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National Competitiveness: a dangerous obsession, at Max Planck Institute

POSTED ON February 24th  - POSTED IN Blog, Financial Regulation, Tax

From The Tax Justice Network, on a presentation by FG contributor John Christensen:

Highlighting a presentation by TJN’s Director John Christensen at the Max Planck Institute in December, and a chapter in a new book by two TJN authors, on the same theme. First, Max Planck, which published the details yesterday:

Click here for the presentation

Click here for the presentation and podcast

HSBC opts to stay in ‘competitive’ London. (It was never going to leave anyway)

POSTED ON February 15th  - POSTED IN Blog, Financial Regulation, Tax

HSBCThere’s been a lot of talk for a long time about a threat from globe-trotting HSBC to move its headquarters from London to Hong Kong. It seems there’s been a resolution of the question for now, of sorts. As Bloomberg puts it:

“HSBC Holdings Plc recommitted its future to London, ending 10 months of deliberations over whether to move its headquarters, after securing concessions from the U.K. government on regulation and taxes. The shares rose.”

That’s the Competitiveness Agenda at work, right there. Shower goodies on mobile capital and its owners for fear that they’ll flee elsewhere. More specifically, via Reuters:

Finance Curse: why a ‘competitive’ financial sector means lower growth

POSTED ON July 9th  - POSTED IN Blog, Financial Regulation, The Harms

One of the core insights driving the Fools’ Gold project is this: national ‘competitiveness’ is a confused and dangerous term to use when talking about an economy. What people (politicians, especially) often seem to think is that if you support one economic sector, that will necessarily make your economy as a whole more competitive. The problem is: that ‘support’ generally has to come from somewhere else in your economy.

So a corporate tax cut, for instance, is paid for by others in the economy, via lower corporate tax revenues, which may mean reduced fewer universities and courts, and so on. A more deregulated (and hence supposedly ‘competitive’) financial sector will see taxpayers taking on risks and eventually being forced to pay for them, while bankers get the cream.

These kinds of internal transfer do not automatically enhance growth, productivity, or anything that one might call ‘competitiveness.’

Admati and Hellwig: global finance is not an Olympic competition

POSTED ON June 29th  - POSTED IN Blog, Financial Regulation, What is competitiveness?
Anat Admati of Stanford Graduate School of Business

Bankers’ New Clothes: co-author Anat Admati, of Stanford Graduate School of Business

(Updated with Krugman comments.) Two years ago Anat Admati and Martin Hellwig published a popular book about banking, The Bankers’ New Clothes, which Martin Wolf in the FT described as “the most important book to emerge from the [Global Financial] Crisis.”

The book pulls off the trick of explaining a lot of technical points about banking in highly accessible detail, and perhaps its most valuable contribution is to have explained so clearly why it is foolish to run banks with only small amounts of loss-absorbing equity. Partly because of the way bank equity is so misleadingly portrayed in the media and elsewhere – as a cost to a bank, and by mindless extrapolation to an economy as a whole – bankers have been able to get away with blunting urgent reforms.

Dodd-frank, competitiveness and the cost of financial regulation

POSTED ON May 27th  - POSTED IN Financial Regulation
Dodd-Frank is down there somewhere

Dodd-Frank is down there somewhere

This month a group called the American Action Forum (AAF) published a document entitled “The Growth Consequences of Dodd-Frank,” looking at the U.S. Dodd-Frank legislation introduced to curb financial excesses in the wake of the global financial crisis that first emerged in 2007.

Reflecting the complexity and — how shall we put this delicately? — dodginess of large parts of the financial sector, Dodd-Frank is a huge and unwieldy creature. It’s also been set upon by sharks: read this stunning (though out of date) Matt Taibbi article about how it’s done. As he put it:

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