Monday, 4 April 2011

Shape of things to come

In a lovely wee article John Kay pointed out how any government wanting to get all strategic about the economic future of an economy would typically fall into the trap of asking today’s big corporate beasts about tomorrow’s economic prospects.

The neat wee example he gave to illustrate the fundamental flaws in such an approach
was how a government looking to figure out an IT strategy a few years back would have asked Big Blue IBM what they thought whereas the reality was that Microsoft, a then tiny wee company that wouldn’t have registered on any government’s radar/have hired a lobbying firm to spew its vested interests allova any politician that happened to pass nearby, was actually the future (cue reference to IBM making the fundamental strategic mistake of ignoring the subsequent importance of PCs and software as opposed to fuck off big complex hardware). Aye, that was what a fabulous person linking to UK Uncut’s rationale for having a go at Fortnum and Mason’s got me thinking today anyway.

The thing with UK Uncut though is, as they very rightly point out, the way things are is horrendously unfair; big companies dodge big tax bills cos of all the offshore holding companies and terribly clever accountants they employ. Except, however justified that may be, it’s still little more than a moral critique. And while morality is all very good, your moral values and mine differ i.e. they're open to endless debate and anyhow someone will sneak in some pragmatic shit about necessary evils and the game would be rendered a bogey. So instead, let’s construct a more effective “economic” argument.

The ability to aggressively negotiate a low tax settlement with Her Majesty’s Revenue and Customs constitutes a competitive advantage i.e., if a big PLC can negotiate a proportionately lower tax bill than a smaller rival, it can undercut said rival, regardless of actual product quality/service, efficiency and so on, and doing so positions it very well to drive said competition out of business. So really it’s in all our interests for every company, no matter how big, to pay the same % tax as each other (the alternative being us being short changed to finance the removal of competition that might otherwise deliver better products, services or job creation opportunities). So yeah, fuck one off deals reached against a backdrop of companies threatening to relocate their headquarters elsewhere. Instead, get every fucker to pay the same corporation tax rate and lets establish a level playing field that will let the Microsofts of tomorrow take over from the IBMs of today (ooh, a rhetorical flourish).

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