Book Review: 'The Finance Curse: How Global Finance is Making Us All Poorer' by Nicholas Shaxson

Understanding 'The Finance Curse'

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As Nicholas Shaxson vividly illustrates in his book The Finance Curse: How Global Finance is Making Us All Poorer, the world has fallen prey to a phenomenon as destructive as the well-documented resource curses observed in mineral-rich countries. 'The Finance Curse' refers to the damage inflicted upon societies due to the outsized role of the financial sector.

A Race to the Bottom

Shaxson describes an increasingly common 'race to the bottom', where local governments and entire nations compete to offer the most attractive conditions for business at the expense of public services and welfare. The fear of losing investment to lower-tax jurisdictions has resulted in a paradox where corporate entities reap enormous financial benefits without corresponding increases in competitiveness or broad economic health.

The Impact on Society

The true victims of this zero-sum game are the average citizens who face eroding social support structures and stagnant wages while wealth concentrates at the pinnacle of the economic hierarchy. The epitome of this disparity is the shocking revelation that Americans' median wealth lags behind their Italian counterparts, a statistic that turns commonly held notions of prosperity on their head.

The Offshore Enigma

Central to the problem, according to Shaxson, is the staggering amount of wealth held in offshore accounts and trust funds, well beyond the reach of tax and law enforcement authorities. Such arrangements facilitate tax evasion and exacerbate inequality, as they deprive governments of revenue needed to fund essential public services.

Our Economic History Redefined

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The book delves into the Bretton Woods system's history, illustrating how its demise led to a deregulated financial environment ripe for corruption. Shaxson correlates periods of strong, equitable economic growth with robust financial regulation, challenging the prevailing narrative that equates deregulation with prosperity.

Corporate Behavior and Share Buybacks

Shaxson also criticizes the current corporate vogue for share buybacks, arguing that companies drain resources that could be invested in innovation and growth – a trend exemplified by the experiences of iconic firms like IBM.

The Dark Heart of Finance: London and Wall Street

Without mincing words, Shaxson paints London as the "sleaze capital" and Wall Street as its eager rival, fostering environments of minimal oversight where illicit funds circulate with impunity.

Personal and Distributed Consequences

The author also touches on the varied global impacts, from the devastation of Ireland's economy to local American farmers' exploitation. He draws poignant connections between the macrocosm of global finance and the microcosm of individual suffering.

Legal Laxity and Anti-Competitive Practices

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The inability or unwillingness to enforce antitrust laws further perpetuates the dominion of finance, Shaxson argues, allowing businesses to threaten relocation as a powerful bargaining chip against government regulation.

An Unapologetic Conclusion

The book's conclusion is particularly forceful in condemning the current financial orthodoxy. Shaxson reassures readers that a well-regulated financial sector can coexist with healthy economic growth, insisting that taxes and democracy are essential for prosperity.

Editor's Final Thoughts

Shaxson's critique is comprehensive and its prescriptions straightforward. To those who have struggled to understand the economic forces shaping our modern world, The Finance Essay not only elucidates the problems but also advocates for meaningful reforms to mitigate the ills of unchecked global finance.

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