Comments on: Costing the country: Britain’s finance curse

By: BC

BC — Mon, 08 Oct 2018 13:06:00 +0000

“You have to posit misrule directly damaging the rest of the economy, not just a more highly valued exchange rate making manufacturing less competitive.”

Why? Who made such a rule and who elected them? This does directly damage the economy. It is therefore a net cost.

“High bonuses and profits might make finance less competitive relative to finance in other countries, but it is not a cost to other UK industries.”

They are a cost to other industries for a number of reasons: Not least is the fact that the profits of the financial “industry” are extractive. They are bled from the real economy.

By: William MacDougall

William MacDougall — Mon, 08 Oct 2018 11:18:00 +0000

Well no. Looking at the simpler resource curse, that can only be a net negative where it permits rent seeking rulers to live on rent from commodities, while ignoring and suppressing other industries. Indonesia and Nigeria are prime examples. But for well governed countries like Norway and Australia, resources are clearly a net benefit, even though other industries are weaker than they would otherwise be. Keeping the commodities in the ground would on balance make these countries poorer, as you would expect. It takes serious misrule – which might have happened anyway – for there to be a net loss.

Financial industry is the same. You have to posit misrule directly damaging the rest of the economy, not just a more highly valued exchange rate making manufacturing less competitive. And some of your costs are laughable. High bonuses and profits might make finance less competitive relative to finance in other countries, but it is not a cost to other UK industries.

By: BC

BC — Sun, 07 Oct 2018 19:56:00 +0000

I’ve always been of the opinion that the finance “industry is little more than an extortion racket which effectively taxes the economy in order to provide handsome livings for people who add no value whatsoever to it. It is good to see that serious empirical study is being made into its affairs.