Interesting and eye-opening. A well written book that makes you think about the state of things yesterday and today.

This book begins with a polemical but clear discussion of the resource curse, the idea that the discovery of natural resources often damages a country's society and economy rather than helping. The writing is stylish and entertaining, filled with dramatic anecdotes. The account is not rigorous or precise, but neither it is oversimplified. If that were the entire book it would be a four-star book for explaining an important economic point without dryness or jargon--not five-star because it is a one-sided version.

But the main point of this book is finance is analogous to natural resources in this respect, and causes similar damage. There is virtually no support for this argument, beyond some hand waving analogies. The author quickly loses interest in even these weak arguments, and launches into a polemical rant about financial abuses. This is less logical and accurate than his account of the resource curse, and the writing gets much sloppier as well.

When natural resources are discovered in a country it tempts groups to grab the wealth. In less developed countries this can lead to violent authoritarians taking over, or imperialist conquest. But even in countries with stronger military strength, rule of law and political institutions to resist the theft, powerful blocs of politicians and cronies can form.

These discoveries often result in the country exporting the resources rather than developing the domestic economy to use them, and using foreign experts and capital rather than providing good jobs and investment opportunities to locals. Attempts to integrate the resource into the domestic economy can backfire by distorting it.

Profits to the foreign workers and investors can distort local prices, making it difficult for ordinary citizens who do not get their share of the resource wealth, to pay their bills. On the other hand, if the resource wealth is distributed widely either as a benefit of citizenship or in infrastructure investments, it can cause damage by distorting incentives and capital allocation.

That's not to say that all resource discoveries are negatives, but every country with natural resources has to deal with these issues. Some succeed pretty well, others seem cursed.

How is this similar to finance? At a very high level you can imagine the concentrated money and power in global financial institutions is like a big oil field. It definitely attracts kleptocrats and cronies to grab the profits. The good jobs and profits can be hoarded by an international elite, and the high-paid workers and owners can buy up political power, choice real estate and other things to make life difficult for everyone else.

But that's just an analogy, it doesn't prove this is what happens. And you can say similar things about almost any business, or any good thing. Why does it not apply equally to Hollywood, or gambling casinos, or technology firms, or big universities? This is what the book promises to elucidate, and the author never tries. He skims over the analogy and gets right on to generic finance bashing.

Any good thing attracts thieves. Any disruption enriches some people more than others. Anything good for one group can cause relative deprivation in others. When do these things rise to the level of a curse? Because the author never takes up that question, his argument applies equally to everything good.

If you want a good discussion of the resource curse from the author's perspective, his earlier Poisoned Wells is much better. His Treasure Islands is a more logical finance bashing, focusing on tax evasion. I would only recommend this book if you've read both of those, and loved them so much you'll overlook the key logical lapse in this one.

I really wish I could give this book a better rating.
I dove in prepared to agree with the author and discover the nuance of what an overly robust financial sector does to economies, why, how and what to do about it. Some of that Shaxson did deliver and there were a few chapters I found quite engaging and informative, for example, the ones where he talks about the “Celtic Tiger” and offshore finance (makes sense, he authored an entire separate book on the topic of tax havens). His breakdown of some key economic ideas of the previous century, neoliberal thought etc. in the beginning of the book also struck me as quite fair and successful.

However, the further I went into the book, the more sensationalist, “finger-pointy” and comical Shaxson’s arguments and rhetoric became. He is quick with exclamations of mock horror at companies facing a possible need to file US tax returns, inexplicably insists on using words like “titan” to describe hedge fund managers or junk-bond-fueled raiders and labels anything even remotely complex in the financial world “squirrelly business”.
Perhaps, I am just a jaded corporate drone, but a lot of his fist-shaking leaves me shrugging my shoulders. There are many destructive aspects to contemporary global finance (oh wow, who knew?), I am trying to learn more about them, not get an earful of moralistic sensationalizations about pension funds getting swindled and taxes being avoided. Even when his general points are reasonable and true the tabloid language makes them next to impossible to absorb. Here is an especially egregious example of what so irks me:
“There’s a third reason for all the snaking chains of corporate complexity, which brings that other large stakeholder into view: the shambling, unloved, grouchy giant that invests in the roads, the courts, the education of workers, the sewage pipes under homes and office buildings, and the other essential things that underpin all of the titans’ profits. Government. After it has picked up the human flotsam from the lacerated pension pots and the layoffs, be they burned-out journalists or the victims of rogue doctors, the government is at least supposed to get a payback in the form of tax levied on corporate profits”.
If this kind of delivery is you cup of tea, you doubtless will enjoy the book much more than I did.

Shaxson does a fair bit of introductory explaining throughout the book, which some readers may find very useful, but I personally did not. He is very clear and brief in these summaries, but goes a little too far, for example, breaking down what bank balances are, which seems redundant in a book not targeted at children. I wish he spent time unpacking more complex concepts mentioned in the book, such as different kinds of trusts or some “typical” ways to structure chains of offshore corporations, rather than focused on the simpler foundational terms.

Lastly, while I find the whole idea of “the finance curse” compelling and its existence demonstrable, I am concerned Shaxson stretches it too far, for example, concluding the book with a chapter on CAFOs. Are they terrible? Yes. Are contemporary farming and agricultural practices horrid in general? Yes. Are they a manifestation of “the finance curse”? I am not convinced. The book does successfully demonstrate the bloat and questionable practices in the financial sector, but comes up short trying to expose its poisonous influence on the rest of the economy. Again, I am already in agreement with the author’s thesis, and I was hoping he would elegantly put relevant arguments into words, alas, he doesn’t accomplish that in this book.