Metcalf, humans are transformed from being “bearers of grace, or of inalienable rights and duties,’ into ruthless profit-and-loss calculators, sorted into winners and losers. […] In terms of raw power, neoliberalism takes authority away from politicians and hands it to economists and moneyed interests.” (recall the famous moment at the beginning of Clinton’s first term when he realized that his agenda was limited by bondholders).
Although the book is not too difficult, it conveys the sense that the “finance curse” is not simply the growth in the size of the financial sector, but the many and pervasive ways that it injects financial techniques and metrics into the entire economy (and much that lies outside of it). That includes systemic rules like “competition” between tax jurisdictions (forum-shopping is often more of an excuse for companies to avoid taxes than a competitive necessity). And there are no limits – i.e. “the race doesn’t stop at zero” taxes or deregulation.
In other words -- without organized people wielding pens and pitchforks -- there is seemingly no end in sight. It's difficult. We are usually fighting symptoms not causes, or if so, only beginning to seriously fight back.
But if a lot more people read this book, we would at least begin to see more clearly what we have to contend with.
New movement formations like the "Hedgeclippers," the "Stop the Money Pipeline" coalition, Americans for Financial Reform and the global Tax Justice Network (which apparently helped Shaxson understand the world of offshore tax havens), are examples of new activism against the finance curse that we can support if we are too busy working to pay off our credit cards.
“Financial engineering” is a euphemistic con, a deceptive way of disguising parasitic chicanery as justly rewarded business innovation. As Paul Volcker once said, the only significant innovation banks have made for decades was introducing ATMs. Every time I hear about some brilliant young college grad getting seduced into working as a quant or derivatives designer on Wall St. I think it's a shame and total waste of talent -- not much better than the many young engineers who put their minds to work on the next weapons system.
When you start to ask “how” financial extraction actually works, the story usually starts getting hard to follow pretty quickly. But Nicholas Shaxson is a tremendous reporter and writer who knows how to bring his readers along. In fact, I can’t think of a better explanation of what the “financialization” of the economy means, what’s driving it, and how it damages us and our society.
There aren't too many books about capitalism that hold your attention as well. How many people gave Piketty’s “Capital” five stars on Goodreads actually read that entire doorstopper? That’s not to suggest that Picketty’s book wasn’t important or didn't deserve the attention it got. It did, but more for the depth of research Picketty conducted than for his means of communicating the results. I got so much more out of “The Finance Curse” that there’s simply no comparison.
Thus, I would put "The Resource Curse" on the top shelf, where I keep Jane Mayer’s “Dark Money,” Nancy McLean’s “Democracy in Chains,” Chris Leonard’s “Kochland,” Naomi Klein’s “The Shock Doctrine,” David Korten’s “When Corporations Rule the World,” Steve Coll’s “Private Empire,” Ralph Nader et al's "Taming the Giant Corporation" and other recent classics books on corporate capitalism.
Anyway, back to the topic of “extractivism.” “The Finance Curse” is a reference to “the resource curse,” the notion that countries whose economies are largely dependent upon extracting and exporting oil or valuable minerals almost universally end up saddled with corrupt governments, widespread poverty and misery, and sometimes a cycle of coups and violent upheavals. Just as much damage, although often subtler, has been caused by finance. (Although to be fair, the oil industry's "invisible" damage is also inestimable -- esp. the destruction passed off to future generations...)
Shaxson knows enough about oil and finance to draw the analogy. His first book was “Poisoned Wells: The Dirty Politics of African Oil” and his second book, “Treasure Islands,” was about offshore tax havens, a kind of prequel to this book.
The irony is that finance probably does more damage than these dirty industries (except in a few cases), but it’s more diffuse and the damage isn’t as easy to see as the messes oil companies have created in places like Nigeria and the Ecuadorean Amazon. And where they don't outright demolish weakened businesses, the damage that private equity, tax dodging trusts, hedge funds and other financial predators create isn't always easy to trace back to its source. Offshore tax havens and new multi-layered legal/financial vehicles, special purpose entities and other forms of speculation and obfuscation are extremely difficult to untangle.
The fundamental problem stems from the shift towards neoliberalism that followed the “Golden Age of Capitalism” in the decades that immediately followed WW II.
The hollowing out of the productive economy cannot simply be written off as the consequence of free trade and technological change. Or even tax competition. There's more to it than that.
The chapter on Iowa and what Big Meat is doing to farmers and rural communities is an example. In most of its 99 counties, Iowa has seen an explosion in CAFOs and extinction of small independent farms. Sure, blame Giant Ag companies that have forced farmers into serfdom. But their enablers include various financial operators.
Shaxson is a Brit. He came briefly to Iowa to look at the Ag sector. So perhaps he can be forgiven for not reminding his readers that a century ago people responded to the big industrial trusts and banks with more effective means than pitchforks. They organized to demand an equitable democratic banking system – demands that led to the FDIC and Farm Credit System. (Christopher Shaw writes this history in "Money, Power, and the People")
Another thing about financial predation is that it cuts across many sectors in the same communities. For example in Iowa, like many states, private equity also had a mostly invisible hand in driving deregulation and consolidation of radio news stations, a story told in the excellent documentary “Corporate FM.” I remember very little talk about private equity’s role in driving media consolidation back in the early 2000s, when the media reform movement peaked. As movements, we didn’t quite go that deep. That I know. But we saw the damage: Clear Channel cut station staff then started to pipe in national programming, including a steady stream of pro-war propaganda before the invasion of Iraq. For some communities, the damage was direct. In Minot, ND, after the station scooped up by Clear Channel was emptied of staff, there was no one left to answer the phone when first responders called to request an emergency broadcast warning after a train carrying deadly anhydrous ammonia derailed and gassed the town. One person was killed and many more went to the hospital.
This is just one example of why we need to keep financial companies from controlling businesses involved in essential services. There are many other examples that led Rep. Garcia and Rep. Tlaib to introduce the “Protecting Consumers From Market Manipulation Act,” which would amend the Bank Holding Company Act by prohibiting large non-financial firms from deriving 5 percent of their revenue from financial activities and restricting banks' ability to own commodities.
Because the connections aren’t always clear, the precise cost of “financialization” is not measurable. In one study, economists at UMass (PERI) estimated that by 2023 our supersized financial sector will have cost the US economy a cumulative $13 to $23 trillion since 1990.
I don't fault Shaxson for missing these or other specific examples of finance-driven gutting of other businesses. There is plenty of evidence here to make the general point and plenty of threads that readers can pursue further, with tightly referenced footnotes.
But he does give a tour of other examples of "financialization" - including the riverside tax-free zone in Dublin that powered Ireland's reputation as the “Celtic Tiger,” a primer in how secretive offshore (and onshore) trusts are used to keep wealth in the family and insulated from taxes, and The City of London (the financial center inside London, treated as an autonomous district) that drives the worst tax avoidance and corrupt money flows in the world -- not just through the City itself, but via its involvement in designing the laws and business vehicles and strategies used to park giant piles of money on small islands. The financial centre's elegant staid architecture houses a festering nucleus of global corruption that keeps politicians in the U.S. from advancing bank transparency laws (because, well, if you do that here, everyone will move their money there).
One sidebar note that occurred to me again: Many people mistakenly believe that corporations are LEGALLY required to maximize profits. Not true. (Law Prof. Lynn Stout debunks this myth directly in her book, “The Shareholder Value Myth.”) So then why do companies act like it is true? Partly because maybe some execs believe it. Partly because of the pressures they are under. Telescope back, however and look at the big picture: Neoliberal economics created its own cult of magical thinking that rationalized a masculine and competitive business culture of “short-termism.” Milton Freedman is usually cited here for his 1970 NYT magazine article, “The Social Responsibility of Business Is to Increase Its Profits.” (note that he cites "social responsibility" - not fiduciary duty under the law). I.e. serve shareholders, not the communities they operate in, workers they employ, or (by paying their taxes) the governments that support the infrastructure and services they rely upon. After Michael Milken, Ivan Boesky and other junk bond shysters crashed savings and loan banks and other businesses another important though less well-known proponent of shareholder primacy stepped up as the “intellectual savior” of that myth in the early 90s: Harvard Business School Prof. Michael Jensen published a couple of seminal papers that argued that the interests of shareholders, managers and the company were all aligned. Corporate America just needed a new breed of superstar owner-managers in a financial “market for corporate control” that would boost efficiency across the system. By pursuing profits for themselves they would be doing good for shareholders and others who depended upon the company for employment and spin-off advantages. In the early 90s, soon after Jensen’s paper, executive compensation shifted to reflect his “pay for performance” philosophy: Executives were rewarded with stock options whose value would rise precipitously with the value of the company. (Of course that incentivized execs and their professional enablers aka "gatekeepers" at accounting firms and banks to juice short-term performance – often by cooking the books, as we saw at Enron, WorldCom and a dozen other companies a decade later).
And when cable television entered the picture, it added a kind of cultural dimension to the phenomenon, as more and more business observers paid closer and closer attention to the stock market. Corporate executives soon learned to hit quarterly targets (see “The Number” by Alex Berenson). Jensen, meanwhile, said that firms should also borrow heavily, because the “discipline of debt” would make them focus even more intensely on the profits necessary to service that debt. How to get those profits? Financial engineering, destructive mergers and acquisitions (bankers and lawyers always there to help out in exchange for the usual fee-raking), etc. R&D on a technology that might take 5-10 years? No -- let the VC guys do that. We can always borrow and buy them when they're about to launch an IPO.
The point is, the "finance curse" is a kind of magical mode of parasitism facilitated by a class of professionals and the rules they have managed to embed in obscure regulatory corners (or the absence of any regulations that would impede systemic risk-taking). It is systemic, multi-dimensional and, importantly, global. Money travels faster and further (and in greater secrecy) than any commodity grown or manufactured.
A sample of Shaxson's limpid prose: I’m sure Neoliberalism has been defined as accessibly elsewhere, or maybe as accurately:
“Neoliberalism is an outgrowth of classical liberalism, which dates back a couple of centuries. There’s political liberalism, which is all about citizens having equal democratic rights in a system of sovereign law, and there’s economic liberalism, which starts from Adam Smith’s “invisible hand,” by which free exchanges or trade in properly functioning – that is, unsabotaged – markets are supposed to make society better off overall. The more liberal (or free) the exchange, in this view, the better for society as a whole; government’s role is to provide basic functions like defense, to enforce property rights, and to keep a watchful eye out for monopolies, but otherwise to get out of the way. … Neoliberalism put these ideas on steroids and gave them a rather large twist. Its starting point was the theory that government amasses ever more power and heads toward tyranny. … Hayek’s most famous book, The Road to Serfdom, laid this all out. Competition and the price system were the only legitimate arbiters of what was good and true, he said. And soon this became a neoliberal mantra. Cut taxes, deregulate, privatize, and launch all these pieces into competition with one another, then let it rip. … In this framework, explained the writer Stephen Metcalf, humans are transformed from being “bearers of grace, or of inalienable rights and duties,’ into ruthless profit-and-loss calculators, sorted into winners and losers. […] In terms of raw power, neoliberalism takes authority away from politicians and hands it to economists and moneyed interests.” (recall the famous moment at the beginning of Clinton’s first term when he realized that his agenda was limited by bondholders).
Although the book is not too difficult, it conveys the sense that the “finance curse” is not simply the growth in the size of the financial sector, but the many and pervasive ways that it injects financial techniques and metrics into the entire economy (and much that lies outside of it). That includes systemic rules like “competition” between tax jurisdictions (forum-shopping is often more of an excuse for companies to avoid taxes than a competitive necessity). And there are no limits – i.e. “the race doesn’t stop at zero” taxes or deregulation.
In other words -- without organized people wielding pens and pitchforks -- there is seemingly no end in sight. It's difficult. We are usually fighting symptoms not causes, or if so, only beginning to seriously fight back.
But if a lot more people read this book, we would at least begin to see more clearly what we have to contend with.
New movement formations like the "Hedgeclippers," the "Stop the Money Pipeline" coalition, Americans for Financial Reform and the global Tax Justice Network (which apparently helped Shaxson understand the world of offshore tax havens), are examples of new activism against the finance curse that we can support if we are too busy working to pay off our credit cards.
March 3, 2019
I have never read a book that made me feel so angry. Page after page of outrage, grinding my teeth, ranting at my poor family, and wondering why did I not know about any of this?
What's it about?
You may look at this book and think it is about economics, tax havens, private equity firms, millionaires, billionaires, monopolies and multinational corporations. Which it is.
This may immediately scream 'boring snoozefest' to you, however, it is about much more, about how all those things negatively impact your life.
This book is about how you are being cheated, about how your money and taxes are effectively being stolen, and as a result how you, your family, your community and country are all being left poorer.
This book is about the 'finance curse', which the author refers to as:
“the idea that once a financial sector grows above an optimal size and beyond its useful roles, it begins to harm the country that hosts it. Finance turns away from its traditional role serving society and creating wealth, and towards often more profitable activities to extract wealth from other parts of the economy. It also becomes politically powerful, shaping laws and rules and even society to suit it. The results include lower economic growth, steeper inequality, inefficient markets, damage to public services, worse corruption, the hollowing-out of alternative economic sectors, and widespread damage to democracy and to society.”
What is this book not?
It is not a door stop. It is not about socialism. It's not about the traditional left versus right in politics, or over simplified arguments about high tax versus low tax. It's about having an economy that works for everyone, not just the rich.
Who is it for?
Everyone, although it seems to be written more for the UK audience, it is relevant to any country where the 'finance curse' is in action. The book is relevant for everyone as the ideas, ideology, politics and economics behind it are everywhere. It should be taken as a warning of how not to run an economy.
You don't need a background in economics or to be any good with numbers (I am definitely not) to understand this book. It can get technical and there are too many abbreviations to remember BUT the outrage will keep you going. I am serious about how this book made me feel and I would recommend you do not read it before bed, because anger does not generally help you get to sleep.
If you are an economics student you should definitely read this, as it gives a powerful, well evidenced critique of the mainstream school of thought being taught at present, i.e. neo-liberalism.
What does the book cover?
The book will take you step by step through the history of the finance curse, how it developed and why it is still so powerful today, despite its clear detrimental impacts to all of us. It will tell you how the rich avoid taxes, explaining: tax havens, charitable trust and regulatory loop holes. The book also explains how the media, politicians, regulators, academia and the evidence they cherry pick are all twisted to keep the status quo.
There are in depth case studies, such as the growth and crash of the Irish economy, that clearly demonstrate how false current economic myths are. The myths the book tackles and proves false include: lower taxes are good for the economy, higher taxes will scare big business away, de-regulating markets is good for economic growth, and there are no negative impacts from lowering taxes (Clue: it definitely looks that way if you only look at one side of the story and refuse to measure the negative impacts).
This is an incredibly well researched book, 79 pages of notes and references at the end, with lots of evidence to back up its claims, and quotes and stories to keep it engaging. The author also keeps it engaging by pointing the reader back to the negative impacts on daily life, from housing prices to train ticket prices. As such there is a good balance between the abstract and impersonal, tax havens, with the deeply personal, the levels of care given to older people in their homes.
Why should I read it?
The 'finance curse' impacts every aspect of our lives and this book has so many answers to so many things we should all worry about.
If you worry about the level of care your Gran gets from her home visiting carers – you should read this book.
If you work as a carer and worry about why you are being asked to visit more and more people in less time, for less pay – you should read this book.
If you wonder about all the shops closing in your town centre and why Amazon does not pay tax – you should read this book.
If you worry about the rising numbers of food banks, of the rising numbers of working people using food banks – you should read this book.
If you are interested in why Brexit happened and why Trump was elected – you should read this book.
If you ever wonder why, as UK tax payers, we are paying for the mistakes made by the finance sector – you should read this book.
If you ever wonder why no bankers or anyone from the finance sector went to jail, at least in the UK, after the last financial crash – you should read this book.
If you care about inequality, poverty, workers rights, global development – you should read this book.
If you are concerned about corruption in markets, corruption in politics and cross border organised crime – you should read this book.
If you care about national security, democracy, sovereignty, foreign influence on government – you should read this book.
What's it about?
You may look at this book and think it is about economics, tax havens, private equity firms, millionaires, billionaires, monopolies and multinational corporations. Which it is.
This may immediately scream 'boring snoozefest' to you, however, it is about much more, about how all those things negatively impact your life.
This book is about how you are being cheated, about how your money and taxes are effectively being stolen, and as a result how you, your family, your community and country are all being left poorer.
This book is about the 'finance curse', which the author refers to as:
“the idea that once a financial sector grows above an optimal size and beyond its useful roles, it begins to harm the country that hosts it. Finance turns away from its traditional role serving society and creating wealth, and towards often more profitable activities to extract wealth from other parts of the economy. It also becomes politically powerful, shaping laws and rules and even society to suit it. The results include lower economic growth, steeper inequality, inefficient markets, damage to public services, worse corruption, the hollowing-out of alternative economic sectors, and widespread damage to democracy and to society.”
What is this book not?
It is not a door stop. It is not about socialism. It's not about the traditional left versus right in politics, or over simplified arguments about high tax versus low tax. It's about having an economy that works for everyone, not just the rich.
Who is it for?
Everyone, although it seems to be written more for the UK audience, it is relevant to any country where the 'finance curse' is in action. The book is relevant for everyone as the ideas, ideology, politics and economics behind it are everywhere. It should be taken as a warning of how not to run an economy.
You don't need a background in economics or to be any good with numbers (I am definitely not) to understand this book. It can get technical and there are too many abbreviations to remember BUT the outrage will keep you going. I am serious about how this book made me feel and I would recommend you do not read it before bed, because anger does not generally help you get to sleep.
If you are an economics student you should definitely read this, as it gives a powerful, well evidenced critique of the mainstream school of thought being taught at present, i.e. neo-liberalism.
What does the book cover?
The book will take you step by step through the history of the finance curse, how it developed and why it is still so powerful today, despite its clear detrimental impacts to all of us. It will tell you how the rich avoid taxes, explaining: tax havens, charitable trust and regulatory loop holes. The book also explains how the media, politicians, regulators, academia and the evidence they cherry pick are all twisted to keep the status quo.
There are in depth case studies, such as the growth and crash of the Irish economy, that clearly demonstrate how false current economic myths are. The myths the book tackles and proves false include: lower taxes are good for the economy, higher taxes will scare big business away, de-regulating markets is good for economic growth, and there are no negative impacts from lowering taxes (Clue: it definitely looks that way if you only look at one side of the story and refuse to measure the negative impacts).
This is an incredibly well researched book, 79 pages of notes and references at the end, with lots of evidence to back up its claims, and quotes and stories to keep it engaging. The author also keeps it engaging by pointing the reader back to the negative impacts on daily life, from housing prices to train ticket prices. As such there is a good balance between the abstract and impersonal, tax havens, with the deeply personal, the levels of care given to older people in their homes.
Why should I read it?
The 'finance curse' impacts every aspect of our lives and this book has so many answers to so many things we should all worry about.
If you worry about the level of care your Gran gets from her home visiting carers – you should read this book.
If you work as a carer and worry about why you are being asked to visit more and more people in less time, for less pay – you should read this book.
If you wonder about all the shops closing in your town centre and why Amazon does not pay tax – you should read this book.
If you worry about the rising numbers of food banks, of the rising numbers of working people using food banks – you should read this book.
If you are interested in why Brexit happened and why Trump was elected – you should read this book.
If you ever wonder why, as UK tax payers, we are paying for the mistakes made by the finance sector – you should read this book.
If you ever wonder why no bankers or anyone from the finance sector went to jail, at least in the UK, after the last financial crash – you should read this book.
If you care about inequality, poverty, workers rights, global development – you should read this book.
If you are concerned about corruption in markets, corruption in politics and cross border organised crime – you should read this book.
If you care about national security, democracy, sovereignty, foreign influence on government – you should read this book.
March 3, 2019
I have never read a book that made me feel so angry. Page after page of outrage, grinding my teeth, ranting at my poor family, and wondering why did I not know about any of this?
What's it about?
You may look at this book and think it is about economics, tax havens, private equity firms, millionaires, billionaires, monopolies and multinational corporations. Which it is.
This may immediately scream 'boring snoozefest' to you, however, it is about much more, about how all those things negatively impact your life.
This book is about how you are being cheated, about how your money and taxes are effectively being stolen, and as a result how you, your family, your community and country are all being left poorer.
This book is about the 'finance curse', which the author refers to as:
“the idea that once a financial sector grows above an optimal size and beyond its useful roles, it begins to harm the country that hosts it. Finance turns away from its traditional role serving society and creating wealth, and towards often more profitable activities to extract wealth from other parts of the economy. It also becomes politically powerful, shaping laws and rules and even society to suit it. The results include lower economic growth, steeper inequality, inefficient markets, damage to public services, worse corruption, the hollowing-out of alternative economic sectors, and widespread damage to democracy and to society.”
What is this book not?
It is not a door stop. It is not about socialism. It's not about the traditional left versus right in politics, or over simplified arguments about high tax versus low tax. It's about having an economy that works for everyone, not just the rich.
Who is it for?
Everyone, although it seems to be written more for the UK audience, it is relevant to any country where the 'finance curse' is in action. The book is relevant for everyone as the ideas, ideology, politics and economics behind it are everywhere. It should be taken as a warning of how not to run an economy.
You don't need a background in economics or to be any good with numbers (I am definitely not) to understand this book. It can get technical and there are too many abbreviations to remember BUT the outrage will keep you going. I am serious about how this book made me feel and I would recommend you do not read it before bed, because anger does not generally help you get to sleep.
If you are an economics student you should definitely read this, as it gives a powerful, well evidenced critique of the mainstream school of thought being taught at present, i.e. neo-liberalism.
What does the book cover?
The book will take you step by step through the history of the finance curse, how it developed and why it is still so powerful today, despite its clear detrimental impacts to all of us. It will tell you how the rich avoid taxes, explaining: tax havens, charitable trust and regulatory loop holes. The book also explains how the media, politicians, regulators, academia and the evidence they cherry pick are all twisted to keep the status quo.
There are in depth case studies, such as the growth and crash of the Irish economy, that clearly demonstrate how false current economic myths are. The myths the book tackles and proves false include: lower taxes are good for the economy, higher taxes will scare big business away, de-regulating markets is good for economic growth, and there are no negative impacts from lowering taxes (Clue: it definitely looks that way if you only look at one side of the story and refuse to measure the negative impacts).
This is an incredibly well researched book, 79 pages of notes and references at the end, with lots of evidence to back up its claims, and quotes and stories to keep it engaging. The author also keeps it engaging by pointing the reader back to the negative impacts on daily life, from housing prices to train ticket prices. As such there is a good balance between the abstract and impersonal, tax havens, with the deeply personal, the levels of care given to older people in their homes.
Why should I read it?
The 'finance curse' impacts every aspect of our lives and this book has so many answers to so many things we should all worry about.
If you worry about the level of care your Gran gets from her home visiting carers – you should read this book.
If you work as a carer and worry about why you are being asked to visit more and more people in less time, for less pay – you should read this book.
If you wonder about all the shops closing in your town centre and why Amazon does not pay tax – you should read this book.
If you worry about the rising numbers of food banks, of the rising numbers of working people using food banks – you should read this book.
If you are interested in why Brexit happened and why Trump was elected – you should read this book.
If you ever wonder why, as UK tax payers, we are paying for the mistakes made by the finance sector – you should read this book.
If you ever wonder why no bankers or anyone from the finance sector went to jail, at least in the UK, after the last financial crash – you should read this book.
If you care about inequality, poverty, workers rights, global development – you should read this book.
If you are concerned about corruption in markets, corruption in politics and cross border organised crime – you should read this book.
If you care about national security, democracy, sovereignty, foreign influence on government – you should read this book.
What's it about?
You may look at this book and think it is about economics, tax havens, private equity firms, millionaires, billionaires, monopolies and multinational corporations. Which it is.
This may immediately scream 'boring snoozefest' to you, however, it is about much more, about how all those things negatively impact your life.
This book is about how you are being cheated, about how your money and taxes are effectively being stolen, and as a result how you, your family, your community and country are all being left poorer.
This book is about the 'finance curse', which the author refers to as:
“the idea that once a financial sector grows above an optimal size and beyond its useful roles, it begins to harm the country that hosts it. Finance turns away from its traditional role serving society and creating wealth, and towards often more profitable activities to extract wealth from other parts of the economy. It also becomes politically powerful, shaping laws and rules and even society to suit it. The results include lower economic growth, steeper inequality, inefficient markets, damage to public services, worse corruption, the hollowing-out of alternative economic sectors, and widespread damage to democracy and to society.”
What is this book not?
It is not a door stop. It is not about socialism. It's not about the traditional left versus right in politics, or over simplified arguments about high tax versus low tax. It's about having an economy that works for everyone, not just the rich.
Who is it for?
Everyone, although it seems to be written more for the UK audience, it is relevant to any country where the 'finance curse' is in action. The book is relevant for everyone as the ideas, ideology, politics and economics behind it are everywhere. It should be taken as a warning of how not to run an economy.
You don't need a background in economics or to be any good with numbers (I am definitely not) to understand this book. It can get technical and there are too many abbreviations to remember BUT the outrage will keep you going. I am serious about how this book made me feel and I would recommend you do not read it before bed, because anger does not generally help you get to sleep.
If you are an economics student you should definitely read this, as it gives a powerful, well evidenced critique of the mainstream school of thought being taught at present, i.e. neo-liberalism.
What does the book cover?
The book will take you step by step through the history of the finance curse, how it developed and why it is still so powerful today, despite its clear detrimental impacts to all of us. It will tell you how the rich avoid taxes, explaining: tax havens, charitable trust and regulatory loop holes. The book also explains how the media, politicians, regulators, academia and the evidence they cherry pick are all twisted to keep the status quo.
There are in depth case studies, such as the growth and crash of the Irish economy, that clearly demonstrate how false current economic myths are. The myths the book tackles and proves false include: lower taxes are good for the economy, higher taxes will scare big business away, de-regulating markets is good for economic growth, and there are no negative impacts from lowering taxes (Clue: it definitely looks that way if you only look at one side of the story and refuse to measure the negative impacts).
This is an incredibly well researched book, 79 pages of notes and references at the end, with lots of evidence to back up its claims, and quotes and stories to keep it engaging. The author also keeps it engaging by pointing the reader back to the negative impacts on daily life, from housing prices to train ticket prices. As such there is a good balance between the abstract and impersonal, tax havens, with the deeply personal, the levels of care given to older people in their homes.
Why should I read it?
The 'finance curse' impacts every aspect of our lives and this book has so many answers to so many things we should all worry about.
If you worry about the level of care your Gran gets from her home visiting carers – you should read this book.
If you work as a carer and worry about why you are being asked to visit more and more people in less time, for less pay – you should read this book.
If you wonder about all the shops closing in your town centre and why Amazon does not pay tax – you should read this book.
If you worry about the rising numbers of food banks, of the rising numbers of working people using food banks – you should read this book.
If you are interested in why Brexit happened and why Trump was elected – you should read this book.
If you ever wonder why, as UK tax payers, we are paying for the mistakes made by the finance sector – you should read this book.
If you ever wonder why no bankers or anyone from the finance sector went to jail, at least in the UK, after the last financial crash – you should read this book.
If you care about inequality, poverty, workers rights, global development – you should read this book.
If you are concerned about corruption in markets, corruption in politics and cross border organised crime – you should read this book.
If you care about national security, democracy, sovereignty, foreign influence on government – you should read this book.
September 6, 2024
A good roundhouse kick on the triple woes of financialisation, deregulation, and tax havens and tax evasions, in good company with (and sometimes liberally repeating) Shaxson's own Treasure Islands, Oliver Bullough's Moneyland, or Rana Foroohars Makers and Takers.
What I learned: How big and corrosive tax evasion is. That the deregulation of financial markets and creation of deregulated tax havens in British territories and tax-avoiding trust funds interact and were both actively driven by the City of London, against US resistance.
That the political rhetoric of a global competition between nations is economically nonsensical but expedient for national economic incumbents who use it to capture regulators and make national markets *less* competitive for them.
The further the book goes on, the more it falls into a more general anti-capitalist critique.
The main thesis supposedly holding the book together is the titular "finance curse". The idea is plausible and has merit: Like the "resource curse" of developing nations rich in natural resources, a nation's financial industries can grow to a size where they hurt growth and innovation in other economic sectors and wellbeing across society, as it captures regulators, fosters corruption, and absorbs talent, capital, and effort into its profit- but not value-generating activities. The book even reports an estimate of how much the oversized financial sector of the UK has cost the country, to the tune of several trillions of pounds (as always, assess the numbers and underlying assumptions for yourself). But this nice idea then isn't really developed convincingly as a main thread of the book that necessitates and integrates all its other parts. It's more like a preface to an overall decent collection of chapters.
What I learned: How big and corrosive tax evasion is. That the deregulation of financial markets and creation of deregulated tax havens in British territories and tax-avoiding trust funds interact and were both actively driven by the City of London, against US resistance.
That the political rhetoric of a global competition between nations is economically nonsensical but expedient for national economic incumbents who use it to capture regulators and make national markets *less* competitive for them.
The further the book goes on, the more it falls into a more general anti-capitalist critique.
The main thesis supposedly holding the book together is the titular "finance curse". The idea is plausible and has merit: Like the "resource curse" of developing nations rich in natural resources, a nation's financial industries can grow to a size where they hurt growth and innovation in other economic sectors and wellbeing across society, as it captures regulators, fosters corruption, and absorbs talent, capital, and effort into its profit- but not value-generating activities. The book even reports an estimate of how much the oversized financial sector of the UK has cost the country, to the tune of several trillions of pounds (as always, assess the numbers and underlying assumptions for yourself). But this nice idea then isn't really developed convincingly as a main thread of the book that necessitates and integrates all its other parts. It's more like a preface to an overall decent collection of chapters.
December 15, 2018
The financial sector is inflicting a staggering cost on people - how exactly this happens is what Mr. Shaxson's book aims to explains. The title is a witty assimilation with the "resource curse", when resource-rich countries stop bargaining with their citizens because all the money comes from one or two corrupt places - democracy falls apart, living standards dive, lives are devastated. That could very well be the future. The books is a knowledgeable walkthrough into important economic ideas and instruments, such as: the theories of Veblen, Hayek, neoliberalism (as the source of most evil), the history of the Eurodollar trade in the City of London, fiscal paradises (very interesting info here, Mr. Shaxson has written a whole other insightful book about this), the Third Way & Competitive agenda as political messages corrupting past decades, how Ireland became the "Celtic Tiger" and then went bust in 2008' Great Crisis, Basel rules, how CDO's came to exist, trusts, private equity's history, the City of London's very flimsy regulations, Big Four companies, tax cuts and the impossibility to judge their effectiveness. The book is filled with great information, which I've not read elsewhere; at times it's quite extreme, but it does not aim to be mild - its message is that something is deeply rotten in the City, people should worry and act. I've read it after seeing the good review granted by Mr. Martin Wolf, Financial Times' chief economics commentator, who also included it in his 2018' Best Economics Books list (he also said it's been an exceptional year for economic books, oh the joy!).
June 25, 2023
A tough read. But highly rewarding.
Four instead instead of Five stars, because I do think it needed a tighter edit. Some time points are repeated or explored in more detail than a general reader might need. However I suppose you should not criticise Shaxson for being through in his research.
This is not a left-wing screed against "the system- man!!". Shaxson admits early in the book, that modern economies need a healthy financial services industry, but his contention and he argues it conclusively in this book, is that in the UK and USA in particular the Finance sector is the tail wagging the dog and it's outsize and influence is damaging both countries in very profound ways.
We have all heard of the "Resource or Commodity Curse" - where a commodity instead of bringing wealth and stability to a country brings misery and corruption. Think of oil in Nigeria or minerals in Angola. Shaxson believes there is the "Finance Curse" where if the banking and finance industry goes beyond a percentage of a country GDP it become damaging rather than a thing of utility.
If you are a British reader, this book is especially uncomfortable, as the City of London has been the offender in many of the instances the author lays out.
So how is Global Finance beggaring the nations that host them? The author takes us through the steps that led us to where we were from 1945 onwards.
1- The undermining of capital controls. The Bretton Woods exchange system of fixed currency exchanges gave us the most stable period of the world economy between 1946 and 1972 when the system collapsed. The City of London from the off, tried to undermine this system of currency stability by offering a shadow banking system of Eurodollars outside of the system, and British goverments turned a blind eye. This allowed holders of wealth to chase investment return around the globe rather than invest in their domestic markets. Want to know why your house costs more now in 2023 than in 1983 as a portion of your income. That is because hot capital from America, China and Russian can move their money to the UK and buy up all the houses in the UK.....
2- Off Shore Tax havens. The City of London quickly in the 1950s worked out that they were losing the competitive edge of having the sterling zone of the old Empire. How to keep some of that money in London. Using British oversea territories to allow Klepocrats from the new independent Asian and African colonies to channel their stolen weath through asset manager in the city into accounts in the Cayman Islands and Jersey.
This perhaps is the most egregious part of the book. The UK goverment has about 30 overseas territories dotted around the globe. The last remaining crumbs of the British Empire. Wealth Managers in the City of London use them to funnel money through trust to not just avoid ineritance tax from the rich in the UK via Trusts but monies stolen from the developing countries that so despearately need them to invest in their infrastructure. There is a telling episode where an owner of a bar in Ghana is confronted with the fact that they pay more tax to the Ghana goverment than the brewer SAB Miller who produces many of the world most famous beer brands. How much tax did this bar owner pay - $50 Ghanian dollars. Yes one of the world biggest corporations pays less tax in Ghana than that and it is due to tax havens. Ever wonder why Amazon have their European headquarters in little old Luxembourg instead of London, Berlin or Paris........?
3- Light Touch Regulation. Banks lobby goverments to keep light touch regulation of the banks. Not a single banker has been jailed for the 2008 banking crisis in the UK. Shaxson goes into some detail how the Banking Lobby has the Goverment in its pocket. Our current PM is an ex employee of Gold man Sachs. A former Chancellor is now an employee of Black Rock Investments. The taking hold of the UK state by the banking system is almost complete.
4- Private Equity- or to give it the old discredited name "Leverage Buy out". So you borrow money from the bank to buy up a company - asset strip it and pay yourself a huge dividend but leave behind a weaker company.
If I walked into a clothes retailer with a black bin bag and stripped the rails of clothes and product, I would have been charged by the Police and possibly jailed.
A Private Equity fund or a purchaser backed by PE can borrow millions from a bank, could buy the whole Chains of stores of that retailer. Sell off the property, lease it back to the company leaving it with no real assets or capital and then pay himself (via his company registered- a tax haven) a huge dividend and pay no tax. The company then is hollowed out and at risk of going broke, loaded in some cases with debt and few capital assets left, but the PE partners walk away with millions.
So who is the biggest criminal the shoplifter or the person that robs the retail of all its assets and walks away leaving it a weaker company?
There are also chapters about how the goverment outsourcing mania has removed monies from the public to private sector, how the City of London sucks out investment and talent from the rest of the UK and how the big four accountancy firms facilitate highly dubious financial practices in Corporate UK.
What I would have liked from the book is more about what we can do to counter this nonsense. It makes it a heavy and somewhat depressing read. There is a chapter relating to this but it is only 20 pages out of a 300 page book, this could have been interjected into the book more to lighten it up and be a more positive manifesto of change.
Still i dont want to seem to shoot the messenger. A really important book.
Four instead instead of Five stars, because I do think it needed a tighter edit. Some time points are repeated or explored in more detail than a general reader might need. However I suppose you should not criticise Shaxson for being through in his research.
This is not a left-wing screed against "the system- man!!". Shaxson admits early in the book, that modern economies need a healthy financial services industry, but his contention and he argues it conclusively in this book, is that in the UK and USA in particular the Finance sector is the tail wagging the dog and it's outsize and influence is damaging both countries in very profound ways.
We have all heard of the "Resource or Commodity Curse" - where a commodity instead of bringing wealth and stability to a country brings misery and corruption. Think of oil in Nigeria or minerals in Angola. Shaxson believes there is the "Finance Curse" where if the banking and finance industry goes beyond a percentage of a country GDP it become damaging rather than a thing of utility.
If you are a British reader, this book is especially uncomfortable, as the City of London has been the offender in many of the instances the author lays out.
So how is Global Finance beggaring the nations that host them? The author takes us through the steps that led us to where we were from 1945 onwards.
1- The undermining of capital controls. The Bretton Woods exchange system of fixed currency exchanges gave us the most stable period of the world economy between 1946 and 1972 when the system collapsed. The City of London from the off, tried to undermine this system of currency stability by offering a shadow banking system of Eurodollars outside of the system, and British goverments turned a blind eye. This allowed holders of wealth to chase investment return around the globe rather than invest in their domestic markets. Want to know why your house costs more now in 2023 than in 1983 as a portion of your income. That is because hot capital from America, China and Russian can move their money to the UK and buy up all the houses in the UK.....
2- Off Shore Tax havens. The City of London quickly in the 1950s worked out that they were losing the competitive edge of having the sterling zone of the old Empire. How to keep some of that money in London. Using British oversea territories to allow Klepocrats from the new independent Asian and African colonies to channel their stolen weath through asset manager in the city into accounts in the Cayman Islands and Jersey.
This perhaps is the most egregious part of the book. The UK goverment has about 30 overseas territories dotted around the globe. The last remaining crumbs of the British Empire. Wealth Managers in the City of London use them to funnel money through trust to not just avoid ineritance tax from the rich in the UK via Trusts but monies stolen from the developing countries that so despearately need them to invest in their infrastructure. There is a telling episode where an owner of a bar in Ghana is confronted with the fact that they pay more tax to the Ghana goverment than the brewer SAB Miller who produces many of the world most famous beer brands. How much tax did this bar owner pay - $50 Ghanian dollars. Yes one of the world biggest corporations pays less tax in Ghana than that and it is due to tax havens. Ever wonder why Amazon have their European headquarters in little old Luxembourg instead of London, Berlin or Paris........?
3- Light Touch Regulation. Banks lobby goverments to keep light touch regulation of the banks. Not a single banker has been jailed for the 2008 banking crisis in the UK. Shaxson goes into some detail how the Banking Lobby has the Goverment in its pocket. Our current PM is an ex employee of Gold man Sachs. A former Chancellor is now an employee of Black Rock Investments. The taking hold of the UK state by the banking system is almost complete.
4- Private Equity- or to give it the old discredited name "Leverage Buy out". So you borrow money from the bank to buy up a company - asset strip it and pay yourself a huge dividend but leave behind a weaker company.
If I walked into a clothes retailer with a black bin bag and stripped the rails of clothes and product, I would have been charged by the Police and possibly jailed.
A Private Equity fund or a purchaser backed by PE can borrow millions from a bank, could buy the whole Chains of stores of that retailer. Sell off the property, lease it back to the company leaving it with no real assets or capital and then pay himself (via his company registered- a tax haven) a huge dividend and pay no tax. The company then is hollowed out and at risk of going broke, loaded in some cases with debt and few capital assets left, but the PE partners walk away with millions.
So who is the biggest criminal the shoplifter or the person that robs the retail of all its assets and walks away leaving it a weaker company?
There are also chapters about how the goverment outsourcing mania has removed monies from the public to private sector, how the City of London sucks out investment and talent from the rest of the UK and how the big four accountancy firms facilitate highly dubious financial practices in Corporate UK.
What I would have liked from the book is more about what we can do to counter this nonsense. It makes it a heavy and somewhat depressing read. There is a chapter relating to this but it is only 20 pages out of a 300 page book, this could have been interjected into the book more to lighten it up and be a more positive manifesto of change.
Still i dont want to seem to shoot the messenger. A really important book.
February 16, 2022
There is a game being played around the world that is bigger than football or Fortnite. It is called financialisation. To borrow one of the author’s examples, the score is always displayed as a fraction: returns over investment. As with many games, the highest score wins.
While are there may be ways to boost returns and hence your chances, the easiest way to game your score is to reduce investment – at least investment that officially appears on your books. By this simple measure, in both the public and private sectors, our societies have experienced a multitude of effects which have led to local and international crises, increased wealth inequality and left the global financial system weaker. To reward themselves for their victories, the winners have devised all manner of techniques to extract wealth for themselves, trophies be damned.
Outlining the finance curse, Shaxson paints a target on monopolies, the competitiveness agenda and the Third Way, all ideological tools to reduce regulation, taxes and accountability that shift capital upwards to big business and the wealthy. Shaxson shows how something as obscure as the Basel Accord or the structure of an offshore SPV (special purpose vehicle) affects your ability to buy your home – and therefore shows how the complexities of financial markets are essential to understanding our everyday challenges.
The fact that, with the aid of legal sleight of hand, the industry in exotic financial instruments such as credit default swaps could have grown to a size equal to that of the entire global economy, is nothing short of insanity. Superlatives do not suffice. These facts are nowhere to be seen in our celebrity/disaster obsessed short-attention-span news cycles. Even after the experiences of the 2008 financial crisis, we continue to sew the seeds of future disasters. The scale that these crises could encompass is genuinely beyond imagination.
Animal instincts are at play here. The author shows that US regulation does a better job of acknowledging these instincts, whereas the UK laws assume principles of gentlemanliness. The picture in London naturally is a mirage - an excuse for extreme liberalisation.
Financialisation, with which the primacy of financial thinking and indeed the pre-eminence of the financial industry in ‘business’ as a whole, is shown to be the business of extraction. Whether the story begins with iron ore or private equity, an ideological formula is applied and the climax always results in wealth moving inwards and upwards. It is no surprise that the numbers of high and ultra high net worth individuals are rising much faster than the population as a whole.
The story of this financilisation game, which almost all of us are losing, is nothing less than an autobiographical tragedy - a tragedy of the loss of our recent past, an illustration of our current and often hidden struggles, and a prognosis of dim future prospects. Not a happy ending.
While are there may be ways to boost returns and hence your chances, the easiest way to game your score is to reduce investment – at least investment that officially appears on your books. By this simple measure, in both the public and private sectors, our societies have experienced a multitude of effects which have led to local and international crises, increased wealth inequality and left the global financial system weaker. To reward themselves for their victories, the winners have devised all manner of techniques to extract wealth for themselves, trophies be damned.
Outlining the finance curse, Shaxson paints a target on monopolies, the competitiveness agenda and the Third Way, all ideological tools to reduce regulation, taxes and accountability that shift capital upwards to big business and the wealthy. Shaxson shows how something as obscure as the Basel Accord or the structure of an offshore SPV (special purpose vehicle) affects your ability to buy your home – and therefore shows how the complexities of financial markets are essential to understanding our everyday challenges.
The fact that, with the aid of legal sleight of hand, the industry in exotic financial instruments such as credit default swaps could have grown to a size equal to that of the entire global economy, is nothing short of insanity. Superlatives do not suffice. These facts are nowhere to be seen in our celebrity/disaster obsessed short-attention-span news cycles. Even after the experiences of the 2008 financial crisis, we continue to sew the seeds of future disasters. The scale that these crises could encompass is genuinely beyond imagination.
Animal instincts are at play here. The author shows that US regulation does a better job of acknowledging these instincts, whereas the UK laws assume principles of gentlemanliness. The picture in London naturally is a mirage - an excuse for extreme liberalisation.
Financialisation, with which the primacy of financial thinking and indeed the pre-eminence of the financial industry in ‘business’ as a whole, is shown to be the business of extraction. Whether the story begins with iron ore or private equity, an ideological formula is applied and the climax always results in wealth moving inwards and upwards. It is no surprise that the numbers of high and ultra high net worth individuals are rising much faster than the population as a whole.
The story of this financilisation game, which almost all of us are losing, is nothing less than an autobiographical tragedy - a tragedy of the loss of our recent past, an illustration of our current and often hidden struggles, and a prognosis of dim future prospects. Not a happy ending.
February 25, 2023
I was highlighting huge swathes of the text. So much there! And such an eye-opener!
I had already read plenty about the “resource curse” and its terrible toll on countries like Venezuela, but this was the first I read of the equivalent “finance curse.” The author points out that “Many countries dependent on income from natural resources tend to grow more slowly and suffer more corruption, greater conflict, more authoritarian politics, steeper inequality, and greater poverty than their resource-poor peers” (the resource curse). And we are seeing the same thing in countries plagued by the finance curse, particularly the US and Great Britain. There is plenty of data to show that “as a country’s financial sector develops, it tends to contribute to the development of the economy—but only up to a point, after which it starts to reduce economic growth and inflict all sorts of other damage.” The US and UK passed that point long ago.
“The excess bloat in the United States’ financial sector will have cost the US economy a cumulative $ 12.9 to $ 22.7 trillion between 1990 and 2023. That calculation, a first approximation of the costs of the finance curse, is equivalent to a net $ 105,000 to $ 184,000 loss for the average American family.”
“Financialization is a central part of the finance curse. Its consequences include lower economic growth, steeper inequality, less efficient and more distorted markets, eroded public services, greater corruption, the hollowing out of small towns and small businesses, and widespread damage to democracy and society.” “Veblen had brutally exposed one of capitalism’s great open secrets. Here it is: big capitalists don’t like efficient competition, and they don’t like free markets. They say they do, but genuine competition drives down prices and drives up wages—and so reduces profits. What they really like are markets rigged in their favor and against workers, consumers, and taxpayers. That’s where the big money is. Instead of competing against each other they conspire against consumers: “It became a competition not within the business but between the business as a whole and the rest of the community.” This conflict is at the heart of the finance curse.’”
We like to talk about the Russian oligarchs, but fail to discuss the ones we’ve created in our own country. We’ve allowed money to dictate politics, which dictate more money in the pockets of the 1% at the expense of the people who actually pay their taxes. Both sides of the political aisle are guilty of cozying up to the big money and failing to hold them accountable. If you rob a store, you’re likely to wind up in jail. If you rob a pension fund through financial manipulation, you’re likely to wind up with a yacht.
I had already read plenty about the “resource curse” and its terrible toll on countries like Venezuela, but this was the first I read of the equivalent “finance curse.” The author points out that “Many countries dependent on income from natural resources tend to grow more slowly and suffer more corruption, greater conflict, more authoritarian politics, steeper inequality, and greater poverty than their resource-poor peers” (the resource curse). And we are seeing the same thing in countries plagued by the finance curse, particularly the US and Great Britain. There is plenty of data to show that “as a country’s financial sector develops, it tends to contribute to the development of the economy—but only up to a point, after which it starts to reduce economic growth and inflict all sorts of other damage.” The US and UK passed that point long ago.
“The excess bloat in the United States’ financial sector will have cost the US economy a cumulative $ 12.9 to $ 22.7 trillion between 1990 and 2023. That calculation, a first approximation of the costs of the finance curse, is equivalent to a net $ 105,000 to $ 184,000 loss for the average American family.”
“Financialization is a central part of the finance curse. Its consequences include lower economic growth, steeper inequality, less efficient and more distorted markets, eroded public services, greater corruption, the hollowing out of small towns and small businesses, and widespread damage to democracy and society.” “Veblen had brutally exposed one of capitalism’s great open secrets. Here it is: big capitalists don’t like efficient competition, and they don’t like free markets. They say they do, but genuine competition drives down prices and drives up wages—and so reduces profits. What they really like are markets rigged in their favor and against workers, consumers, and taxpayers. That’s where the big money is. Instead of competing against each other they conspire against consumers: “It became a competition not within the business but between the business as a whole and the rest of the community.” This conflict is at the heart of the finance curse.’”
We like to talk about the Russian oligarchs, but fail to discuss the ones we’ve created in our own country. We’ve allowed money to dictate politics, which dictate more money in the pockets of the 1% at the expense of the people who actually pay their taxes. Both sides of the political aisle are guilty of cozying up to the big money and failing to hold them accountable. If you rob a store, you’re likely to wind up in jail. If you rob a pension fund through financial manipulation, you’re likely to wind up with a yacht.
July 18, 2021
Overall, this was a sobering and somewhat depressing book. Note that I was already in agreement with Shaxson's thesis: the world economy has become far too dependent on the financial sector, which has found more and more ways to create "products" that actually harm short and long term economic well being. What Shaxson does is take that idea (which I had previously seen in a more focused form in books like The Big Short) and shows the many different ways it has taken root (e.g. tax havens, shell corporations, businesses that inflate earnings by minimizing assets, private equity firms, and a staggering array of monopolies).
What I learned about the most from the book was the economic and political foundations of this "financialization"; Shaxson did a great job explaining the theories that led to deregulation and market solutions to government problems. His section on the origins of neoliberalism was very enlightening. However, I will admit to some confusion on the specific strategies he brings up. Shaxson has a great chapter on the dangerous precedent of perpetual trusts, but in another chapter, I got lost in his discussion of foreign capital and Eurodollars. I would have preferred a bit more emphasis on explanation throughout the book.
I also wish there was a greater emphasis on solutions. The conclusion has a great argument about what economic studies don't measure (and thus end up supporting neoliberal approaches) that could be a whole book in itself. And often, Shaxson spends so much time on the ways corporations and financial consultants evade taxes that it's hard to believe that any solution to hold them accountable could work (or even be politically feasible). But, overall, I'm glad I read the book, even if its message was hard to take.
What I learned about the most from the book was the economic and political foundations of this "financialization"; Shaxson did a great job explaining the theories that led to deregulation and market solutions to government problems. His section on the origins of neoliberalism was very enlightening. However, I will admit to some confusion on the specific strategies he brings up. Shaxson has a great chapter on the dangerous precedent of perpetual trusts, but in another chapter, I got lost in his discussion of foreign capital and Eurodollars. I would have preferred a bit more emphasis on explanation throughout the book.
I also wish there was a greater emphasis on solutions. The conclusion has a great argument about what economic studies don't measure (and thus end up supporting neoliberal approaches) that could be a whole book in itself. And often, Shaxson spends so much time on the ways corporations and financial consultants evade taxes that it's hard to believe that any solution to hold them accountable could work (or even be politically feasible). But, overall, I'm glad I read the book, even if its message was hard to take.
January 5, 2021
本人極力極力推薦這一本上個禮拜有提到的：全世界大部分的企業在大逃稅的同一個作者所寫的：你所生活的社會上，你每天周邊的企業都並沒有為我們中產階級跟平凡的人做出任何的犧牲。所謂的信託其實只是不想被政府打稅而已而避稅天堂就是大英帝國搞出來的一個扭曲現象
這本書你們每個人都要看，你就知道全世界的政府跟財團做錯什麼事情而我們都不知道真相
1）我上個禮拜跟這個禮拜提過了所謂的交給信託保管其實只是假象而已這些有錢人不會無理頭就放棄他們財產⋯
2）每一國的政府都遇到同一個問題，每一區的省份也遇到同一個問題就是被一些學者洗腦說你必須要給予財團優惠，你的區域才能吸引產業，建立龐大的就業率…如同財團挾持林口區說我要在你那邊蓋廠房，你必須要給予優惠，所以林口區的官員就會給予最大的稅收稅務優惠＞＞變相省份與省份在競爭，如同兩個做一樣東西的攤販互相降價；實際是對區域跟國家完全沒有優惠的！而且假如國家的角度來看，他把自己的競爭優惠全部放出去的話，國家是會毁滅的，會有暴動。但是國家的利益跟公司的利益不能同時間放為一體…作者有提到不要被財團的威脅犧牲，省份或者區域的天然資源或者區域的優勢，區域的互相競爭變相擴大…全世界國與國的互相搶資源這樣做法其實百害而無一利…那為何會是這樣子？
3）作者有提到早期的一些經濟學家還有經濟哲學家Hayek尤其是6零年代芝加哥大學經濟學派的壞蛋Milton他們提出所謂新自由經濟主義其實扭曲了要讓市場自我運作的概念，也就是他們鼓勵所有的東西都不要介入，不要政府的介入，不要受到政治的介入，讓市場的價格決定一切！但是這個是很危險的因為財團用這個騙政府跟其他保守的學者…讓市場完完全全被財團控制而所謂的讓價格自由浮動背後那隻手就被靈活的財團來控制而政府的反應永遠都不及財團…
4) 這個世界你想到的，有錢的人，財團，中型公司，個人，都在避稅⋯⋯而因為這樣每一個國家的資金其實不斷地在流失到一個所謂的地下金融帝國而當資金在地面上不足的話政府只好印鈔
5）各國央行總裁也是和這些帝國合作，長期的低利息說要刺激民眾消費，其實也是幫助財團把資金抽出。這個我以前有講過…利息低你就沒有存錢的慾望其實存錢不見得是一個壞事⋯⋯
6）以價格斷定的競爭不見得是好事大家都知道…偏偏我們沒有注意到產油國並不是用一個價格來斷定市場…但也讓他們可以有豐富的利潤但是我們忘記了價格是他們操控…假設政府可以有一個靈敏的機制來決定價格的話將社會跟資源的分配才會出現平衡而不像現在的世界都在浪費資源
7）本人在以前有教企業管理也發現到企業管理很怪…Michael Porter 的優勢SWOT, 價格的優勢等等才會讓公司有利潤但是作者認為這個都變調了…一家公司假如是以持股者有沒有得到利潤為主的話，這種概念只會讓公司與公司之間出現惡性循環的競爭一直到國家的層面上⋯
就因為這樣子才會出現現實面的作者Disruptive Technology。破壞科技是因為人性才會不斷地自我更新，但同時任由價格去做主宰的話雖然是快但是對社會環境其實出現很大的破壞
8）作者在這裡花了很長的很大的章節去抨擊私募資金公司⋯⋯KKR...其實再說這一些重組公司根本就是看到什麼都要把他們吞下來重組一家新的沒有重點的公司⋯說是要保護社會，增加經濟力其實根本就不是…你們可以花點時間看看他講的
9）看了你就知道這本書已經很深刻的提到這個社會的金融主宰全世界的資源分配和生產能力就是因為這個金融的制度是太過於貪心…作者還是給予一些勸告但是本人是覺得沒救因為人都是蛇鼠一鍋
10）這一部分是我的想法所有諾貝爾得獎的經濟學家都在騙人都在障眼法⋯⋯你看到的只是冰山一角⋯⋯他們所說的並不是真的是幫助社會繁榮
極為好看的一本書10/10
其實YouTube也有人也花了一些時間製作一些關於世界財團的真相有興趣的話你可以跟我要
這本書你們每個人都要看，你就知道全世界的政府跟財團做錯什麼事情而我們都不知道真相
1）我上個禮拜跟這個禮拜提過了所謂的交給信託保管其實只是假象而已這些有錢人不會無理頭就放棄他們財產⋯
2）每一國的政府都遇到同一個問題，每一區的省份也遇到同一個問題就是被一些學者洗腦說你必須要給予財團優惠，你的區域才能吸引產業，建立龐大的就業率…如同財團挾持林口區說我要在你那邊蓋廠房，你必須要給予優惠，所以林口區的官員就會給予最大的稅收稅務優惠＞＞變相省份與省份在競爭，如同兩個做一樣東西的攤販互相降價；實際是對區域跟國家完全沒有優惠的！而且假如國家的角度來看，他把自己的競爭優惠全部放出去的話，國家是會毁滅的，會有暴動。但是國家的利益跟公司的利益不能同時間放為一體…作者有提到不要被財團的威脅犧牲，省份或者區域的天然資源或者區域的優勢，區域的互相競爭變相擴大…全世界國與國的互相搶資源這樣做法其實百害而無一利…那為何會是這樣子？
3）作者有提到早期的一些經濟學家還有經濟哲學家Hayek尤其是6零年代芝加哥大學經濟學派的壞蛋Milton他們提出所謂新自由經濟主義其實扭曲了要讓市場自我運作的概念，也就是他們鼓勵所有的東西都不要介入，不要政府的介入，不要受到政治的介入，讓市場的價格決定一切！但是這個是很危險的因為財團用這個騙政府跟其他保守的學者…讓市場完完全全被財團控制而所謂的讓價格自由浮動背後那隻手就被靈活的財團來控制而政府的反應永遠都不及財團…
4) 這個世界你想到的，有錢的人，財團，中型公司，個人，都在避稅⋯⋯而因為這樣每一個國家的資金其實不斷地在流失到一個所謂的地下金融帝國而當資金在地面上不足的話政府只好印鈔
5）各國央行總裁也是和這些帝國合作，長期的低利息說要刺激民眾消費，其實也是幫助財團把資金抽出。這個我以前有講過…利息低你就沒有存錢的慾望其實存錢不見得是一個壞事⋯⋯
6）以價格斷定的競爭不見得是好事大家都知道…偏偏我們沒有注意到產油國並不是用一個價格來斷定市場…但也讓他們可以有豐富的利潤但是我們忘記了價格是他們操控…假設政府可以有一個靈敏的機制來決定價格的話將社會跟資源的分配才會出現平衡而不像現在的世界都在浪費資源
7）本人在以前有教企業管理也發現到企業管理很怪…Michael Porter 的優勢SWOT, 價格的優勢等等才會讓公司有利潤但是作者認為這個都變調了…一家公司假如是以持股者有沒有得到利潤為主的話，這種概念只會讓公司與公司之間出現惡性循環的競爭一直到國家的層面上⋯
就因為這樣子才會出現現實面的作者Disruptive Technology。破壞科技是因為人性才會不斷地自我更新，但同時任由價格去做主宰的話雖然是快但是對社會環境其實出現很大的破壞
8）作者在這裡花了很長的很大的章節去抨擊私募資金公司⋯⋯KKR...其實再說這一些重組公司根本就是看到什麼都要把他們吞下來重組一家新的沒有重點的公司⋯說是要保護社會，增加經濟力其實根本就不是…你們可以花點時間看看他講的
9）看了你就知道這本書已經很深刻的提到這個社會的金融主宰全世界的資源分配和生產能力就是因為這個金融的制度是太過於貪心…作者還是給予一些勸告但是本人是覺得沒救因為人都是蛇鼠一鍋
10）這一部分是我的想法所有諾貝爾得獎的經濟學家都在騙人都在障眼法⋯⋯你看到的只是冰山一角⋯⋯他們所說的並不是真的是幫助社會繁榮
極為好看的一本書10/10
其實YouTube也有人也花了一些時間製作一些關於世界財團的真相有興趣的話你可以跟我要
September 8, 2021
This is the first book I read from an economics standpoint. The breadth of topics covered to explain the finance curse that the current global economy faces is commendable. It introduces quite a few topics from tax havens to monopolies to competitive agendas to wealth extractors to businesses lobbying for corporate tax rate cuts. For the uninitiated, this book is a good primer of sorts.
The depth, however, in my opinion, was not as much, or clear enough for common people to comprehend the impact.
More text was aimed at descriptive narrations of final impact and what he-said/she-said about it, than trying to break down the bigger numbers or explain the course that led to the impact. That could have made the reader hooked on the details and paved the way for more interest to understand them in greater detail and helped the author achieve his agenda of making the public more aware.
The depth, however, in my opinion, was not as much, or clear enough for common people to comprehend the impact.
More text was aimed at descriptive narrations of final impact and what he-said/she-said about it, than trying to break down the bigger numbers or explain the course that led to the impact. That could have made the reader hooked on the details and paved the way for more interest to understand them in greater detail and helped the author achieve his agenda of making the public more aware.
June 16, 2023
Very good book and overview of a couple of interconnected topics.
On a personal note, having lived in the UK (and not London), I always found the divide between the abstract and quasi-theoretical wealth (e.g. high GDP, very high costs of living, very concentrated pockets of wealth) and the actual 'on-the-ground' living experience astonishing.
The fact that most grads make 23k out of uni and the avg. Brit makes 28k p.a. while a good chunk of people make 100s of thousands of pounds per year has always been very strange to me. In Germany, you may make 40-60k out of uni and cap out at 100k. In the UK, it seems, you can easily go from 23k to multiples if not dozens of that.
In some sense, reality seems to be catching up with the UK though and I found this book very revealing as to a few of the reasons.
On a personal note, having lived in the UK (and not London), I always found the divide between the abstract and quasi-theoretical wealth (e.g. high GDP, very high costs of living, very concentrated pockets of wealth) and the actual 'on-the-ground' living experience astonishing.
The fact that most grads make 23k out of uni and the avg. Brit makes 28k p.a. while a good chunk of people make 100s of thousands of pounds per year has always been very strange to me. In Germany, you may make 40-60k out of uni and cap out at 100k. In the UK, it seems, you can easily go from 23k to multiples if not dozens of that.
In some sense, reality seems to be catching up with the UK though and I found this book very revealing as to a few of the reasons.
December 30, 2024
To me, this was a great book on a challenging subject matter. The anecdotes are very interesting and the author goes through quite a few domains to illustrate his point, such as agribusiness. Having read two of his previous books, I knew to expect an engaging and easy style. What it did not prepare me for was how overtly political the author is, to the detriment of the book. The author wears his lefty politics on his sleeve in a manner that was quite unnecessary. He does not shy away from criticizing leftist politicians such as Barack Obama, but it is obvious that he is pulling his punches and is oblivious to how high finance and corporations have migrated to the left to purchase influence in exchange for supporting identity politics. In any case, I learned a lot, including to be on the lookout for Gell-Mann Amnesia.
January 13, 2020
Reading this just after Tom Holland's Dominion, about the role of Christianity in the making of Western values, the similarities are startling: Left to its own devices, the world would be a really horrible place, with the mighty running roughshod over the weak.
Not that it doesn't already happen, but there is at least some resistance and some pretence that things are not so bad.
If you've ever wondered why, for example, there is so much wealth inequality around, why monopolies are tolerated so much more, why public services have been gutted the way they have been, then the "over-financialisation" of modern economies is the answer.
Finance serves a very important function but the sector has grown too big in many countries and does more harm than good.
Not that it doesn't already happen, but there is at least some resistance and some pretence that things are not so bad.
If you've ever wondered why, for example, there is so much wealth inequality around, why monopolies are tolerated so much more, why public services have been gutted the way they have been, then the "over-financialisation" of modern economies is the answer.
Finance serves a very important function but the sector has grown too big in many countries and does more harm than good.
May 31, 2021
//3.75//
Very interesting synethesis of the financialisation of everything.Taught me what a trust fund is, how London became a banking center via the eurodollar and offshore tax havens, how corporate restructuring can bleed a company dry while still making shareholder profits, how everything even farming is up for grabs and how countries needing to be „competitive“ is a lie. Truly fascinating.
Cons: Every chapter felt about 5 pages too long for me and I started to get a little bored before being given the next really great element and having my mind blown again. The author’s writing style was such that I, personally as a reader, found a bit jarring at times: the vibe of the word choice suddenly changed into sarcastic or „fun“ with no rhyme or reason.
Very interesting synethesis of the financialisation of everything.Taught me what a trust fund is, how London became a banking center via the eurodollar and offshore tax havens, how corporate restructuring can bleed a company dry while still making shareholder profits, how everything even farming is up for grabs and how countries needing to be „competitive“ is a lie. Truly fascinating.
Cons: Every chapter felt about 5 pages too long for me and I started to get a little bored before being given the next really great element and having my mind blown again. The author’s writing style was such that I, personally as a reader, found a bit jarring at times: the vibe of the word choice suddenly changed into sarcastic or „fun“ with no rhyme or reason.
January 7, 2020
The Finance Curse: How Global Finance Is Making Us All Poorer by Nicholas Shaxson is about how the global Finance Industry is not helping us but making us poorer If you did not know about the greed in the industry , this is a shocker for you. he shows. The money laundering that goes on it so widespread that it makes you wonder who follows the laws and regulations. Nicholas Shaxson shows the stranglehold that the financial industry has on society. A solution in included which helps deal with all the bad. It is an interesting read that gets tough to handle but worthy the time and energy to read.
I received a copy thru a Goodreads Giveaway.
I received a copy thru a Goodreads Giveaway.
January 19, 2021
Brilliant written book. Thought provoking.
The movement from focus on creating wealth to extracting wealth from the economy is described. Financialisation - creating money for owners and rent seekers is in vogue while the underlying economy has stagnated. This is the Finance curse. Resource curse is an example of finance curse. In the UK the finance curse is built on the base economy. The myth of competition is exposed; actually the owners work to secure monopoly. Historically this has been the case.
London and how it has become the centre of the financialisation and related tax avoidance schemes and controls tax havens.
The movement from focus on creating wealth to extracting wealth from the economy is described. Financialisation - creating money for owners and rent seekers is in vogue while the underlying economy has stagnated. This is the Finance curse. Resource curse is an example of finance curse. In the UK the finance curse is built on the base economy. The myth of competition is exposed; actually the owners work to secure monopoly. Historically this has been the case.
London and how it has become the centre of the financialisation and related tax avoidance schemes and controls tax havens.
March 3, 2019
I have never read a book that made me feel so angry. Page after page of outrage, grinding my teeth, ranting at my poor family, and wondering why did I not know about any of this?
What's it about?
You may look at this book and think it is about economics, tax havens, private equity firms, millionaires, billionaires, monopolies and multinational corporations. Which it is.
This may immediately scream 'boring snoozefest' to you, however, it is about much more, about how all those things negatively impact your life.
This book is about how you are being cheated, about how your money and taxes are effectively being stolen, and as a result how you, your family, your community and country are all being left poorer.
This book is about the 'finance curse', which the author refers to as:
“the idea that once a financial sector grows above an optimal size and beyond its useful roles, it begins to harm the country that hosts it. Finance turns away from its traditional role serving society and creating wealth, and towards often more profitable activities to extract wealth from other parts of the economy. It also becomes politically powerful, shaping laws and rules and even society to suit it. The results include lower economic growth, steeper inequality, inefficient markets, damage to public services, worse corruption, the hollowing-out of alternative economic sectors, and widespread damage to democracy and to society.”
What is this book not?
It is not a door stop. It is not about socialism. It's not about the traditional left versus right in politics, or over simplified arguments about high tax versus low tax. It's about having an economy that works for everyone, not just the rich.
Who is it for?
Everyone, although it seems to be written more for the UK audience, it is relevant to any country where the 'finance curse' is in action. The book is relevant for everyone as the ideas, ideology, politics and economics behind it are everywhere. It should be taken as a warning of how not to run an economy.
You don't need a background in economics or to be any good with numbers (I am definitely not) to understand this book. It can get technical and there are too many abbreviations to remember BUT the outrage will keep you going. I am serious about how this book made me feel and I would recommend you do not read it before bed, because anger does not generally help you get to sleep.
If you are an economics student you should definitely read this, as it gives a powerful, well evidenced critique of the mainstream school of thought being taught at present, i.e. neo-liberalism.
What does the book cover?
The book will take you step by step through the history of the finance curse, how it developed and why it is still so powerful today, despite its clear detrimental impacts to all of us. It will tell you how the rich avoid taxes, explaining: tax havens, charitable trust and regulatory loop holes. The book also explains how the media, politicians, regulators, academia and the evidence they cherry pick are all twisted to keep the status quo.
There are in depth case studies, such as the growth and crash of the Irish economy, that clearly demonstrate how false current economic myths are. The myths the book tackles and proves false include: lower taxes are good for the economy, higher taxes will scare big business away, de-regulating markets is good for economic growth, and there are no negative impacts from lowering taxes (Clue: it definitely looks that way if you only look at one side of the story and refuse to measure the negative impacts).
This is an incredibly well researched book, 79 pages of notes and references at the end, with lots of evidence to back up its claims, and quotes and stories to keep it engaging. The author also keeps it engaging by pointing the reader back to the negative impacts on daily life, from housing prices to train ticket prices. As such there is a good balance between the abstract and impersonal, tax havens, with the deeply personal, the levels of care given to older people in their homes.
Why should I read it?
The 'finance curse' impacts every aspect of our lives and this book has so many answers to so many things we should all worry about.
If you worry about the level of care your Gran gets from her home visiting carers – you should read this book.
If you work as a carer and worry about why you are being asked to visit more and more people in less time, for less pay – you should read this book.
If you wonder about all the shops closing in your town centre and why Amazon does not pay tax – you should read this book.
If you worry about the rising numbers of food banks, of the rising numbers of working people using food banks – you should read this book.
If you are interested in why Brexit happened and why Trump was elected – you should read this book.
If you ever wonder why, as UK tax payers, we are paying for the mistakes made by the finance sector – you should read this book.
If you ever wonder why no bankers or anyone from the finance sector went to jail, at least in the UK, after the last financial crash – you should read this book.
If you care about inequality, poverty, workers rights, global development – you should read this book.
If you are concerned about corruption in markets, corruption in politics and cross border organised crime – you should read this book.
If you care about national security, democracy, sovereignty, foreign influence on government – you should read this book.
What's it about?
You may look at this book and think it is about economics, tax havens, private equity firms, millionaires, billionaires, monopolies and multinational corporations. Which it is.
This may immediately scream 'boring snoozefest' to you, however, it is about much more, about how all those things negatively impact your life.
This book is about how you are being cheated, about how your money and taxes are effectively being stolen, and as a result how you, your family, your community and country are all being left poorer.
This book is about the 'finance curse', which the author refers to as:
“the idea that once a financial sector grows above an optimal size and beyond its useful roles, it begins to harm the country that hosts it. Finance turns away from its traditional role serving society and creating wealth, and towards often more profitable activities to extract wealth from other parts of the economy. It also becomes politically powerful, shaping laws and rules and even society to suit it. The results include lower economic growth, steeper inequality, inefficient markets, damage to public services, worse corruption, the hollowing-out of alternative economic sectors, and widespread damage to democracy and to society.”
What is this book not?
It is not a door stop. It is not about socialism. It's not about the traditional left versus right in politics, or over simplified arguments about high tax versus low tax. It's about having an economy that works for everyone, not just the rich.
Who is it for?
Everyone, although it seems to be written more for the UK audience, it is relevant to any country where the 'finance curse' is in action. The book is relevant for everyone as the ideas, ideology, politics and economics behind it are everywhere. It should be taken as a warning of how not to run an economy.
You don't need a background in economics or to be any good with numbers (I am definitely not) to understand this book. It can get technical and there are too many abbreviations to remember BUT the outrage will keep you going. I am serious about how this book made me feel and I would recommend you do not read it before bed, because anger does not generally help you get to sleep.
If you are an economics student you should definitely read this, as it gives a powerful, well evidenced critique of the mainstream school of thought being taught at present, i.e. neo-liberalism.
What does the book cover?
The book will take you step by step through the history of the finance curse, how it developed and why it is still so powerful today, despite its clear detrimental impacts to all of us. It will tell you how the rich avoid taxes, explaining: tax havens, charitable trust and regulatory loop holes. The book also explains how the media, politicians, regulators, academia and the evidence they cherry pick are all twisted to keep the status quo.
There are in depth case studies, such as the growth and crash of the Irish economy, that clearly demonstrate how false current economic myths are. The myths the book tackles and proves false include: lower taxes are good for the economy, higher taxes will scare big business away, de-regulating markets is good for economic growth, and there are no negative impacts from lowering taxes (Clue: it definitely looks that way if you only look at one side of the story and refuse to measure the negative impacts).
This is an incredibly well researched book, 79 pages of notes and references at the end, with lots of evidence to back up its claims, and quotes and stories to keep it engaging. The author also keeps it engaging by pointing the reader back to the negative impacts on daily life, from housing prices to train ticket prices. As such there is a good balance between the abstract and impersonal, tax havens, with the deeply personal, the levels of care given to older people in their homes.
Why should I read it?
The 'finance curse' impacts every aspect of our lives and this book has so many answers to so many things we should all worry about.
If you worry about the level of care your Gran gets from her home visiting carers – you should read this book.
If you work as a carer and worry about why you are being asked to visit more and more people in less time, for less pay – you should read this book.
If you wonder about all the shops closing in your town centre and why Amazon does not pay tax – you should read this book.
If you worry about the rising numbers of food banks, of the rising numbers of working people using food banks – you should read this book.
If you are interested in why Brexit happened and why Trump was elected – you should read this book.
If you ever wonder why, as UK tax payers, we are paying for the mistakes made by the finance sector – you should read this book.
If you ever wonder why no bankers or anyone from the finance sector went to jail, at least in the UK, after the last financial crash – you should read this book.
If you care about inequality, poverty, workers rights, global development – you should read this book.
If you are concerned about corruption in markets, corruption in politics and cross border organised crime – you should read this book.
If you care about national security, democracy, sovereignty, foreign influence on government – you should read this book.
March 3, 2019
I have never read a book that made me feel so angry. Page after page of outrage, grinding my teeth, ranting at my poor family, and wondering why did I not know about any of this?
What's it about?
You may look at this book and think it is about economics, tax havens, private equity firms, millionaires, billionaires, monopolies and multinational corporations. Which it is.
This may immediately scream 'boring snoozefest' to you, however, it is about much more, about how all those things negatively impact your life.
This book is about how you are being cheated, about how your money and taxes are effectively being stolen, and as a result how you, your family, your community and country are all being left poorer.
This book is about the 'finance curse', which the author refers to as:
“the idea that once a financial sector grows above an optimal size and beyond its useful roles, it begins to harm the country that hosts it. Finance turns away from its traditional role serving society and creating wealth, and towards often more profitable activities to extract wealth from other parts of the economy. It also becomes politically powerful, shaping laws and rules and even society to suit it. The results include lower economic growth, steeper inequality, inefficient markets, damage to public services, worse corruption, the hollowing-out of alternative economic sectors, and widespread damage to democracy and to society.”
What is this book not?
It is not a door stop. It is not about socialism. It's not about the traditional left versus right in politics, or over simplified arguments about high tax versus low tax. It's about having an economy that works for everyone, not just the rich.
Who is it for?
Everyone, although it seems to be written more for the UK audience, it is relevant to any country where the 'finance curse' is in action. The book is relevant for everyone as the ideas, ideology, politics and economics behind it are everywhere. It should be taken as a warning of how not to run an economy.
You don't need a background in economics or to be any good with numbers (I am definitely not) to understand this book. It can get technical and there are too many abbreviations to remember BUT the outrage will keep you going. I am serious about how this book made me feel and I would recommend you do not read it before bed, because anger does not generally help you get to sleep.
If you are an economics student you should definitely read this, as it gives a powerful, well evidenced critique of the mainstream school of thought being taught at present, i.e. neo-liberalism.
What does the book cover?
The book will take you step by step through the history of the finance curse, how it developed and why it is still so powerful today, despite its clear detrimental impacts to all of us. It will tell you how the rich avoid taxes, explaining: tax havens, charitable trust and regulatory loop holes. The book also explains how the media, politicians, regulators, academia and the evidence they cherry pick are all twisted to keep the status quo.
There are in depth case studies, such as the growth and crash of the Irish economy, that clearly demonstrate how false current economic myths are. The myths the book tackles and proves false include: lower taxes are good for the economy, higher taxes will scare big business away, de-regulating markets is good for economic growth, and there are no negative impacts from lowering taxes (Clue: it definitely looks that way if you only look at one side of the story and refuse to measure the negative impacts).
This is an incredibly well researched book, 79 pages of notes and references at the end, with lots of evidence to back up its claims, and quotes and stories to keep it engaging. The author also keeps it engaging by pointing the reader back to the negative impacts on daily life, from housing prices to train ticket prices. As such there is a good balance between the abstract and impersonal, tax havens, with the deeply personal, the levels of care given to older people in their homes.
Why should I read it?
The 'finance curse' impacts every aspect of our lives and this book has so many answers to so many things we should all worry about.
If you worry about the level of care your Gran gets from her home visiting carers – you should read this book.
If you work as a carer and worry about why you are being asked to visit more and more people in less time, for less pay – you should read this book.
If you wonder about all the shops closing in your town centre and why Amazon does not pay tax – you should read this book.
If you worry about the rising numbers of food banks, of the rising numbers of working people using food banks – you should read this book.
If you are interested in why Brexit happened and why Trump was elected – you should read this book.
If you ever wonder why, as UK tax payers, we are paying for the mistakes made by the finance sector – you should read this book.
If you ever wonder why no bankers or anyone from the finance sector went to jail, at least in the UK, after the last financial crash – you should read this book.
If you care about inequality, poverty, workers rights, global development – you should read this book.
If you are concerned about corruption in markets, corruption in politics and cross border organised crime – you should read this book.
If you care about national security, democracy, sovereignty, foreign influence on government – you should read this book.
What's it about?
You may look at this book and think it is about economics, tax havens, private equity firms, millionaires, billionaires, monopolies and multinational corporations. Which it is.
This may immediately scream 'boring snoozefest' to you, however, it is about much more, about how all those things negatively impact your life.
This book is about how you are being cheated, about how your money and taxes are effectively being stolen, and as a result how you, your family, your community and country are all being left poorer.
This book is about the 'finance curse', which the author refers to as:
“the idea that once a financial sector grows above an optimal size and beyond its useful roles, it begins to harm the country that hosts it. Finance turns away from its traditional role serving society and creating wealth, and towards often more profitable activities to extract wealth from other parts of the economy. It also becomes politically powerful, shaping laws and rules and even society to suit it. The results include lower economic growth, steeper inequality, inefficient markets, damage to public services, worse corruption, the hollowing-out of alternative economic sectors, and widespread damage to democracy and to society.”
What is this book not?
It is not a door stop. It is not about socialism. It's not about the traditional left versus right in politics, or over simplified arguments about high tax versus low tax. It's about having an economy that works for everyone, not just the rich.
Who is it for?
Everyone, although it seems to be written more for the UK audience, it is relevant to any country where the 'finance curse' is in action. The book is relevant for everyone as the ideas, ideology, politics and economics behind it are everywhere. It should be taken as a warning of how not to run an economy.
You don't need a background in economics or to be any good with numbers (I am definitely not) to understand this book. It can get technical and there are too many abbreviations to remember BUT the outrage will keep you going. I am serious about how this book made me feel and I would recommend you do not read it before bed, because anger does not generally help you get to sleep.
If you are an economics student you should definitely read this, as it gives a powerful, well evidenced critique of the mainstream school of thought being taught at present, i.e. neo-liberalism.
What does the book cover?
The book will take you step by step through the history of the finance curse, how it developed and why it is still so powerful today, despite its clear detrimental impacts to all of us. It will tell you how the rich avoid taxes, explaining: tax havens, charitable trust and regulatory loop holes. The book also explains how the media, politicians, regulators, academia and the evidence they cherry pick are all twisted to keep the status quo.
There are in depth case studies, such as the growth and crash of the Irish economy, that clearly demonstrate how false current economic myths are. The myths the book tackles and proves false include: lower taxes are good for the economy, higher taxes will scare big business away, de-regulating markets is good for economic growth, and there are no negative impacts from lowering taxes (Clue: it definitely looks that way if you only look at one side of the story and refuse to measure the negative impacts).
This is an incredibly well researched book, 79 pages of notes and references at the end, with lots of evidence to back up its claims, and quotes and stories to keep it engaging. The author also keeps it engaging by pointing the reader back to the negative impacts on daily life, from housing prices to train ticket prices. As such there is a good balance between the abstract and impersonal, tax havens, with the deeply personal, the levels of care given to older people in their homes.
Why should I read it?
The 'finance curse' impacts every aspect of our lives and this book has so many answers to so many things we should all worry about.
If you worry about the level of care your Gran gets from her home visiting carers – you should read this book.
If you work as a carer and worry about why you are being asked to visit more and more people in less time, for less pay – you should read this book.
If you wonder about all the shops closing in your town centre and why Amazon does not pay tax – you should read this book.
If you worry about the rising numbers of food banks, of the rising numbers of working people using food banks – you should read this book.
If you are interested in why Brexit happened and why Trump was elected – you should read this book.
If you ever wonder why, as UK tax payers, we are paying for the mistakes made by the finance sector – you should read this book.
If you ever wonder why no bankers or anyone from the finance sector went to jail, at least in the UK, after the last financial crash – you should read this book.
If you care about inequality, poverty, workers rights, global development – you should read this book.
If you are concerned about corruption in markets, corruption in politics and cross border organised crime – you should read this book.
If you care about national security, democracy, sovereignty, foreign influence on government – you should read this book.
February 11, 2020
As you read this book, remember there is hope that we can take back America's (and Great Britain's) future from the forces of monopoly, financialization, tax havens, global oligarchic thievery, private "equity", hedge funds, and all the other elements of shadow banking that are extracting the wealth of the country.
But to take our country's future back from these powerful, moneyed, and entrenched interests, you need to know what they have done and how they did it.
So gird yourself, get brave, and read this book.
I am grateful for Nicholas Shaxson's having written this. Fine work.
But to take our country's future back from these powerful, moneyed, and entrenched interests, you need to know what they have done and how they did it.
So gird yourself, get brave, and read this book.
I am grateful for Nicholas Shaxson's having written this. Fine work.
June 20, 2022
Shockingly good. This story has scratched the itch of idea’s that I’ve held in my head for years.
How does Boeing go from engineering the best airplanes to deliberately lying about their know corruption that cause two 737 max crashes. Or why is the NHS ( British public health service) go to ruins.
Why are roads in the u.s and uk becoming worse with every passing year.
This book really is an eye opener to what is really wrong in the world and the direction we are heading towards. Plutocracy !
How does Boeing go from engineering the best airplanes to deliberately lying about their know corruption that cause two 737 max crashes. Or why is the NHS ( British public health service) go to ruins.
Why are roads in the u.s and uk becoming worse with every passing year.
This book really is an eye opener to what is really wrong in the world and the direction we are heading towards. Plutocracy !
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