Tuesday, February 19, 2019

Renegade Inc: The Finance Curse

I read Nick Shaxson's book years ago and it was excellent. Finance is an important part of society helping businesses to grow while earning interest on people's investments, but when it gets too large it can become parasitic harming growth.

Also, the best brains are attracted to finance and so other vital sectors of the economy may suffer. The best engineers, scientists, and mathematicians will often go into finance when they could be designing state-of-the-art products to improve the standard of living of society and our world, which I'm sure most of these scientists and engineers would find more interesting and fulfilling in the long run.

Finance good, big finance better and biggest finance best. This subtle mantra has bounced around developed economies for decades and has almost entirely captured politicians, the media and the public. Countries have fallen over themselves to attract financial corporates to their shores to ‘create wealth’. But recent studies have shown that financialisation actually extracts wealth, hollows out an economy and drives inequality. Host Ross Ashcroft is joined by the author Nick Shaxson to ask if it is finally dawning on us that what has been sold to us as a blessing is actually a curse?


Ralph Musgrave said...

The bank industry in the UK expanded TEN FOLD relative to GDP between about 1970 and 2010.

One problem is that politicians and most economists are on the side of banks. E.g the UKs official government response to the 2007/8 crisis, the so called "Vickers Commission" certainly didn't think that if an industry makes a major mess of things it has possibly over-expanded. Quite the opposite: they wouldn't hear of any contraction of the industry.

Andrew Anderson said...

Finance is an important part of society helping businesses to grow while earning interest on people's investments, but when it gets too large it can become parasitic harming growth. kv

Our banking model is inherently parasitic, including when it helps businesses grow by stealing from their workers, so it's only poetic justice when business itself is victimized.

Konrad said...

Parasitic finance is precisely the reason why the USA is doomed.

It's only a matter of time.

Konrad said...


This is amusing. I love to see Israel humiliated.

When the USSR broke up, four eastern European nations formed a coalition called the “Visegrád Group, or Visegrád Four, or V4.

Poland, Hungary, Slovakia, and the Czech Republic.

Every year the prime ministers of the V4 hold a summit meeting. The first summit was in the Hungarian castle-town of Visegrád on 15 Feb 1991.

The V4 is pro-USA, because V4 nations seek to resist Russian influence.

Meanwhile Poles and Germans have always hated each other, so at Poland’s request, the V4 nations all agreed to honor the Jewish holo-hoax, and build Jewish temples (i.e. holo-hoax museums) at public expense, in order to shame Germany.

In 2011 NATO destroyed Libya, and began attacking Syria, creating endless waves of refugees coming to Europe.

The European Commission in Brussels ordered EU nations to accept these endless refugees, but the V4 nations refused, and became furiously anti-Muslim.

Israel sensed an opening in this, and told the V4 nations, “We hate Muslims too!” (Unless they’re Saudis. Or Kurds. Or any other Muslims that are allied with Israel.)

Israel and the V4 nations became tight, and this year the V4 were to hold their annual summit in Israel for the first time.

The V4’s hatred of Muslims also made the V4 amenable to scrapping the Iran nuclear deal as urged by Washington, a move strongly opposed by France and Germany.

Unfortunately Jews cannot control themselves regarding their holo-hoax lies, and they have spent years claiming that Poland participated in the hoax while under German and Soviet occupation. For example, last year Israeli president Reuven Rivlin said, "Poland and Poles had a hand in the extermination of Jews during the holocaust.”

In Feb 2018 Poland passed a law making it illegal to accuse Poland of complicity in the hoax.

Israel screamed so loudly that Poland backed down and rescinded the law, in return for the Jews backing off in their ultra-racist hate speech against Poland.

But four days ago Netanyahu started it again while he was visiting Poland, telling Poles to their faces that, “Poles perpetrated the holocaust.”

Poles became so angry that Prime Minister Mateusz Morawiecki said he would not attend the V4 summit in Jerusalem, but would instead send his foreign minister, Jacek Czaputowicz.

Two days ago, Israel’s new foreign minister (Yisrael Katz) spat out the same hate speech during his first day on the job, claiming that Poles did the hoax, and that “Poles suckle anti-Semitism from their mother’s breast.” (Israel’s new foreign minister said this.)

In response, the V4 nations cancelled the summit altogether, causing Israel and the USA to stamp their feet and whine that the V4 are “vicious anti-Semites.”

Once again the Israelis had fouled up.

Russia is laughing, and so am I.

GLH said...

"Arrogance diminishes wisdom."

Ralph Musgrave said...

The way to cut the % of the nation's brainpower that goes into banking is simply to cut out unjustified assistance given to banks by taxpayers. In particular, taxpayer backed deposit insurance is unjustified: it amounts to the taxpayer standing behind a loan made by one person to another via a bank. Loans are COMMERCIAL TRANSACTIONS and it is not normal practice for taxpayers to assist or stand behind commercial transactions.

In contrast, everyone is entitled to a totally safe method of storing and transferring money. So totally safe accounts were money is simply lodged at the central bank and not loaned on are justified.

The above distinction between the way COMMERCIAL and non-commercial transactions are treated is achieved by full reserve banking, first advocated by Irving Fisher & Co in the 1930s, and later by Milton Friedman and several other Nobel laureate economists.

Noah Way said...

I would not describe greed as brain power.

The simplest way to change a behavior is to take the profit out of it. Tax it away.