This blog post is shared from the Corporate Accountability Network website. It is the presentation made by Meesha Nehru, a director of CAN, at its launch event on 12 July:
I remember when I first started looking at accounts as a non-financially-trained person. I couldn’t work out why there were 15 pages on Executive remuneration but barely even a couple of lines on employees and only small notes on tax.
Because the previous generation of taters baked such wibble about executive compensation into the accounts because they thought that’s what civil society needed to know. Or claimed to believe such at least.
There are several things to say. First, although I have reservations about electric cars, let’s be clear that this is a nascent Green New Deal in operation.
Second, let’s also be clear that this is the government picking winners and losers.
And third, quite unambiguously this is the government acting as a banker to the private sector.
And, fourth, the sum involved is far from insignificant.
So, fifth, let’s never again hear opponents of the Green New Deal and a National Investment Bank saying that it is not the government’s job to do any of these things: very clearly it is. A Tory government has just proved that.
What about those of us who think that government shouldn’t be trying to pick winners and also shouldn’t be guaranteeing loans in this manner? That we disagree with Tory policy doesn’t mean we have to accept it, surely?
But much more fun. Note what the Senior Lecturer’s argument actually is. A Tory Government is doing this, therefore by definition it is right to do this. An interesting idea that, isn’t it?
it was put to me over the weekend that this blog may not be as appropriately named now as it was when it was launched more than 13 years ago. Tax is not its sole focus by a long way now.
I thought about alternatives and the best I could come up with was TAPER – Tax, accounting and political economy research.
Here Be Drongoes?
In the light of large fines this week for data mishandling, is this a chance of this?
Think how that would change the world’s business models.
And then wonder whether this is part of the Green New Deal that we need.
Yep, to prevent Flipper steaming in the fumes of the last ice floe we must regulate data handling.
Is there nothing the Green New Deal can’t handle?
In the discussion at yesterday’s Corporate Accountability Network launch event I was asked how we could possibly effect change in accounting standards when it takes up to seven years for any change to a standard to take place.
My answer at the time was that this pace of change is, of course, quite ridiculous. There is no reasonable reason on earth why it should take seven years to change an accounting standard.
There must, then, be good reason why it does take this long for change to take place in accountancy. I think there is.
The reason being because they hate me etc.
The trick being missed? If it takes 7 years to gain a change that’s 7 years of funding to ask for, innit?
The result is a radically different approach to accounting standards. The objective is to make accounting and business responsible to all in society, which is appropriate given the enormous privilege of limited liability which most businesses enjoy, and which is granted at cost to everyone else in the communities that make it available.
If granting limited liability were a cost to everyone then we wouldn’t grant it, would we?
That limited liability makes large scale economic cooperation – which makes us richer – even possible is why we do. And that it makes us all richer is why it’s not a cost to us.
Changing the rules on advertising yachts could help that
July 9 2019 at 8:31 pm
“Changing the rules on advertising yachts could help that”
Why not make it illegal for people to own one?
Richard Murphy says:
July 10 2019 at 7:24 am
Because as yet I do not think that necessary
Won’t we all need one to get around London?
And isn’t it a lovely vision of society, that your having a boat or not depends upon a permission slip from a retired accountant our of Wandsworth?
Graham Hewitt says:
July 5 2019 at 9:00 am
An example of SCA would be to charge to the accounts of, among others, the Oil industry the costs associated with global warming as a result of burning oil and oil derived products.
Richard Murphy says:
July 5 2019 at 9:54 am
Exxon already includes a carbon tax in its evaluations of new projects…..
The Corporate Accountability Network is a new idea. I am unashamedly looking for support, sponsorship and funding. If society is to be protected; accounts are to be meaningful; the local economy is to be promoted and people are to trade with each other with confidence then we need better data for the benefit of everyone. I am keen to hear from those who share that view.
A des res in Ely doesn’t pay for itself. Therefore sums equivalent to a full professorship are sought before staff are thought of…..
The simple fact is that the Green New Deal and profit maximisation are incompatible with each other, and this is of massive importance and is an issue that cannot be ducked if the Green New Deal is to work.
Profit is the value added in an organisation. This statement is tantamount to insisting that we don’t want to add value in our economic activities. Which is rather the point of having economic activities in the first place really, to add value.
Quite explicitly, externalities such as environmental cost are ignored in this framework, which accepts the standard neoclassical line that natural capital is a ‘free gift of nature’. This is inappropriate in a world where we face the reality of climate crisis. The capital constraint that businesses now face does not come from finance – which is readily available to most of them at almost no real cost in the case of larger companies – but from natural capital, whose use we have to limit.
This all having been dealt with by Arthur Cecil Pigou in the 1910 to 1925 period. Which is why the Stern Review, William Nordhaus and all the rest advocate the carbon tax as they do. Include externalities in the price system and Robert’s your parent’s sibling of choice.
We already considered this, dealt with it, a century ago. But then those who know no economics are going to be constantly trying to puzzle through questions already answered, aren’t they?
Perhaps more reading and less staring out the window is required?
But so too is it by another simple fact. Over 80% of UK personal wealth is made up of tax incentivised assets, either in the form of people’s homes or pension funds or ISAs. That is a staggering fact that makes clear it is the UK tax system that does help create the wealth inequality that we suffer in this country. In that case to tax the resulting imbalances in society makes complete sense.
So, 80% of UK wealth is in pretty mainstream savings schemes and pensions. Belonging to pretty mainstream people too.
This is thus evidence of vast inequality that must be taxed?
I am not saying we need start with a tax on wealth as such, although I see little reason why we should not on the wealth of the top 0.1%, with the sole justification being that they are exceptionally wealthy and that the imbalance this creates society requires redress for no other reason than that.
Well, there’s only the entirety of optimal taxation theory to tell us that we shouldn’t tax wealth. But then that would mean having to know about bits of economics that they awarded the Nobel for.
Of course such taxes are indeed regressive, but soft drinks are empty useless calories and serve no purpose whatsoever other than making profits for their producers – and us fat.
People enjoy them. Is that not reason enough?
Well, obviously enough, not if you’re a puritan, but still. Why Mozart? It’s just noise after all….
Richard Murphy says:
July 3 2019 at 9:26 pm
Richard Murphy says:
July 4 2019 at 7:23 am
An advertising ban is the start
And then an enforced limit on the harmful contents has to be the case
And I simply cannot see why not
July 3 2019 at 1:06 pm
Making And Selling Coca Cola Is A Sin Says The Senior Lecturer
What do you think of his line of argument (putting aside the neoliberal bigger picture) and just focusing on logic?
Richard Murphy says:
July 3 2019 at 1:15 pm
My response is very simply: nothing Worstall has ever said is worth responding to
Nope, not even the fact that soda pop consumption is elastic with respect to price rather than the inelastic he based his argument upon.
….a can of Coke? ….What we know about these products, and others like tobacco and alcohol, is that they are addictive and so have a high inelasticity of demand with regard to price…
He didn’t even bother to look up the elasticity of soda pop….
Using a few more electric cars, cutting air miles by a small amount a year and recycling the office waste is not the change we need now. Nothing less than a fundamental change to the whole business model of society is required. Tackling global heating has to be at the heart of that, and much of what UK business does increases the risk of catastrophe, rather than prevents it.
In that case a change in the purpose of all companies, imposed by law so that adaptation to the constraints of the climate crisis is their number one objective rather than profit, matched by the introduction of sustainable cost accounting so that we can appraise who is likely to be able to succeed at that process of adaptation and who will not, and aware capital appropriately as a consequence, is what is essential now if the economy, the country, we and the planet are all to have any chance of survival.
Ritchie’s current funding runs out in September. Expect – if you can even believe this is possible – a certain increasing shrillness in the call for new funding for the new project as the date approaches.
The cowardly state is the exact opposite of the Courageous State that I described in my 2011 book with that title. What happens in the cowardly state is that a neoliberal politician, obsessed by centralised macroeconomic control of the economy and a desire to shrink the state at all costs so long as it has limited impact upon their own political fortunes, will close, privatise, outsource and simply abandon public services where anyone but they can be blamed for this happening with an indifference as to the consequence that is profoundly sociopathic.
I would argue that this is exactly what has happened to local government since 2010. The impact of austerity has been offloaded by central government onto local authorities. Sixty per cent of central government funding for local services has been lost over that period.
So, those obsessed by centralised macroeconomic control decentralise economic control over local services and funding.
This is bad.
Ho hum, that expansion of the universities was a bad idea, wasn’t it?
This is not a situation that is easy to reverse, for all sorts of reasons. Good people are not attracted to be councillors when the rewards are low and the prospect of failure, for which you may well feel a personal responsibility even if that is inappropriate, is high.
Councillors used to be unpaid. Now they’re paid. The quality has gone up, has it?
Whilst funding, borrowing and the governance of local government have all to be reimagined to make sure that they are fit for purpose,
How about local people pay the local taxes they wish to have in order to pay for the local services they desire?
It seems that the time has come to state the obvious: I am a liberal.
Not a Liberal Democrat.
Nor a neoliberal.
But a liberal.
This means that I believe that my neighbour is as important as me.
Nobody does believe that. We might insist that they’re ass morally important, equally one of God’s Special Little Snowflakes. But absolutely no one does think their neighbour is as important as they themselves are. We’s all be around next door cooking their breakfast if we did.
Saying that makes clear the third aspect of being a liberal. We must have a criteria for determining what is just, meaning that it requires defence. My logic is that justice is blind. Something is right when it would be considered just from whoever’s perspective it is viewed.
Isn’t that cute? So, 80% tax levels. Doesn’t seem just from the point of the view of the person being taxed. That’s why they all bigger off when we try it. Therefore it’s not just to have 80% tax rates as it’s not, considered from the perspective of the person being taxed, just.
Gosh, this moral logic stuff is fun, isn’t it?
That is what law is for in a liberal society: to define the boundaries of the freedoms that we can enjoy.
Err, no, that’s the definition of illiberality. A liberal society is one where the law defines the boundaries of what we may not do.
Victor Anderson -who has a long history as an environmental economist – presented the first paper on whether it is possible to measure the value of natural capital, or not. I think it is fair to say that it was concluded that it is not, and even more strongly that it may not even be desirable to do so. That might only encourage its use, which is not just undesirable but simply contrary to all our interests now.
If something doesn’t have a value then it’s valueless. Meaning that people don’t preserve it……
Jane McTavish says:
June 27 2019 at 8:32 am
I find it hard to imagine what such accounts would look like. Could you construct a simple example using a real business? For example Tax Research LLP?
Richard Murphy says:
June 27 2019 at 8:38 am
For Tax Research LLP the accounting would be exceptionally simple – but there would be a narrative
For Shell it would be very different
As yet I have not done this
If I get a grant I will
You must cross my palm with silver to find out what the future holds for you moi lass!