Sad, sad, sad

The practice, called trade mispricing, costs developing countries dearly. We estimate that the US$160bn lost each year could, if used according to current spending patterns, save the lives of 350,000 children under the age of five every year."

You see, because if companies don\’t pay their taxes then the money just disappears. There\’s no such thing as an opportunity cost in lefty world.

Now then, out in the real world what does happen when the capitalist bastards manage to dodge taxes? One of two things.

1) The company has a higher retained profit which it then uses to reinvest in the business. More jobs, higher wages, economic growth, Hurrah!

2) The company pays it out to their fat cat shareholders who simply engorge themselves on the lucre extracted from the sweat and blood of the poor. And investments in companies working in poor countries are seen to be paying higher returns. Which leads to more capital being invested in companies working in poor countries so more jobs, higher wages and economic growth, Hurrah!

It is of course possible to argue that direct spending by governments will do more for the chances of the poor than more foreign direct investment. But to argue that if the money is not paid in taxes then it simply disappears as far as the poor are concerned is simply nonsense.



6 thoughts on “Sad, sad, sad”

  1. Is it not in fact the case that the wealth leaves the country so someone may benefit but probably not the workers in that country. Do you really imagine that the company’s directors say “oh we have paid a bit less tax let’s just increase the workers’ wages” . Instead of just exposing your prejudices, why won’t you take a long look at the real world?

    In fact, Mr Worstall, I take exception to the mocking tone you use in referring to the sweat and blood of the poor. Presumably this is the same tone you would adopt if you were talking to the victims of the Bhopal disaster or indeed other such incidents.

  2. “fat cat shareholders who simply engorge themselves on the lucre extracted from the sweat and blood of the poor”

    No, no, Worstall you fool, we take $1,000.00 bills and use them to light cigars. The rest we stuff into our mattresses so it cannot possibly circulate further. Many of my fat cat friends are so wealthy they have trouble sleeping, their mattresses are so lumpy. Every time the poor suffer we rejoice. After all, the last thing we want is for the poor to be less poor so they can buy our products. We will sell only to the already wealthy. Smaller markets!

    James, I loved your post, it was the most compact version I have ever read of of the usual lefty cant composed of lies by innuendo (Bhopal), ignorance, and snotty condescension.

    Perhaps you could post further on how ‘wealth’ ‘leaves’ a country. Perhaps Nigerian oil as an example. I should like to know how Nigerians will use the oil if we do not buy it, that is, how it is ‘wealth’ to them without the act of removal, rather than an offensive pollutant.

  3. Hang about here, RM seems to be talking about multi-nationals underpaying tax in developing countries. Isn’t it up to the developing country to decide what sort of tax system they want to have?

    The developing country has the same choice as anywhere else – low rates and low avoidance or high rates and strict anti-avoidance rules than make the place less attractive as a place to invest. Or the developing country could say ‘Sod this’ and replace all taxes with Land Value Tax, which is nigh impossible to evade.

  4. Mark,

    We forget that RM is interested in pushing some version of social justice imperialism on these very same countries.

    In the mind of RM we can’t have the locals making their own rules.

  5. “Social Justice Imperialism”

    Brilliant. That’s as neat a slogan as the “dissembling mumble-swerve” someone came up with the other day.

  6. Pingback: In which I am reamed a new one

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