In the October 2018 Taxcast: we speak to Nicholas Shaxson about his new book “The Finance Curse: How Global Finance Is Making Us All Poorer” released alongside new research from the Sheffield Political Economy Research Institute on the true costs of the City of London’s oversized finance sector to the British economy – £4.5 trillion in lost economic output over a 20 year period – that’s equivalent to £67,500 for every person in the UK, not far off $90,000. This research has serious implications for oversized financial centres everywhere. Also, we discuss the brutal murder of Saudi journalist Jamal Khashoggi, the hypocrisy of the ‘west’ and corruption of democracy by dark money and national and international security threats not only from Russia, but also from China and, the most overlooked – the United States.
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The finance curse identifies a paradox at the heart of financial sectors. While it is common to think of a finance centre as the engine of an economy, an oversized financial centre can make a country poorer and destabilise economies, and actually delivers a range of harms. For instance, oversized finance boosts inequality, undermines democracy and people’s faith in the rule of law. It damages national security. It corrupts markets, makes businesses more fragile, less resistant to shocks, and harms good governance. It also has powerful geographical, racial and gender effects.
Revenue, to fund public services, infrastructure and administration.
Redistribution, to curb inequalities between individuals and between groups.
Repricing, to limit public “bads” such as tobacco consumption and carbon emissions.
Representation, to build healthier democratic processes, recognising that higher reliance of government. spending on tax revenues is strongly linked to higher quality of governance and political representation.
Reparation, to redress the historical legacies of empire and ecological damage.