Archive for capitalism

Vegan Tigers and Moral Corporations

Posted in Uncategorized with tags , , , on December 18, 2012 by Jonathan Kent

What is it with politicians?  All too often it’s all about them looking good and not at all about getting something done.

Take Margaret Hodge.  With bosses from Amazon, Starbucks and Google lined up before the Public Accounts Committee she lectures them on their failure to pay more tax and when they point out that they’re within the law she comes back with “We aren’t accusing you of being illegal; we are accusing you of being immoral.”

Excuse me?  Corporations aren’t immoral, they’re amoral.  That’s the way they’re constituted.  Their legal duty is to make profits to pay for dividends to shareholders.  If it doesn’t add to their revenue they’re not allowed to do good.

“I am very proud of the structure that we set up,” says Google boss Eric Schmidt. “We did it based on the incentives that the governments offered us to operate.”  He’s been given a set of rules to play by and he’s gamed them.  If it’s not very sporting it’s because it’s not sport, it’s business.

And while that little lecture raised Mrs Hodge’s profile it didn’t do anything much to address the underlying problem.

I’d have some sympathy for the politicians who would rather fire off a soundbite than actually take concrete action if they hadn’t had plenty of warning that this sort of rampant capitalism was coming down the track.

“I hope we shall…crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government to trial and bid defiance to the laws of our country,” wrote one former president of the United States.

‘Which president?’ you ask. ‘Clinton?  Carter? Kennedy maybe?’

A little further back.

‘How about one of the Roosevelts, FDR or even Teddy back in the day?  Don’t tell me was it Abe Lincoln?’

Nope.  It was Thomas Jefferson in a letter dated 1816.   Thomas Jefferson was no socialist.  He was quote convinced of the ability of private business to provide the goods that the people and the government needed better and cheaper than could the state. But he was equally convinced that business, unfettered, would try to run the show for its own benefit and not for the good of the nation.

So having had two centuries to wake up to the realities politicians like Mrs Hodge still appeal to corporations’ sense of morality.  That’s like asking a tiger to consider veganism.

Corporations are the way they are because requiring them to maximise profit was deemed to be the best way of ensuring they didn’t cheat their shareholders.  But while they don’t make moral choices, they do make cost benefit analyses.

If a new product stands to make a listed company £1Bn profit, but there’s a risk of it causing death or injury, the analysis will weigh potential profits against fines, compensation and the cost of reputational damage.  Governments can set fines, courts can determine compensation and campaigners can make a company’s reputation the issue and, between them, they can do their best to deter bad behaviour.

But better than surrounding a tiger with people wielding pointy sticks and hoping they don’t nod off, is building a really good, plain wall.

Companies are forever looking for the gaps in legislation through which they can slip a couple of billion quid and keep it out of the taxperson’s way.  The more complex the legislation, the more gaps go un-noticed by legislators, but not by sharp-eyed corporate-tax lawyers.  In general the simpler the rules the harder they are to game.

One thing global corporations cannot hide is global profits.  They have to declare those to shareholders.  They avoid tax through internal accounting so that their profits are made, for legal purposes, in low-tax jurisdictions.

So how’s this?  If Starbucks makes £10Bn profit worldwide and 10% of its turnover is in the UK the starting point for tax calculations should be 10% of its global profits, i.e. £1Bn.  The default minimum taxable profits would be set at a percentage of that £1Bn, say 50 or 66 per cent.  If a corporation wants to argue that it really isn’t making that much profit in the UK, and should pay less, then the onus should fall on the company to prove it.  Internal licensing and silly payments from one wholly owned subsidiary to another should be discounted.

I can hear the Tax Payers Alliance (an odd name for people who want to avoid paying tax) and the libertarian right protest; ‘you’ll drive businesses out of Britain!’

Really?  In just over a decade Starbucks has persuaded millions of people in the UK to pay £3 or more for a small bucket of not-great coffee, something we’d have called crazy in the days before all that coffee made us crazy.  If Starbucks go will people stop drinking the stuff?  Will we suddenly become a decaff-nation?  Or will some enterprising soul, seeing hundreds of empty coffee shops and hundreds of unemployed baristas, and more to the point a ready made market, not simply open new, better coffee shops and make themselves a small, or actually quite large, fortune.

So let’s quit the grandstanding, the soundbiting and the moralising and build us a good, simple legal wall.


Wotcha Pippa, Got an Old Motor?

Posted in Uncategorized with tags , , , , , , on August 20, 2012 by Jonathan Kent

So, Pippa Bartolotti drives a Jag!  That’s a little surprising given that she’s one of the four candidates for leader of the Green Party.  And though she expresses amazement it’s that fact that The Independent chose to lead its contest coverage on, frankly that’s hardly a surprise at all.

Journalists like nothing more than the whiff of hypocrisy especially when they smell it on one of our (would-be) elected representatives.  No matter that there’s a cogent case that a Prius is impractical, or that now Pippa has the Jag it’s more eco to run it than buy a new car.  Nope, the question is how someone who wants to front the Greens could have bought one in the first place.

Cards on the table time; I have a car.  I drive it more than I’d like to but, living in the sticks, and 2 miles from the nearest bus stop, and almost 5 from the nearest village, it’s not as easy as when I lived in London, there was a bus stop 50 yards away and I only used the car to drive back to the sticks every month or so.

I bought a second hand VW Golf 5 years ago.  It runs on diesel, and when I go past one of those rare outlets that sells the stuff, it runs on recycled biodiesel.  I like it.  I get variety.  I can smell of stir-fry, curry or fish and chips and as I go past I know I’m doing a little bit to boost sales of deep-fried food as people get a whiff.

Am I a saint?  The heck I am.  If I was saintly I’d cycle everywhere with my small son in a trailer on the back.  And if we got wiped out in the process by one of the psycho lorry drivers that uses the road between me and the station I might get an obit in Green World, while the non-green world would write me off as a selfish idiot for putting my child in harm’s way.  See; you can’t win.

But the point is this – if you espouse a principled position, as Greens try to – you can do too little and you can do too much.  Do too little and you sound like on of those old time SWP bores that used to tell women at my uni that liberation would come after the revolution.  The ones that believed them are still waiting,  It’s not good enough to say ‘well it’s not easy being green’ (though it sounds better if you sing it).  You have to make some sacrifices.

On the other hand if you really do live your ideals, as people like Brig Oubridge do – Brig who I also saw speak at university and who, as a result, I suspected was possibly the coolest person on the planet – the mainstream commentariat declare that you’re living in la-la land and couldn’t be trusted with high office.

So it’s a bit of a tightrope.  If you want guidance for how to walk that tightrope you might take a leaf out of the Caroline Lucas guide to how to do it.  Get a good haircut, choose simple, stylish but unostentatious clothes, avoid extravagance but don’t sound like you’re lecturing mum and dad Middle England to wear a hair shirt and radiate good vibes.

I’m afraid Pippa rather fell off the tightrope.

However her other point, that Greens have a rather uncomfortable relationship with business, is well made.

I became a Green, for among other reasons, because I agreed with the green critique of the consumer society.  It’s something we don’t talk about enough at the moment, but the endless cycle of creating unhappiness in order to create wants so that those wants can be filled is a cycle that has to be broken.  It’s a cycle that has enslaved us to needless labour and has turned us into a society that judges everything by its cost and values people by how much wealth they conspicuously display.

However even if we do manage to break these chains we’ll still need things and services and jobs and businesses provide all of those.

The big debate is really about two things – the scope of the state and the scope of private enterprise.

I believe strongly in limited government (as distinct from small government); that the state should be the instrument of action and not the repository of power.  It should be (with caveats) the embodiment of the popular will.  We want an NHS?  Then we mandate the state to create and run a public healthcare service free at the point of use as the most efficient way to realise our chosen collective endeavour.  Likewise all the other services we decide that we need to provide for all citizens in order to create a compassionate and civilised society.

What the state shouldn’t do is go freelancing – looking for ways to increase its scope beyond its doing what we want it to do.  I don’t want the state spending money infiltrating peaceful protest groups, or engaging in foreign wars that serve neither our interests nor the greater good of humanity.  I don’t want the state to poke its nose into my bedroom, allying itself with one religion or another or a host of other things.

Because there are about 60 million different opinions about what the state should and shouldn’t do we work out these differences through the ballot box.  It ain’t perfect but, as Churchill said, it’s the worst possible system except for all the others that human beings have tried.

So if you were to suggest that it’s the job of the state to design, build and sell us mp3 players, you might have some difficulty persuading your fellow citizens that we should take our government’s eye off the ball of more important tasks with such fripperies.

As for business, what is it’s scope?  For me the Greens’ real gripe with business is this: business has no place whatsoever co-opting power for itself.  In a democracy power belongs to all of us; one person, one vote.  Moreover if you believe in subsidiarity that power should be kept as close to the people as the people wish.  (Me, I’m happy to delegate organising rubbish collection to the council UNTIL they do something stupid and I want to stop them doing that stupid something).

But what we have now is the apparently inexorable leeching away of power from the institutions we delegate it to, to big business.  Note I don’t simply say business.

Small and medium sized businesses rarely have much, if any, power at all.  Greens are instinctively pretty sympathetic to smaller businesses and I reckon it’s because they provide goods, services and jobs without trying to set themselves up to make decisions for us for which they’re unaccountable.  Big business tries to do exactly that.

That is the big political issue of our age – the theft of power from the people (yes all the people – stockbrokers, company directors and the idle rich along with the rest of us – they all get one vote just like you and me) by big finance and big business.

If Greens used the power question as the litmus they’d be far less conflicted about their relationship with businesses.  It’s abuse of power by corporates – from bullying local authorities into approving megastores to leaning on government to drive down the minimum wage or holding a gun to our collective heads to bail them out after the financial crisis – that is at the root of it all.

If we got that power back and if we made decisions collectively, every person in this country over sixteen, in our best interests as both a whole and as a collection of 60 million individuals, we’d probably not be facing the global meltdown we all fear.

So Pippa, make smarter decisions next time you shop for a motor and start talking about the proper role of business in a greener society.

‘How Much Is That Minister In The Window…’

Posted in Uncategorized with tags , , , , , , , , on October 17, 2011 by Jonathan Kent

We don’t want capitalism, we want democracy.

Capitalism is not simply people going about their lives setting up businesses, providing goods and services and jobs.  Most of us need some of the stuff that businesses offer.

Capitalism is one-dollar-one-vote.  The more dollars you have the more votes you get.

This power of money goes to the heart of the Fox scandal.

Liam Fox travelled the world with a man whose time was paid for by people with vested interests in the defence industry.  That man, Adam Werrity, arranged off-diary meetings for Fox away from the gaze of civil servants.  In short Fox travelled the world with a man who constantly whispered in his ear on behalf of weapons manufacturers.  He didn’t travel the world with someone gently reminding him about injured service personnel, about retired veterans, the Ghurkhas, or the ex-service people sleeping rough on Britain’s streets (ex military personnel reportedly make up the largest group of homeless after those brought up in the ‘care’ system).  There was no one there reminding him about Deepcut or speaking up for Iraqis or Afghans who felt the rough end of British Military ‘justice’.  His ear was open to those with the most cash and, by extension, the most power.

It also goes to the heart of the Murdoch scandal.  In the 14 months following the election George Osborne met with senior News International figures 16 times, Michael Gove met the Murdochs or Rebekah Brooks 21 times and Baroness Warsi, the Tory Chairman had dinner with 14 senior NI. Executives last October.

It’s consistent with the picture painted by figures in today’s Guardian.  It identifies more than 1500 ministerial meetings with corporate lobbyists in the first 10 months of the coalition alone.  Aside from education corporate ear bending sessions make up the lions share of meetings with outside interests.  Even in the education department there were 70 meetings with corporates and only 14 with unions.

The education department’s official figures for meetings also hint at what we don’t see because only one meeting with the media is listed, though we know Michael Gove went on bended knee before the Murdochs and their henchwoman 21 times.  Those meetings were ‘informal’ and are thus not included.

Given that ministers want to be seen to be meeting charities and the public and given also that one might expect any potentially questionable meetings to be ‘informal’ and thus not included in these figures, we might not un-reasonably suspect that corporate lobbying dwarfs anything else in ministerial diaries.

All most of us want is for our elected representatives too govern for all of us.  Yes that means they will spend some time listening to business and trying to create an environment where it’s possible to create goods and provide services and jobs, but that has to be in balance with the wider needs of our society.

I met a senior tax lawyer late last month who declared that what had happened with the banks had started to make him feel like a communist.  A less likely would-be-communist you could not hope to meet.

It’s simply one small sign of the depth and breadth of the anger out there.  It comes from a realisation that our system is out of balance, that the needs of the very wealthy have been overly tended to and the needs of the 99%, for housing, health, education, food and the means to live with dignity and in reasonable comfort have been relegated to at best second place.

This anger isn’t the province of what might once have been called ‘the working classes’ alone.  If anything the artificial divide between those of us who work with our hands and those who work with our heads is withering away.  The ‘us’ is almost all of us, and the ‘them’ those very few whose assets have transcended mere wealth and have bought them power.

It’s not a revolution if you’re simply asking for what you have by law, by tradition and by right; a one-person-one-vote democratic system whereby our elected representatives govern for and on behalf of the nation, or at least for those who elected them, and not simply for those interests whose financial power allows their voices to drown out all others.