Ritchie really doesn’t get markets, does he?

Tax is, of course, one of the things that needs to be accounted for locally. It can only be paid in that way. But tax is paid on profits, which is always a residual of economic activity. As a result, people want an indication of the scale of the activities of any company with whom they engage in the place that they are.

That means the local reporting of sales, on both a source and destination basis, for the group that is preparing the report; details of the number of people employed in a country, and their total pay; information on key sensitive data that is likely to influence profit shifting, such as interest paid on intragroup loans, royalties and management charges;and local profits declared and information on taxes due and paid on both a current and deferred basis, for each and every jurisdiction in which a multinational company trades. All this information is vital if people are to have a chance to understand the activities of the companies that they engage with.

The great joy of the market system is that we don’t actually have to worry about these things if we don’t want to. We can just look at the price of bananananas in Tesco and make a decision, Y/N. We don’t need to know the producer, the owner, the tax situation, anything else: all the information we need is boiled down into that price system.

And I’m sure that some of these varied nonsenses being foisted upon us, from country by country reporting through the various know your supply chain initiatives to Fair Trade and the rest are coming from people who just don’t like that market and price system. They hanker for the days when people like them could indeed tell people what to buy where and how according to their interpretation of what other people should be doing.

As an example I’ve had a long conversation with the people at Global Witness. This conflicts minerals stuff is one thing but they really do see that as just a wedge in the crack. They want everyone to be able to track their entire supply chain all the way through the entire global economy. To the subcontractors’ subcontractors’ subcontractor and beyond. They simply don’t grasp why we actually have this “free market” system at all. Which is that that level of knowledge simply isn’t available in an economy that at any one time has billions of different things available for sale. They’re hankering after the planned economy again, failing to realise that the Socialist Calculation Problem really just doesn’t have a solution.

Ritchie’s only a small part of it but I am indeed convinced that this is a part of what is going on.

13 thoughts on “Ritchie really doesn’t get markets, does he?”

  1. The supreme irony is this information is being demanded by a man who doesn’t publish his tax return and writes letters to ministers arguing that asking HIM to reveal his funders, or his ‘customers’ as I would call them, would place an “onerous burden” on him.

    P.S. Of course I don’t believe people should be required to publish their tax returns. However, when you make a living and receive money demanding that private businesses – and individuals sometimes – should reveal their affairs and when you openly accuse people (Tyer yesterday) of being paid by shadey group, then hell yes; show us your return!

  2. “Ritchie really doesn’t get markets, does he?”
    Of course he does.
    There’s a market niche for a complete tosspot on tax advocacy.
    And he’s filling it.

  3. As a result, people want an indication of the scale of the activities of any company with whom they engage in the place that they are

    Which people? Not me. And I’ve just asked my wife and she responded by asking me if I’m not getting a bit jowly and putting on weight in the neck department.

    So my little sample of two would seem to confirm Tim’s analysis.

    Oh, and does anyone think that Ritchie ever got a gold star in his English Composition exercise book for treasures like “any company with whom”?

  4. If he was talking about tax, I’d understand. But I really don’t understand this at all. Eg

    “As a result, people *want* [my emphasis] an indication of the scale of the activities of any company with whom they engage in the place that they are.”

    (A) who are these people who want to know this?

    (B) anyway, I pretty much know the scale of the companies I engage with. Tesco, big. Corner shop, small. Waterstones, quite big – bigger than corner shop, smaller than Tesco. And?

    Who apart from Tim reads this man?

  5. Although I really don’t like Richie. I would like to know that if I buy x money is not going to terrorists, the Labour party, destroying the rainforest or people like Richie etc.
    In some cases I would rather go without.

  6. Trivia will paralyze an organization. Knowing a contractor’s subcontractor is not just useless information, it is destructive information.

  7. Suppose I really did know all the fine granular details about where my hypothetical cup of coffee came from – the number of workers per bean, the wages paid to everyone in the value chain, all the countries of origin and transit, the CO2-equivalent generated, the distribution of the fractions of pennies paid in corporate tax across the world based on the pennies of profit each of the middlemen they were making from me…

    However would I be able to choose a coffee?

  8. Tim

    Of course they are – as Lady Thatcher herself said: – ‘Contrary to what some thought, I never though the Alliance would usurp Labour Party as the opposition – Socialism remains an enduring temptation’

    Anyone supporting or referring to Ritchie as an ‘authority’ is a socialist. Most people of a sane disposition have the same attitude to him as Luke evinces here (i.e they ignore him, much to his chagrin) I don’t know of any even moderately pro market blog or indeed a conventional economics blog that consider him anything other than a crank. Sadly, as Thatcher observed, there’s a lot of them about. The USSR and its satellites had more than 50,000 Agents/sympathisers in the UK. One of the most prominent has just passed away today. Do you think these people have reconciled themselves to the seeming primacy of the market system?

  9. Not knowing how to do something, and not needing to, is one of the most powerfully liberating aspects of a civilisation. It’s the essence of the division of labour, of comparative advantage, of existence much beyond the subsistence level. Murphy’s never actually made anything in his life, of course, so he has no idea of what sort of burden gathering all this bullshit would do to the efficiency of enterprises, although given our inability to distinguish his idiocy from his malevolence it’s hard to know whether he regards sodding up the supply chain as desirable or merely irrelevant.

  10. I’m wondering how far back he wants to go? I mean, at work, we make stuff out of steel plate. It’s fairly to trace that plate back to the rolling mill (we already use plate stamp identification to do this, as we are making pressure vessels), but is he then expecting it to be traced back further? Do I need to know that the lump of iron ore that became great Uncle Peter’s Austin 7 chassis has subsequently been in the form of a washing machine, a ford escort, a lump of railway rail and some RSJ used in a water treatment works before in ended up in the lump of plate in front of me? Do I measure all the CO2 from when the ore was first extracted, for from when it was last smelted? How would any of this knowlage do me any good anyway, when all I want is a lump of plate of the correct quality (so traceable back to the last point it was analyzed) and delivered to me for the cheapest possible price?

  11. As an online seller I simply want to know I’m buying from a reputable supplier, a bit of research gives me the answer. As a consumer I simply want to know I’m buying something I want, I really could not care about where something is from, the contractors, the supply side of things. ‘Those pasties look nice, I’ll take two’.

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