John Christensen, an economist who runs Tax Justice Network, which campaigns against tax havens, equates the dominance of finance in the UK economy to the \”resource curse\” that exacerbates inequality in the developing world. Finance in the UK, like oil and gas or mining in the developing world, has crowded out other sectors and therefore narrowed opportunity for the working age population. \”The Finance Curse is every bit as corrupting as the Resource Curse which hits mineral rich countries,\” he says.
You would hope that an economist would actually be able to articulate what the resource curse is.
If you\’ve got some natural resource within your borders, one that lots of people want to buy, then you end up getting lots of foreign money being changed into your local currency as people buy that resource. That drives your exchange rate up and thus strangles everything except that natural resource.
The solution to this, if you have such a natural resource, is to make damn sure that the money from selling it is not allowed to come onshore. You know, like Norway? That oil money cannot be spent in the Norwegian economy. That\’s why there is a Norwegian economy.
By the way, John Christensen campaigns against anyone being allowed to put income from natural resources offshore, he insists that it must all be repatriated and spent domestically.
A slightly strange thing for an economist concerned about the resource curse to advocate but then no one said that he had to be consistent or even logical, did they?