Tax Justice Focus: The Finance Curse
The latest edition of Tax Justice Focus, edited by Daniel Hind, Nicholas Shaxson and John Christensen, explores the Finance Curse, a phenomenon rather similar to the Resource Curse afflicting resource-rich economies. Evidence continues to mount suggesting that, far from being an asset, a large and globally 'competitive' financial sector, above a certain size, becomes a drain on the rest of the economy.
We are publishing this edition of Tax Justice Focus in partnership with the UK site Open Democracy, which is carrying one of this edition's articles today. Open Democracy will publish the remaining three of our feature articles during the rest of this week, on its UK-focused site OurKingdom.
In our lead article, renowned geographer Doreen Massey explores the long history of ‘the City’ having a major (and often harmful) role in the UK, but says this time is different. Finance and financialisation is at the core of a new social settlement in which the fabric of its society and economy has been thoroughly reworked. OurKingdom will be publishing this stand-alone later this week.
Next, Adam Leaver of the Centre for Research on Socio-Cultural Change (CRESC) then offers a corrective to the idea, commonly heard in UK policy-making and opinion-forming circles, that London is the engine of Britain’s prosperity. Finance, he explains, enables London and its hinterland to enjoys the “metropolitanisation of gains” from economic activity in the whole country - while the rest of Britain suffers “the nationalisation of losses” emanating from London’s financial centre. OurKingdom will be publishing this stand-alone later this week.
Tamasin Cave of Spinwatch then introduces us to the ways in which the financial and political elite in Britain merge and overlap, to the point where it no longer makes sense to talk about finance lobbying the government. The government is now a lobbyist for finance. OurKingdom will be publishing this stand-alone later this week.
In the final feature, Nicholas Shaxson looks at the Resource Curse and traces the similarities between mineral wealth and finance in greater detail. In one sector, people appropriate economic rents from valuable and potentially explosive substances that can leak out and pollute the surrounding environment. In the other, they dig mines and drill oil wells. OurKingdom is carrying a stand-alone version of this here; or you can read a stand-alone pdf here.
These features are followed by an interview with Mike Dun from the British tax haven of Jersey, describing the large economic crowding-out that has occurred on his home island and explains how nationalist undercurrents in a small community can close down debate, entrenching political ‘capture’ by the financial sector.
Our book review in this edition looks at Richard Eccleston's 'The Dynamics of Global Economic Governance: The Financial Crisis, the OECD and the Politics of International Tax Cooperation' (Edward Elgar, 2012), which considers the key issue: "Does the international system have the capacity to devise and implement an effective governance response to the grave challenges facing the global economy?"
With a Letter from Cyprus contributed by David Officer in Nicosia, and a commentary from Markus Meinzer on the latest developments on automatic information exchange and FATCA, this is a bumper edition of Tax Justice Focus.
Update: See here to keep current with issues of Tax Justice Focus.