There’s been a bit of pushback (of course) to our Finance Curse analysis, which some people think is just an empty slogan. It isn’t.
Our basic proposition is that hosting a large financial services industry can be like hosting an oil industry: there are many penalties associated with doing so, and in some cases those penalties may well outweigh possible economic benefits. Either way, things are never as good as one might hope, given the amount of cash sloshing in.
This image below isn’t new: it’s drawn from the original document. We’re posting it as a reminder of our thesis, which is slowly but steadily seeping out there.
Of course correlation ain’t causation, and one can quibble with the “GNI minus HDI” measure (that’s a UNDP measure, not ours). But you’ll agree that it’s a pretty striking graph, which tells a pretty clear story in support of our proposition.
For just one current example of *how* the Finance Curse operates, see yesterday’s blog focusing on the exploding value of the Swiss Franc.
We at TJN have always seen our Finance Curse analysis as an important complement to our work on tax havens / secrecy jurisdictions. Our offshore work is about how one country’s financial sector transmits harm to other countries. Our work on the Finance Curse speaks to a domestic constituency instead: how one’s country’s financial sector can be harmful for one’s own country. The two fit together, naturally.
Now read on.