The Finance Curse | Nicholas Shaxson

Summary of: The Finance Curse: How Global Finance is Making Us All Poorer
By: Nicholas Shaxson

Introduction

Embark on an enlightening journey with Nicholas Shaxson’s ‘The Finance Curse: How Global Finance is Making Us All Poorer’, as he reveals the dark side of financialization, where billionaires hide wealth, private equity firms exploit businesses, and governments favor corporate interests over public welfare. Delve into the history of America’s transition to financialization and learn how it has eroded democracy, justified social inequality, and plagued communities with reduced public services. Explore the ethical transgressions of the City of London and its role in the 2008 financial crisis, and uncover the opaque world of tax havens, trust funds, and money laundering that destabilize our democracy.

The Danger of the Finance Curse

Nicholas Shaxson’s book explores the harmful effects of excessive finance on economies, leading to economic stagnation and political polarization. Shaxson sheds light on billionaires hiding their assets, private equity firms taking advantage of companies, and governments prioritizing corporate investment. Despite the familiar theme, Shaxson’s investigative approach provides a captivating and accessible read for anyone interested in the world of finance.

Financialization: Undermining Democracy

In “The Finance Curse,” Shaxson argues that the US transition to financialization in the 1970s has resulted in a system that serves the wealthy few while leaving most people worse off. The government deregulated industries and privatized businesses, leading companies to prioritize maximum profits over social responsibility. This has not only justified inequality and discrimination but has also undermined democratic institutions. The US financial sector has grown to equal five years of GDP, perpetuating a system that serves only those in power. Shaxson makes a compelling case for the need to address these issues.

The Illusion of Neoliberalism

The book argues that neoliberalism’s belief in tax competition between countries only benefits large corporations and financial institutions. The author highlights how lower corporate taxes in Kansas led to budget cuts in public services such as education. Despite the idea that cutting taxes is good for competitiveness, a 2016 study showed that on average, states spent $658,000 to create one job in big business.

The City of London: A Den of Unethical Behavior

The City of London, Britain’s equivalent of Wall Street, is a highly deregulated and unscrupulous financial hub that operates outside ethical boundaries. In his book, Shaxson reveals how senior financiers operate with impunity above the law, enabling tax evasion, money laundering, and fraudulent securities. London-based trading divisions were responsible for booking the most harmful credit default swaps leading to the 2008 financial crisis. By then, the City had become known as the ‘Guantanamo Bay’ of global finance, where financiers could execute illegal activities under the guise of regulation. The book exposes the long-standing issues in the City of London.

Undermining Democracy with Secrecy

In “Treasure Islands,” Nicholas Shaxson exposes how tax havens like The Bahamas and Cayman Islands enable tax avoidance via trust funds that obscure ownership and tax liability. This leads to the entrenchment of capital in wealthy families, perpetuating inequality and eroding democracy. Furthermore, private equity firms can leverage tax havens to evade regulations and purchase successful companies, unburdened by liabilities and with the power to force questionable practices onto the acquired company. While these tactics may fetch higher returns, they come at the cost of jeopardizing the wider economy, and the livelihoods of ordinary employees and vendors.

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