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October 13, 2006
Polly Today
Apologies, it just hurts too much to read this drivel. I think I'll go and have a little lie down in a darkend room.
Stepping in sharply behind the HSBC came the CBI, yet again shaking its
fist at the government. "Some companies are relocating," warned its new
head, Richard Lambert. "We can see a trickle. Our anxiety is, it
doesn't turn into a flood." This is distinctly odd, since these are the
facts of the matter: the latest UN figures for inward investment show
that last year the UK attracted more inward investment than any other
country. It was twice as high as America's, growing by 183% last year.
Meanwhile, the OECD ranks the UK as one of the most attractive places
for foreign direct investment. The World Bank rates the UK top of the
EU for best business conditions.
A word in your shell like my luvver. To invest in a country is not the same thing as being domiciled there for tax purposes. Someone in France can invest in the UK without paying UK profits taxes.
Every company has a legal duty to maximise value for its shareholders;
without regulation they would have a duty to poison, maim, cheat and
exploit in pursuit of profit. Social responsibility may be useful PR,
but most of it is imposed by regulation - and most good companies
appreciate that. Who wants a race to the bottom in standards?
Ever thought about brands? Why they exist? They're markers of quality they are. Heinz on the tin is a very valuable signifier that the product isn't going to kill you. That's how brands arose, that's why they still sell for a premium. As ever, my little potted cabbage of an economic ignoramus, you have failed to note the fact that free markets produced, all on their lonesome, exactly the form of regulation by reputation that you state you desire.
Right, back room with the curtains shut here I come. I might come out later when it's safe to go to the pub.
October 13, 2006 in Idiotarians | Permalink
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I think I've been wrong about Ms Toynbee. I've always thought that, much as I disagree with pretty much every thing she says, writes and stand for, and much as I think her journalistic standards can be damn near contemptible,... [Read More]
Tracked on Oct 13, 2006 5:49:07 PM
Comments
She's so profoundly stupid and ignorant that it hardly seems worth it, Tim. Why not just alter your straplines: put up a photo of her and caption it "This ugly-bug is also a dolt"?
Posted by: dearieme | Oct 13, 2006 3:51:38 PM
As ever, my little potted cabbage of an economic ignoramus, you have failed to note the fact that free markets produced, all on their lonesome, exactly the form of regulation by reputation that you state you desire.
um, but she doesn't want "regulation by reputation" -- your heinz example just shows that brands create the impression for the consumer that the product they are buying is of good quality. It might be a good idea to think a little before reaching for the free market apologia.
Tim adds: And in order to keep that reputation those who own brands are very careful to maintain quality. Does everything have to be spelled out for you?
Posted by: orerb | Oct 13, 2006 4:36:59 PM
Toynbee and Jenkins' articles today have given me a headache. I managed to dash off a long comment on science education (Jenkins was right, but for the wrong reasons), but couldn't bring myself to address Toynbee's drivel.
I think I need a lie down now!
Posted by: Francis Sedgemore | Oct 13, 2006 4:54:03 PM
>without regulation they would have a duty to poison, maim, cheat and exploit in pursuit of profit.
It's surprising how often you hear intelligent people making this sort of ridiculous claim about the free market. It's no wonder they don't like businessman, they're cowering in fear that the suit across the bar is just waiting to slice them up when no-one's looking and sell their kidneys.
I also loved this bit -- really brings home to the reader what a Victorian melodrama the inside of Pollypot's mind must be:
>This mindset reveals the old culture that would still send little boys up chimneys and children on 16-hour shifts in cotton mills.
Posted by: Blithering Bunny | Oct 13, 2006 5:44:21 PM
Dearieme, ask yourself, if you would, how brands have kept going for decades? Magic? As Tim points out, there is usually a reason based on the fact that the brands are genuinely communicating information about the quality of the goods/services they represent.
Another point: It takes years to build up a brand and a reputation, but it can take only minutes to destroy it. That is why firms spend so much time and energy protecting their brands and why brands are an important protector of the consumer, lapses notwithstanding.
Posted by: Johnathan | Oct 13, 2006 8:18:13 PM
Mm, Johnathan, but the Manchester Guardian once had a reputation. Now look at it. Its principal columnist has devoted decades to proving her 11-plus examiners right.
Posted by: dearieme | Oct 13, 2006 8:46:07 PM
One wonders if Polly has ever heard of tort law.
Posted by: Jon | Oct 14, 2006 12:04:24 AM
The important thing is that brands can and do have the resources to correct any problems and pull "contaminated" products from the shelves.
Perrier and Benzine anyone? Kingsmill???
That said, had anyone heard of San Pellegrino before the benzine scandal? Now it is all you can get in London restaurants.
Posted by: James B | Oct 14, 2006 1:45:43 PM
"Someone in France can invest in the UK without paying UK profits taxes."
If someone in France buys shares in a UK company, they are paid dividends out of the UK company's taxed profits.
If someone in France buys a whole UK company, their UK operation continues to pay UK corporation tax on its profits.
So distressingly, I think Polly's less wrong than you on this score: the returns on inward investment by foreigners generally /are/ subject to UK corporation tax.
Looking at the specific example, if HSBC were to move its HQ to Bermuda, then the ex-Midland Bank and HFC UK parts of its business would continue to pay UK corporation tax on their profits.
The tax savings would come on the profits from big corporate finance deals that are currently dealt with by the UK business, but which could be handled equally well out of Bermuda.
(some simplification above, obviously - international tax law is a /little/ bit complicated. Pretty certain I'm closer approximation to the truth than your generalisation above, though).
Tim adds: That would have been true until recently, yes. However, any company based anywhere in the EU (or EFTA) may trade, manufacture, what they will, anywhere else in the EU (or EFTA) and pay the tax rate of their companies HQ domicile. Thus HSBC can move to France and pay French tax on their profits from their activities in the UK (althou it would be odd if they did) or Ireland at 12.5% or Estonia at 0% of retained profits.
This is something of a large problem for the very existence of corporation taxx actually for the point has been confirmed by the EU courts. You do NOT have to be domiciled in hte UK to trade here and you pay tax on what profits you make here where you are domiciled.
Posted by: john b | Oct 14, 2006 1:52:32 PM
