The Finance Curse

October 7, 2019
In this deeply researched cri de coeur, British journalist Shaxson (Treasure Islands) equates the “resource curse” that impoverishes such mineral-rich countries as Angola with the “finance curse” currently afflicting Western economies that are too dependent on their financial sectors. Focusing on England and the U.S., Shaxson argues that the curse is to blame for rising inequality, shuttered public services, slower economic growth, and “the hollowing out of small towns and small businesses.” He locates the seeds of the problem in the economic theories of Friedrich Hayek and the Chicago School, the surge in offshore tax havens from the 1950s through the 1980s, and lax antimonopoly laws that have helped to create “gargantuan” tech companies including Facebook and Google. Politicians have abetted the “financialization” of their economies, Shaxson argues, pointing to President Barack Obama’s bailouts of “crashing megabanks” in 2008. Shaxson’s solutions include “getting money out of politics,” reviving antitrust laws, effectively measuring both the benefits and costs of tax reforms, and reining in the activities of tax havens. His urgent tone cuts through the financial jargon to produce clear, commonsense arguments. Though unlikely to change the minds of ardent free-marketeers, this impassioned account will be championed by progressives.