{"id":43267,"date":"2018-10-05T07:26:50","date_gmt":"2018-10-05T06:26:50","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=43267"},"modified":"2018-10-05T07:26:50","modified_gmt":"2018-10-05T06:26:50","slug":"the-finance-curse-the-new-book-from-nick-shaxson","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2018\/10\/05\/the-finance-curse-the-new-book-from-nick-shaxson\/","title":{"rendered":"The Finance Curse: the new book from Nick Shaxson"},"content":{"rendered":"

Nick Shaxson, the author of Treasure Islands which is the most popular book on tax havens, has a new book out. This is the press release for The Finance Curse<\/a>:<\/em><\/p>\n

A new book by Nicholas Shaxson, entitled\u00a0The Finance Curse: How Global Finance is Making Us All Poorer<\/em>\u00a0(11th<\/sup>\u00a0Oct, The Bodley Head) has revealed that Britain\u2019s over-sized financial sector is\u00a0inflicting a huge cost on Britain\u2019s economy<\/strong>, vastly overwhelming any jobs or tax benefits the City of London brings.<\/p>\n

We all need finance, but only up to a point. Once a financial centre grows above its useful size and roles, it starts to become predatory and harms the economy that hosts it. This happens in many ways: an oversized City drains our best educated and most talented people out of manufacturing and other economic sectors, generates large economic distortions and financial crises, and many of its members focus on devising ever more creative ways to extract wealth from other parts of the economy.\u00a0 The\u00a0Finance Curse,\u00a0<\/em>the product of five years of dedicated, original research,\u00a0<\/em>lays out in gripping and vivid detail how and why this happens.<\/p>\n

New academic research published alongside this book has also produced the first ever numerical estimate for the scale of this damage.\u00a0 A new report\u00a0The UK\u2019s Finance Curse? Costs and Processes<\/em>\u00a0by Andrew Baker of Sheffield University, Professor Gerald Epstein of the University of Massachusetts Amherst, and Juan Montecino of Columbia University, published by the Sheffield Political Economy Research Institute at the University of Sheffield, reveals that the UK has suffered a\u00a0\u00a34.5 trillion cumulative cost in lost economic output from 1995-2015 \u2014 and counting. That is equivalent to a \u00a3170,000 loss per British household<\/strong>.\u00a0\u00a0The full academic paper can be found\u00a0here<\/a><\/strong>.<\/p>\n

The Finance Curse<\/em>\u00a0explains how and why the damage occurs. But it also contains an immensely positive message. By demolishing the idea that Britain needs to protect a \u201ccompetitive\u201d City of London in order to prosper as a nation, this opens up the possibility of taxing and appropriately regulating the City in the interests of society, withno<\/em>\u00a0economic penalty \u2014 with a net economic benefit, in fact. It reveals Brexit as a once in a lifetime opportunity for Britain to revitalise both its democracy and its prosperity.<\/p>\n

Nicholas Shaxson<\/strong>\u00a0said:<\/p>\n

\u201cThe City of London likes to describe itself as the goose that lays Britain\u2019s golden eggs, contributing jobs and tax revenues and export surpluses. But in reality, the costs of an oversized financial sector overwhelm these benefits.\u00a0 The City is in fact a different bird: a cuckoo in the nest, crowding out and killling other sectors which could have made Britain more prosperous.\u201d<\/p>\n

Gerald Epstein said:<\/strong><\/p>\n

\"As\u00a0The Finance Curse\u00a0<\/em>brilliantly demonstrates, The United Kingdom has paid a high price for hosting the City of London in recent decades. Brexit creates a great opportunity to reform finance so that the City serves Britain, rather than the other way around.\u201d<\/p>\n

Andrew Baker<\/strong><\/a>\u00a0said:<\/strong><\/p>\n

\"The finance curse is a hugely important idea. The data in our work suggests that past a certain point, finance can start to impede an economy's performance. But numbers can only tell us so much. A\u00a0 more pressing task is to get behind the numbers and investigate the true social costs of too much finance. The finance curse provides us with a framework for considering how finance might damage productivity and employment, cause instability and crisis, expand inequality, create problematic uneven geographies and change the political wiring of affected countries.\"<\/p>\n

Notes to editors<\/u><\/strong><\/p>\n

The \u2018finance curse<\/strong>\u2019 is a new framework for understanding politics and the economy, first developed by leading journalist Nicholas Shaxson, author of\u00a0Treasure Islands: Tax Havens and the Men Who Stole the World<\/em>; and by John Christensen, Director of the Tax Justice Network and the former economic adviser to the British tax haven of Jersey.\u00a0 The finance curse takes as a starting point the academic theory of the \u201cresource curse\u201d \u2014 where some countries abundant in natural resources actually experience slower economic growth, more corruption, more conflict and more authoritarian politics than their resource-poor peers. Countries dominated by oversized financial sectors suffer many similar problems, often for similar reasons, such as a \u2018brain drain\u2019 of talented people out of manufacturing and other sectors into lucrative jobs in finance; economic volatility and financial crises; a growing focus on wealth extraction rather than wealth creation, and a finance-driven distortion of markets and misallocation of resources. In Britain, for instance, only\u00a03.5 percent of business lending<\/a>\u00a0goes to manufacturing \u2014 while over 75 percent goes back into finance, insurance and real estate.<\/p>\n

The Finance Curse<\/em>\u00a0book lays out the social, political, economic and above all human costs of this, in shocking detail.\u00a0 It weaves together tax havens, inequality, monopolies, too-big-to-fail banks, hedge funds and private equity, shadow banking, national \u2018competitivess,\u2019 and more, into a single coherent package. The finance curse is a new prism through which to understand the economic world, and a basis for political change.<\/p>\n

The\u00a0new research\u00a0<\/em><\/strong>published alongside the book builds\u00a0<\/strong>on a\u00a0<\/strong>2016 document called\u00a0Overcharged: the High Costs of High Finance<\/em><\/a>,<\/em>\u00a0by two US finance academics, Professor Gerald Epstein of the University of Massachusetts, and Juan Montecino of Columbia University. They\u00a0<\/em>drew on a growing strand of academic literature that has become known as \u201cToo Much Finance<\/a>\u201d, and used mainstream techniques to estimate that the United States would have suffered a cumulative $13-23 trillion in lost economic output from 1990-2023, as a result of its financial sector having grown beyond its useful size and roles. After meeting Shaxson and Christensen, Epstein and Montecino agreed to produce a similar estimate for Britain. They co-authored a paper with Andrew Baker of the Sheffield Political Economy Research Institute (SPERI) at Sheffield University, whose results are now ready to publish.<\/p>\n

They reveal that Britain has potentially suffered a cumulative\u00a0\u00a34.5 trillion<\/strong>\u00a0in lost economic output from 1995-2015 (and counting,) relative to how things might have been if the City had been operating at its optimal size and functions.\u00a0 This number is estimated by taking the long-term costs of the financial crisis to Britain\u2019s economy, and adding the costs associated with a finance-driven distortion and misallocation of resources across the British economy (taking care to avoid double counting).<\/p>\n

The various ways in which the finance curse works, and what we can do to stop it, can be found in Nicholas Shaxson\u2019s forthcoming book,\u00a0The Finance Curse<\/em>, published by The Bodley Head on 11th<\/sup>\u00a0October 2018.<\/p>\n

The full academic paper can be found\u00a0here<\/a><\/strong>.<\/p>\n

Nicholas Shaxson<\/strong>\u00a0is an investigative journalist with more than 25 years\u2019 experience. He has written for the Financial Times, Vanity Fair, The Economist, The Guardian, the Washington Post, and many others. His first book\u00a0Poisoned Wells<\/em><\/a>, about the Resource Curse in west Africa\u2019s oil-rich nations, was published in 2007. His next book\u00a0Treasure Islands,\u00a0<\/em>a bestseller about tax havens, came out in 2010, to\u00a0widespread acclaim<\/a>.\u00a0The Finance Curse<\/em>\u00a0follows Shaxson\u2019s realisation that many of the issues facing tax havens and financial centres were similar to those facing west Africa\u2019s oil-rich countries. He began developing the idea with John Christensen, who had come to similar conclusions.<\/p>\n","protected":false},"excerpt":{"rendered":"

Nick Shaxson, the author of Treasure Islands which is the most popular book on tax havens, has a new book out. This is the press
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