Quelle Surprise

Alex Cobham at the Tax Justice Network published this blog late last week and I think it worth sharing because it shows that whilst some in business now recognise that tax responsibility is an issue that they must address they are still a long way from being willing to address the issues in the way that commitment to the Fair Tax Mark would, for example, require. I share Alex’s disappointment that yet another PR exercise is distracting from what is really required:

The B Team, [who describe themselves] as the leading global group for responsible business, has released a report: ‘A New Bar for Responsible Tax‘. To our great sadness, it moves the bar in one direction – towards the bottom.

When the B Team first got in touch to discuss their plan to work with major multinationals to establish a new standard of tax transparency, we were excited. The one thing lacking so far in the process towards public country-by-country reporting has been a champion among the major multinationals – and that’s exactly who the B Team work with. Moreover, they have made some genuine progress towards beneficial ownership transparency for their own group structures. We felt their staff were on the right track, and we hoped that they would be able to take the business members with them.

It soon became clear that the members were less keen. But even so, the report which has now been released is desperately disappointing.

Competition for the Fair Tax Mark.

such a pity, eh?

Rilly?

Four things worry me.

First, that the whole of the first page fails to address any question asked.

Why not just refer them to other pieces on the blog which can be found through Google?

Works for some people apparently.

Hip? Hippy? Hypocri…….

Feb 17:

Oxfam is to at least temporarily lose its access to government funding as a result of a tiny number of its staff committing acts

Feb 13:

And the result was abusive: Barclays gained from this.

But is there outrage? I have not heard it.

Has there been a call for banks to take the moral high ground, issued by ministers? No.

Has Barclays been threatened with the loss of all its public contracts? No.

Is it ‘coz Oxfam pays (or has paid) me and Barclay’s hasn’t?

So law is another thing he doesn’t know about then

Has a crime been committed? If crime is an affront to the accepted standards of society then, yes, that can be argued in both cases.

No, a crime is what the currently written law states is a crime.

Not DoublusPlusUngoodThink.

In contrast, did, and does, Jeremy Hunt knowingly cause harm by his actions? The answer is unambiguously yes in my opinion. This is because there is amply evidence to suggest that alternatives are available; that he knows of them and does nothing to act on them. He is, then, guilty of causing pain and loss of life when both could be avoided. It is not just his judgement that has erred; his actions have been informed by that judgement despite knowing what would happen.

Sometimes a little theorising helps.

Hunt is slowing the rise in the NHS budget. This is now a crime in RitchieUnThink.

BTW, if people can be charged with crimes for “bad” policy options when do we stick Ritchie in the Tower? For the crime against humanity of stupidity?

Remarkable

So, therefore, I remark:

The corporate form exists in its current guise to support an ethos. That is the cult of maximisation. I deliberately omit the word profit from that last sentence. What most managers realise is that they have no idea what profit is. And they also realise that they have no idea how to maximise it, even if they really understand profit. That is because those with any insight realise that doing so requires a knowledge of the future with a degree of certainty that is actually beyond us all. So what they instead do is suggest that other, easier to identify (and fulfil) goals be used as proxies for profit maximisation. Almost invariable that proxy is income growth. The maxim is simple. It is ‘if it’s bigger, it’s better’. And so from the false microeconomic idea of profit maximisation was the cult of growth born.

Amazing how little he knows about business really, isn’t it? People are endlessly cutting unprofitable lines of work. Something he complains about a lot actually.

As I tell my students, the whole of political economy is about the influence of power over the allocation of resources in society. The isomorphic model of corporate form is designed to deliver unaccountable power to a few at cost to many. As it has spread the consequences have become more obvious. But so too has the need for the consideration of alternatives, to which far too little attention has been paid. That’s because if the modern cult of microeconomics is good at anything it is good at crushing alternative thought. We’re all paying the price for that.

Guess that’s why everything should be concentrated into an even smaller group of managers, the State?

What an ambition, eh?

I would like a world where there was no need for development aid.

To say so is not to come over all Daily Express / Rees-Moggish all of a sudden. I have worked towards that aim for most of this century. This, at its core, is what tax justice is all about.

This is not a discussion of disaster assistance: that is quite another issue. I am talking about development here.

By Ritchie/TJN numbers a complete absence of that offshore dodging would raise some $120 billion a year. Or add 0.5% to government revenues globally.

That’s all that’s needed is it?

What was needed was a mechanism to ensure that the so called developing countries could move on from aid and become the fully fledged, self-governing, democratic and self-supporting states that they deserved to be, that their people rightly demanded, and that anyone who respected them should wish for.

We were quite sure we had two mechanisms to deliver that. One was tax. The other was transparency. We wrapped them together under the banner tax justice. I wish I could say that the rest is history, but it’s not yet.

Strangely, the people who know about these things recommend neoliberal globalisation instead. It’s how China got rich recently, it’s how India and Bangladesh are following….it’s what has produced the largest fall in absolute poverty in the history of our species.

You’ve heard about the difference between charges brought and convictions achieved?

News broke yesterday that Barclays Bank is to be charged with criminal offences. I stress, not the directors or some names individual, but the Bank itself.

The charge does, admittedly, relate to events in the past. It is alleged that in 2008 the Bank lent £3 billion ( I stress, billion) to Qatar so that Qatar could use those funds to buy shares in Barclays that then ensured Barclays would not need to be nationalised, unlike Lloyd’s and RBS.

There was just one problem with this arrangement. It was illegal. Banks may not explicitly lend to assist others to buy shares in themselves.

Barclays, of course, knew this.

Well, no, not quite. The allegation is that the actions were illegal and that this was known.

Has Barclays been threatened with the loss of all its public contracts? No.

Err, punishment comes after the trial, no?

The power of neoliberals

Richard Murphy says:
February 13 2018 at 10:59 am
I have condemned those who abused when in Oxfam’s employment

I have said Oxfam made mistakes

Helen Evans said the government and Charity Commission did as well

And yes, it is a neoliberal plot

Never knew I had the power to get elderly Dutchmen to shell out for dusky maidens. The things you learn, eh?

Heinz Kiosk

But the question then becomes what needs to be done?

What would be wholly inappropriate to say that this issue is only Oxfam’s. It is not.

And what would be wholly inappropriate would be to end all aid. That would compound the issue.

And what would also be wrong would be to close Oxfam when so many have done so much good there.

Just as it would be wrong to stop charities speaking out. After all, who then would speak for the abused when it is very clear that in this case the government and Charity Commission turned a complete blind eye, unlike Oxfam, when they knew of the issue?

What is required is better safeguarding. All of society has to pay for that.

And what is required beyond that is a change of culture: a completely holistic reform.

Sigh.

But reinforcing the status quo of predominantly white male power inherent within modern capitalism, whose power structures have been copied within far too many charities, is not going to deliver that change. But that is what The Times wants.

White folks, as enriched by capitalism, are the only people who have ever had the luxury of pondering child and sexual abuse. OK, so, perhaps those not-white folks similarly enriched too.

To defend Oxfam

And does he really think the world would have been a better place without the work development agencies have done, including the lobbying that has, for example, resulted in the Extractive Industries Transparency Initiative and country-by-country reporting that are designed to hold the world’s multinational corporations to account when no one else has been able to make that demand?

Kiddie fiddling’s not so bad when the people doing it support the idea of mine. Invented by me.

Good question

Interestingly, it comes from one of the commenters, not the Senior Lecturer:

Here I think, we get to the nub of the issue. Assuming we are intent upon taking this forward.

Let us ignore what precise figure we will accept as ‘full employment’. The number is not arbitrary, but by for example, raising the pension age, or the school leaving age it can be shifted substantially at a stroke. Also there will always inevitably be a degree of churn at any given time and that is not only inevitable, but necessary.

In terms of developing policy it is pointless to speak of ‘full employment’ without considering what we are going to accept as ’employment’ and how its ‘fullness’ might be achieved.

An extremely useful definition is to look at it the other way around. As Marx said, if we’ve got full employment, no more than frictional unemployment, then labour compensation should rise in line with productivity.

Thus, if labour compensation is rising in line with productivity we’ve full employment…..we quite obviously haven’t had in recent years, we’re about there now.

FFS. now it’s the dictionary he’s not getting!

The second half of their argument I have a lot of time for: deflation is a danger to be avoided at just about all costs, in my opinion. That a fall in the value of the currency might destroy real opportunity in the economy is unforgivable in my opinion, and it’s right that the Bank should steer clear of it.

Deflation is a rise in the value of the currency.

But equally, I see no reason at all why we should keep inflation to 2% so that the owners of debt (and debt ownership is the basis of wealth) should have their asset values preserved, which is the only reason why I can see the current target is so low.

Would the world end if the target was 3%? Or 4%? Or even 5%? I’m not suggesting any more than that, and might only go for doubling to 4% to be honest. The obvious answer is it would not.

No, that’s not why the target is where it is. The biggest damage caused by inflation is that it screws the price system. It’s the changing relative prices of goods and services which are the useful signals in an economy. Consistent and large inflation masks those. We all just lose track if you like. Deflation is also bad, worse even. Thus, the target is set where we get the least of the distortion of the price system while still avoiding the deflation.

And that rate of inflation would allow for wage growth in proportion to asset prices – and most specifically house prices – which is vital.

Everyone recall how wages kept up with house prices in the 1970s when we had higher inflation?

Such a rate may also allow real wage rises – which has to be good.

4% inflation will increase the likelihood of real wage rises?

Critically, this inflation target would also mean that interest rates need not rise – rate rises that will tip millions into unmanageable debt scenarios and which might precipitate a new banking crisis as a result.

Higher inflation will not increase market determined interest rates? Jeebus, which planet is Ritchie phoning this in from?

There are reasonable – maybe not good but reasonable – arguments for a rise in the inflation target. Amazing that the Senior Lecturer has managed to stumble across absolutely none of them.

Nope, not even understanding MMT

What this also means is that the capacity to tax, and indeed to borrow, cannot constrain government spending. Tautologically this has to be true: since neither payment of tax or lending to the government would be possible unless government created money was put into circulation as a result of government spending that spending cannot be constrained by either of them.

But what this means is that there is no requirement per se to balance the government’s books. Indeed it is not just illogical but completely economically perverse to seek to do. A government with a balanced budget necessarily denies an economy the funds it needs to function.

Nope, not at all.

Assume the steps leading up to this are correct. Govt can just print money, they spend then tax, there aren’t those constraints. This does not then mean that a balanced budget is denying society the money it needs to function. MMT doesn’t say that at all. Taking it all again as true, imagine a society at full employment. True, entirely full, employment and capacity utilisation. Any further money emission will turn up as inflation, only inflation. Which MMT types say must be taxed back to prevent the inflation.

That is, even MMT says that at full capacity therefore there should be a balanced budget. To prevent inflation.

Dear God, he even gets this wrong

This new work breaks ground by emphasising more than financial capital, and that is important because many forms of capital drive growth. In the process it also emphasises vulnerabilities: mineral resources don’t last forever for example, whereas high human capital is associated with high growth.

No it isn’t. The currently rich countries have high human capital. The currently poor countries have low. The poor countries grow faster than the rich.

The association is that high human capital is correlated with past economic growth, not high future such.

It gets worse of course:

Measures are useful for three reasons. The first is comparison. The second is comprehension. The third is as the basis for decision making. What this says is that the best investment in the world is in people. And questions immediately follow, not least as to why so many barriers to education now exist in the UK in the form of student debt, and why have we been so opposed to student migration?

The World Bank’s measure explicitly excludes years of schooling as a measure. Instead:

Human capital wealth is measured for the first time as the present value
of the future earnings of the labor force using household surveys for 141
countries. Human capital is often interpreted to include, among other factors,
the years of schooling of the population, the actual learning taking
place in school and after leaving school, and health investments. In this
book the measure of human capital is based on the present value of the
expected earnings of the labor force, a measure that is consistent with the
concept of capital used for other assets. This measure factors in not only
the number of years of schooling completed by workers, but also the earnings
gains associated with schooling (which implicitly factors in the quality
of the learning taking place in school) and how long workers can work
(which implicitly accounts for health conditions through life expectancy,
among others).

The capitalisation of the extra income stream from the education, not the years of it. And given that an arts degree for a male in the UK, on average of course, is a net loser in income for the student that means that a healthy chunk of university education in the UK subtracts from national wealth.

Which is why we have a loan system to fund it. In the hope that the 18 year olds will have enough nous not to do degrees which lower their lifetime income.

Silly Senior Lecturer

Many commentators now seem to agree stock markets are heavily over valued. If the correction is not now it is coming.

But still people buy. If ever proof of irrationality was required, or alternatively that there persists a belief amongst many that they can beat the market, this looks like it.

For every seller there is a buyer. Meaning that there are always (well, OK, St Petersburg exchange, 1917) people who still buy.

Sigh.