JPB Law's Blog

Peter's occasional soapbox

HS2

Essentially my objections to HS2 are three fold. One is its absolute cost. Government has finite resources unlike the theoretical firm of economics and finance theory. CBA is all well and good but as I think came up in another comment of mine here in the Long Room, they might as well pick figures out of thin air. Complicated and large scale engineering projects of this sort cannot possibly be modelled with any degree of accuracy in terms of their cost, let alone attempting to quantify their benefit and more importantly in much the same way neither can much of the harm they do to people’s quality of life. Simply claiming it will add so much to GDP growth per annum does not go nearly far enough to justify such projects. Large scale engineering projects such as HS2 differ hugely from say a new international airport or any greenfield or a lot of brownfield sites where there is some degree of containment from the outside world. This is the crucial and critical factor which is often overlooked in terms of differentiating between those where budgets and models are reliable and those where they are not.

My second objection is if this money is available for improving transport infrastructure it goes with out saying that so many £1bn projects around the country would improve the state of our infrastructure with the concomitant benefits to GDP, business and people’s quality of life far more than one super scale project.

My third objection is simply it shouldn’t be build. It’s unnecessary, extravagant, politically motivated bling of the sort peddled by lobby that will damage the UK’s architectural and rural heritage beyond repair, ruin the lives of those who live along the route up to as far as a mile away (c.300 sq miles blighted permanently or 75,000 Ha down the spine of England) and cause misery and disruption for I don’t know how many countless millions across the country for the decade or so of its construction

The handling of HS2 ties in with my fundamental critique of the civil service, let the conduct of  the politicians. The UK may be quite unusual and unlike almost any other country where if you were to pay enough, you could have the best run organisation in the world. The UK employ a huge number of highly paid senior executives, consultants and so on, all of whom are highly skilled and excel at their job. The problem is effectively the same as with HS2 where there’s simply no room to put it. The UK civil service and its infrastructure is simply too old, complicated and cobbled together over countless years. Largely due to the 1000 years of uninterrupted democratic (or thereabouts) government so it has never been under the thumb of one individual with absolute authority, unlike say France or Germany and the rest of Europe.  All this history means it is impossible to form a modern organisation run in an efficient and effective manner and delivering a quality service so the best we could ever hope for is government adopting a make do and mend mentality and approach everything with Kaizen principles of continuous improvement. This is as opposed to the consultant way favoured by politicians, of tinkering and fiddling, complicating and reorganising. It doesn’t matter how much you pay people, they all get sucked into the amorphous entropy of government with no hope of anything substantive ever changing or making much of a difference of any kind.

Financial Crises as Groundhog Day

The endless cycle of financial crises owes much to the flawed relationship between the elected politicians of the government of the day, the politicos appointed to run these agencies and the well known absence of a learning mechanism in the institutions of democratic government. It baffles me that there continues to be surprise expressed, akin to moving from the sublime to the ridiculous, merely at discovering such conflicts exist. Each time the chronic ineptitude of the institutional response and its inevitable failure, does little more than provide further evidence of the existence of fundamental flaws in the system. I mean I was studying this at uni in the mid 90s and then after the briefest spell working at a bank, it was quite apparent what was going on that any fool could see it. This refusal by lawmakers and regulators to have a look around when even my cursory effort told me all I needed to know on this score and about much else makes me fear for the future and the inevitability of corporate scandal and financial collapse yet to come with economic consequences and repercussions around the world.

After a period that could be defined by the regularity of the recurrence of financial crises, it beggars belief that the political response remains the same in terms of knee-jerk legislation, the institutional witch hunt for high-profile and soft-target wrongdoers and any kind of root and branch approach that is the best hope to preventing events repeating themselves remains a pipe dream. In the last couple of decades, from the outset there has been a failure to identify leading indicators to areas of systemic concern such as institutionalising a cultural mindset of unethical behaviour in the corporate world through such a core function as the accountancy profession. Each time the consequences of the failure to grasp this nettle have shown their cataclysmic potential, we’ve seen the same bewildered and befuddled response from all involved, be it Enron and WorldCom for auditors and accountancy firms, the dot com crash and IB research analysts and now and ongoing with subprime and the ratings agencies. There is a clear failure to adequately police the system and in the course of action pursued by the authorities in response to events, most recently in the case of MF Global, which is basically just a sad indictment of where true blame lies for the failure to prevent the endless cycle of fiasco since their response and reform usually only pays lip service to anything other than their own political agenda.

CFA INSTITUTE | An essay

As a lifelong market observer and private investor who to all intents and purposes probably has finance running in his veins, the CFA Institute is a particularly curious and interesting entity. It strikes me these days that its eponymous qualification is now in the ascendancy carrying growing weight with increasing numbers of serious individuals and decision makers as it comes to replace the MBA in many quarters as the heavyweight calling card of choice.

After engineering half a century of self-perpetuating, almost Ponzi-like, explosive growth to become at its apogée effectively a prerequisite for both ambitious young people and mature candidates looking for a new career; more exceptional candidates, recruiters and administrators have become aware of certain home truths. Something had happened to this celebrated degree that for an age across the world came to define a class of leaders and membership of an elite that reached beyond the confines of just the business world or finance to permeate throughout the upper echelons of society as a whole.

It wasn’t even a stepping stone or helpful leg up the career ladder any more in the face of the vast numbers emerging each year who it turned out were little more than carbon copies with a tendency to the worst sort of cult-like group think and questionable values and ethics as well such that they came to most closely resemble any number of the evil forces in popular science fiction. (To my mind, Star Trek’s Borg. The parallels are uncanny.)

All that has happened in the wider world in terms of recent history has come to alter societal perception towards this mindset and bring its class into disrepute so that an MBA now is little more than a year or two long steeplechase cum boot camp to nowhere in particular (unless its participating in a recreation of aforementioned sci-fi).

It was probably as long ago as the Enron and WorldCom scandals that the navel-gazing began for the business school world, when it was laid bare just what sort of monster Frankenstein had created that far from being a force for good in society was full of faceless egomaniacs completely lacking in ethics, whose wanton ambition knew no bounds and with no moral compass as they rode roughshod over all else. The rest of course is history. Massive fraud committed on an unprecedented scale, thousands out of work and/or wiped out in bankruptcies, prison for one or two but nothing substantive really changing. The inevitable recriminations and knee-jerk reactions on Capitol Hill while there is political capital to be gained from it and the endless witch hunts that never go out of fashion but regretfully as ever plus ça change.

The persistent and perennial, secular failure to address fundamental problems at the very heart of the regulatory structure and the incestuous relationship it engenders between poacher and gamekeeper with respect the corporate world is nothing less than an abnegation of responsibility for the root-and-branch overhaul and reform needed to prevent the cycle endlessly repeating itself. According to this arms-length observer most recently of the current and ongoing financial and economic crisis, once again, amidst all the outcry and scandal and moral indignation that resemble nothing more than crocodile tears, the whole sorry saga has proceeded as if by textbook.

However, the solitary sunbeam that finds a chink in the clouds and illuminates all this as it seeks to shine a light on a possible new order and into the dark corners kept in the shadows by the old guard strikes me as being the CFA Institute through the agents of the providers of research and information (in other words the life blood of the investment community) who it seems to be making a valiant effort to reshape as a force for old fashioned, professional values in a world that clearly has scant regard for them in its pursuit of profit sans fin. The caveat and disclaimer being that I’m essentially relying on their marketing material and other PR efforts plus a load of anecdotal evidence gained over the years combined with a reasonable belief in my ability to read between the lines sufficient for the limited extent of this interpretive assessment.

It goes without saying that finance is one industry that has never felt the need to define itself in the way that the other professions do, with no love lost for the niceties of such organisational strictures. The City is an ancient institution that has seen it all before with a history that almost predates memory but always a place of trade and commerce. Its most recent incarnation as a financial hub where businessmen could meet and do business with one another according to its own unique set of rules evolved organically for hundreds of years from its 17th century origins in the coffee houses that gave birth to such iconic institutions as the LSE and Lloyd’s.

I suspect largely because the unique position of the Corporation of London meant that while the cannons thundered across Europe and centuries passed and the world turn pink and back again as the British Empire reached its heights in tandem with the East India Company coming to be the behemoth it once was (whose size and scale and scope of operations are hard for us to comprehend these days), even this must have posed challenges as it must have had great demand not just for finance but insurance and all kinds of other ancillary services offered by the City.

At the same time, they must have been dealing with similar problems to today. The challenges of managing the economic cycle, when to cooperate and when to compete with your ‘frenemies’, dealing with politicos and mandarins who have say over your business, be it duty and taxation; the award and removal of concessions etc. It is surely remarkable that the Corporation of London and ‘the City’ retained their autonomy and weren’t subsumed into the apparatus of the state or some other entity.

While it may be apocryphal, how one famous European banking dynasty came to have its roots in the unique position London occupied during the Napoleonic Wars at the same time being the provider of the royal overdraft. One could say that London’s status as the capital of global finance owes much to Britain’s history as an island trading nation on the edge and separate from a continent that only now after two world wars and the founding of the EU project has come to enjoy the longest period of peace and prosperity in its history that puts the current economic crisis pale in some context.

The threat to London from this resurgent Europe able to speak for the first time with one voice should not be underestimated. While empire may have come and gone and the UK’s status in the world be much diminished, in many ways it looks like chance or the law of unintended consequences that London regain its position as the capital of global finance. While geography must help, it is curious that the ‘Wimbledon’ approach meant that even if few had their global HQ here, becoming the de facto location of the international operations of almost everyone else.

London has a long history as a host city and its achievement here should not be underestimated or sacrificed lightly in dealing with our continental neighbours who would like nothing more than to bring some of its business to Frankfurt or any number of other European cities. In this way, even a cursory glance at history validates the City’s commitment to its independent status and self-government as an autonomous entity where the activities of consenting market participants are free from outside interference so as not to restrict them any more than is necessary since their fiercely guarded reputation and honour always used to be sufficient to avoid the prescriptive and legalistic contractual relationships common elsewhere and enshrined in the motto of the LSE dictum verbum pactum.

More recently, London’s light touch regulation has been castigated from Wall Street to DC and in Europe, for whom this arm’s length principle is completely alien and even anathema (the tenets of which spread amoeba-like through the underpinning of much of UK accounting and auditing, English law and protecting the citizen from the overreach of the state and its agents). This was largely a political failure as Blair and Brown cosied up to the industry.

While Thatcher and Lawson initiated the process of deregulation, the pace of financial innovation continued to gather pace and surely reached critical velocity in the early years of Blair and Brown’s first term in office which makes it inexcusable the way they took their eye off the ball at the worst possible time and quite shameful how the rankest form of base political expediency was the hallmark of the new Labour project.

So it comes to a place where “Professionals Must Take the Lead in Restoring Trust” says CFA Institute CEO John Rogers, CFA (Video) | CFA Institute Annual Conference http://cfa.is/169UP6C via @CFAInstitute which define how the efforts of the CFA Institute can resume the place of traditional professional bodies that no longer meet the role they were meant to be. It’s reassuring that we have an entity that now describes itself as

“The global association of investment professionals that sets the standard for professional excellence. We are a champion for ethical behavior in investment markets and a respected source of knowledge in the global financial community.

Our ultimate goal? To serve the greater good by creating an environment where investors’ interests come first, markets function at their best, and economies grow.”

So we wait in anticipation.

 

Not even an illusion of safety

Looking for the illusion of safety, there’s no such thing as a safe anything anywhere. In terms of the financial system and capital adequacy, and say pricing models like the CAPM and/or Black-Scholes, the risk free rate is an artificial construct based on a (financial) economist’s premise that such a thing exists. As far as the GFC is concerned, it wasn’t anything to do with the traditional idea of a ‘safe’ asset so much that financial engineers could create a proxy in their CDOs or CLOs or the like that the ratings agencies could find a tranche that they could label as ‘risk-free’. The subsequent problem that made things so much worse was that these assets on that basis were then able to permeate through the financial system.

Certainly gilts and US treasuries are ‘risk-free’ in the traditional sense of the word, in as much as their holders are as guaranteed as is possible to receive coupon and principle according to the terms of the bond, but that doesn’t make them a safe asset.  For one like any other financial instrument their price varies, meaning there’s no guarantee you’ll receive what you paid when you come to sell them. Equally given the difference between real and nominal rates of return, the effect of inflation on the value of money means that the purchasing power of your asset may well deteriorate.

The idea that gold has anything to do with this, creating so called ‘safe assets’,  is just ridiculous. Gold is a commodity that like any other has value as a means of exchange and as an investment. In some cultures it may be seen as a store of value, but this tends to be where there’s a requirement for a tangible, portable or fungible means of exchange, but at the same time they are also aware of the relative purchasing power of money.

The whole conception of ‘safe’ or ‘risk-free’ with regard to assets is as much a manipulable, sales tool used across the financial community by bankers, economists, academics etc as any other, and needs to be treated with commensurate scepticism. The idea of a requirement to satisfy demand for such an asset is discussed here.

Equally, this post describes how negative rates of return can still be seen to constitute a safe asset.

Finally, it’s quite apparent that the search for safety is definitely not ubiquitously responsible for creating asset price bubbles. While this could well have a lot to do with the current ‘bond bubble’, I’m not sure how anyone could describe the dot com and irrational exuberance of the late 90s as having anything to do with it.

Comments gratefully received and maybe more to follow.

 

‘Those who live in glasshouses shouldn’t throw stones’. An alternative EU view.

After reading another feisty post from Pat on her Madkentdragon blog in her most recent offering on this longstanding popular favorite, ever polarising chestnut, felt inspired to present an alternative view.

It’s hardly surprising given a thousand years of history and as a mercantile island nation that lost its empire, situated on the edge of Europe, that us Brits have always lived under the continuous gentle drizzle and occasional thunderstorm of Euroscepticism from the cradle to the grave that probably extends beyond just the EU to include in large part most of our our continental neighbours as well.

We joined the Common Market with a very different agenda to the rest of the club. After many years of being refused admission which I suspect probably lead us to a position that was strangely reminiscent of and/or vaguely akin to what Graucho Marx had to say on the subject. This was combined with a very much what’s in it for us attitude and a conveniently blind popular and political naivete to the fact that it was clear from day one it would evolve in the way it has. Unsurprisingly little has changed for half a century or more. It wasn’t long ago that in the face of seemingly terminal, inexorable, industrial and economic decline in the post-war years, that for decades this angst manifested itself in the aphorism ‘We won the war and lost the peace’ (and Germany vice versa). Little has changed now except the EU has become the bogeyman for us even if these days some countries might see German dominance of EU as its paymaster general as little more than a financial blitzkrieg on their country and economy, such that even the IMF recently has started to seem positively warm and cuddly by comparison. Maybe leopards can change their spots.

Have we ever not had politicians, the media and the like not take great pleasure in this political football?

To my mind, a lot of this EU bashing, makes for a convenient distraction from the far more egregious wanton profligacy of Whitehall procurement and general conduct in its business dealings; the NHS, MoD and DfT to name just three. Hardly surprisingly given the Yes, Minister acrimony of relations between Westminster and Whitehall. It serves the the politicians’ agenda as lawmakers living under the Damoclean sword of re-election, to seek to generate popular support and media coverage (where normally there’s no such thing as bad publicity) and electoral currency by keeping their departments busy messing with policy and endless headline generating reform and restructuring. Bar the inevitable, occasional ‘omnishambles’, keeping them on their wheel in this way also serves to keep the mandarins in their place and at the same time prevents them from having a chance to put their house in order, which should it occur would run the risk of putting ministers out of a job. A winning situation for ministers from whichever angle you look at it.

Certainly there are travesties in the EU budget and its accounting aplenty, but given its size and scale and the nature and composition of the EU, it’s hardly surprising that these problems have arisen, and it’s actually to be applauded for standing up to the misdemeanors of its member states. For goodness sake, there’s nothing else like it anywhere in the world. By all accounts and by any measure the EU DGs and its governmental insitutions run quite smoothly compared with the UK which looks more like a snake pit. For our part,  it’s taken the crisis of the GFC and the worst double-dip recession for a generation for government coffers to be so depleted and such a mountain of debt to have piled up for politicians finally to start to take action to rectify the situation. Reminded of the irresistible force paradox, I reserve judgement about these initiatives.

Just to finish with the observation that the NAO and PAC as the UK’s nearest equivalent to the EU’s audit watchdog are yapping chihuahuas compared to the EU’s, if toothless, Alsatian.

 

 

A paean to Persephone Books

I discovered this small London based publishing house quite by chance a few years ago, when I  read an article in the Weekend FT with the inimitable title of  simply ‘I am doing it for the books’ .  A profile of and quote from Nicola Beauman with regards her ongoing role as the founder of Persephone. She remains in charge to this day, with what by any stretch of the imagination must be one of the most challenging jobs in any business: running a young, independent company specialising in what most people would consider to be a deeply unfashionable part of the market, and all this in the wasteland or wilderness that is the current state of almost every part of your industry. All this, it would appear from my single visit there, from a small desk at their charming shop and HQ in Bloomsbury.

For a decade or more after leaving school, I devoured the classics and almost anything else I could lay my hands on that remotely caught my attention, as manifested by my frequent trips down to my local Waterstones, (which in due time not surprisingly turned into clicks on Amazon) when over time I would come home or receive parcels laden not with the worthy and improving titles I had hoped for, but increasing loads of dross. So being one who when he realises he’s in a hole tends to stop digging, so it became more and more of a challenge to find anything I wanted to read. The end result being increasingly forlorn perusals through mine or Dad’s bookshelves. More often than not drawing a blank, my most likely reading would probably be some business or finance book that I’d heard about in the course of my work.

So back in 2008, reading this article and finding out about the firm for the first time, but remaining sceptical, given then as now it describes itself as ‘reprinting neglected fiction and non-fiction by mid-twentieth century (mostly women) writers‘ thinking it must be something like Virago, which I’d never been much of a fan of growing up, I ventured on to their website for a look around and maybe order a book or two. Almost immediately it became my new favourite publisher (replacing the The Folio Society and Everyman’s Library which had pretty well run their course for me). So you won’t be surprised to read I’ve always paid as much attention to the quality of the bindings as the contents, sometimes the one to the detriment of the other. It was also a particular almost childhood delight for me to discover a new quality British niche publisher since I remember growing up going on various educational or exchange type trips to France and envying them the riches to be found in the panoply of bookstores of some sort or other to be found on almost every street corner, from the newsagent kiosks, the Papeteries (stationers) and the bookshops themselves, which all seemed to be filled with such a diversity of quality paperbacks or what have you one couldn’t help but feel sure that the French publishing industry was vibrant and thriving, benefiting all concerned – publishers, authors, booksellers and of course readers. The fact we live in a very different world these days is another matter.

The whole experience of buying these books was a delight. An easily navigable, attractive website with every detailed attention paid to making it as easy as possible for you to peruse the catalogue and find the right book. No mean feat when you consider that while you may be familiar with some of the authors, under the circumstances,  it’s unlikely you’ll know anything of any of the titles, unless your specific paths had previously crossed for different reasons. The same meticulous approach can be found in the books themselves, both as an object, that compared with some tatty paperback or hardback from the lastest bestseller list,  far from being an embarrassment, is likely to occupy pride of place in your briefcase or handbag or the like. Every one of them an individual marvel, with their smart uniform Persephone Grey dust jackets and cream ‘labels’ belying the unique, period endpapers and matching bookmarks that for them alone would be reason enough for collecting the books.

While I understand the books may not be widely available or even that visible on the high street, whenever I do come to mention Persephone to the right sort of someone, more often than not they’re already well acquainted with it. And for those of a nervous disposition, placing orders is very straightforward, either through the website, on order from your local bookseller, or even from the elephant in the room who shall remain nameless. For whatever reason you may come into contact with them, the staff are an absolute delight to deal with.  All in all, it’s not surprising that Persephone and its readers have come to form a real community if not a club that doesn’t require membership as it displaya all the hallmarks of a more social type organisation: newsletters and other periodicals both the old fashioned way and a vibrant virtual presence on the social networks of internet 2.0 that goes beyond simple commercial marketing or advertising, coffee mornings, readings and other events and so on.

Lastly, just a personal comment about what I’ve found so special about the Persephone world in the couple of dozen or so books I’ve read so far. Each of which is exceptional. Hardly surprising that something that was lost for decades and sought out and rediscovered will only see the light of day again if it’s unique in some way and stood the test of time in its own right and on its own merits. A far cry from a lot of the rubbish that gets churned out each year by the majors and is flogged in large quantities and/or on a limited campaign basis, where if a book isn’t an immediate best seller or at least hit its targets, it gets remaindered and risks the ultimate ignominy of being pulped. So unsurprisingly, the main concern for all involved becomes basically covering the author’s advance and all the other costs of producing a comparatively small number of titles on sort of a sink or swim basis where they seem to be almost betting the house on every title. Like in the music or film industry, these sorts of high stakes lead to an increasing aversion to risk, and a commensurate decline in nurturing talent and quality that will stand the test of time. I can’t imagine there being much need for a Persephone type media organisation in another 50 years.

While obviously this post hasn’t had much to do with lit crit, just one or two personal remarks about things that have particularly struck me after a first reading, though I suspect I’ll be rereading my collection many times with great pleasure for years to come. The most common preoccupation, not actual subject matter but looming in the background like an ominous grey thundercloud, is the War. What’s so fascinating is to read novels written at the time, not as historical or period pieces, but as current events when in many of these novels and short stories even the outcome of the war wasn’t known. Authors actually knew what they were talking about in describing how people went about trying to live their lives, how they felt and what it was really like whether it’s an adulterous young bride whose husband is dispatched indefinitely overseas; a family trying to preserve its heritage in the face of unstoppable social change, be it a stately or historic family home, a business, someone’s very family or even their own sense of identity. On the other hand they might be dealing with something more lighthearted like a collection of short stories about small incidents or petty niggles of everyday life as events/history go on around them. Elsewhere, there are wonderful novels about minorities, the aristocracy and  the ties that bind it with the USA; not forgetting the downtrodden and dispossessed so to speak, on both sides of the pond, and in one, which is one of my particular favorites I think, for this reason probably, that even in telling a story about your regular working man and the simple pleasures of his couple of weeks annual family holiday by the seaside, it still doesn’t neglect social realism.

What’s fascinating and to my mind possibly unique about this period, and one reason why it may have seen such a flourishing of woman writers, is that again because of the war, they were the only ones around who lived or at least aspired to any semblance of a normal life, let alone be in a position to read about it or write about it. Every book I’ve read so far has been a gem even if unsurprisingly I doubt anyone would take equal pleasure in every volume. I don’t think I’d be overstating the case to suggest that Persephone will be seen as a real national treasure for resurrecting and preserving this part of our heritage for future generations according to almost Reithian ideals and doing it with such style.

It’s time to say something

I was reading this blog post Opinion: Calling All Bloggers – Don’t  make me a tax avoidance accomplice quite by chance and just decided I’d had enough and it was time to say a few things, specifically in response to this post but generally to try and actually take a dispassionate view and present as objective a consideration of the matter at hand as I can.

An interesting piece of basically (party political) propaganda but the issue of tax avoidance is so emotive that facts often get forgotten about and given how serious is the state of our public finances, it’s worth having a look at reality in the cold light of day.

First, the usual suspects of Boots, Top Shop and Vodafone. As stated here ‘the trio is in the champions league of tax avoidance‘.  By any measure, it’s hard to defend Philip Green, but a lot of the outcry seems to be to do with high profile events that happened years ago, that a lot of people probably don’t even understand the mechanics of . You can say what you likes about the apparent ethics of how he runs his business, whether it’s worker conditions in the UK or possible use of sweatshops in his supply chain, but it’s the very opacity that makes him a target, as very few people know what’s really going on.

The fact remains though that he’s an extremely successful businessman who’s taken a ragtag bag of humdrum British fashion retailers and created a global empire. We should be singing his praises not condemning him for structuring the ownership and financing of his business in a tax efficient way. Think of all the jobs he’s created and the beneficial impact of the spending power of his employees in terms of income tax and NIC and of course all the VAT all this economic activity generates. Think of the beneficial impact having thriving stores has on high streets and shopping centres in terms of business rates, rents paid etc. It’s all manna from heaven compared with the the parlous state of the rest of the retail sector and so much of our economy. How many high street chains have gone out of business in recent years and how rare are these sorts of success stories. HMRC should be amongst his most ardent aficionados shouting from the rooftops.

Vodafone at first glance obviously pays a low rate or little tax. But hang on, few people seem to bother to differentiate between which part of the business they’re actually talking about, let alone define which tax they have in mind, before even coming close to thinking about why that might be the case. Say Vodafone UK, yes indeed, it does pay little corporation tax, but let’s not forget the billions of pounds (£5.9 bn to be exact) they paid to the exchequer for the 3G license back in 2001. A cost that almost bankrupted the industry.  That equates to close to £600 million a year paid to the treasury just for the license  before the company even begins operations. This is before we start to think about the massive amounts of capital expenditure required for rolling out the network. Now we can start to think of the costs of running the business and generating some taxable profits. Again Vodafone is a successful FTSE 100 company that we should be proud of.  It generates those benefits described above and even more.  As one of the most valuable companies in the world, it constitutes a core element of almost all our pension funds. Those dividends that the Greens send offshore are one of the largest individual contributors to the income that actually pays for our retirement, helps fund our insurance schemes and all sorts of other benefits.

Finally Boots. Again the critics demonstrate the same poor attention to detail in specifying what they object to and a general lack of  a understanding of its corporate and ownership and financing structure. Essentially, having been subject of a leveraged buyout, it’s possible we should be throwing brickbats at the LSE and PTM and complaining about the market for corporate control in the UK. All of which are legitimate concerns. For what it’s worth though, again we should be thankful that Boots has ended up as part of a thriving global concern rather than victim of an asset stripper, and even if they pay little tax, the same positive benefits accrue to all of us across the UK economy.

My last point is concerning the quote from the article in the New Statesman  which generally muddles tax evasion and avoidance all over the place and the author of the post it’s quoted in doesn’t seem to consider it worthwhile to differentiate between the two. Specifically to deal with what he writes about HMRC’s spending on publicity reducing tax evasion versus benefit fraud. Most noteworthy is that it’s publicity he’s talking about (not actual enforcement action, to be clear) and on this occasion not avoidance but tax evasion, so once again a completely different issue, but a few things need to be said so let’s deal with it briefly just to finish off.  Obviously, it’s hardly news that it costs a lot more to reach the entire population on any matter. In this case, inform them about action they’re taking to reduce the occurrence of an offence that involves a small amount of money committed by a large number of people. In fact, more often than not, publicity to reduce tax evasion can hardly be said to be publicity in the mass market or normal sense of the word.  And to be clear, HMRC has set up a special unit consisting of close to 400 members of staff to focus on tax evasion by the wealthy that in three years has already netted around £500 million.

While tax evasion is a whole other area and illegal, tax avoidance is legal and we all attempt it at some level. The schemes get bigger and more elaborate and more expensive the wealthier people are or larger the company. It’s human nature.  We tend to be outraged because we normally only find out about what they’re getting up to when people get caught and high profile cases arise. This though is as much a fault of the tax system, which creates the situation that just about the only people who get rich are the lawyers and accountants.

Please redirect…!

After a concurrent trial period, for now wordpress will be on hiatus. But many thanks for visiting and please do pass by my new permanent home for the time being.

http://jpblaw.blogspot.com

 

 

 

 

Small is Beautiful

Practical Action

Another side of your founder’s legacy.

Archive on 4: Schumacher’s Big Society

http://www.bbc.co.uk

Did EF Schumacher’s landmark book Small is Beautiful inspire David Cameron’s big idea?

http://www.bbc.co.uk/iplayer/episode/b0122n2g/Archive_on_4_Schumachers_Big_Society/

    • What a fascinating documentary. Jonathan Porritt is an excellent presenter and I think I fell in love with Schumacher hearing him speak with such charm, humour, humility and of course genius. I wish my lecturers at uni could have ‘touched the hem of his garment’. And of course great hearing him speak about your organisation as well reaffirms why I love to support the work you do. Thank you one and all! And just to add hearing Beckerman speak is it any wonder conventional/traditional economists have such a bad reputation. I think the world would be a better place if more people followed EF’s school of thought.

A Poetic Tribute to the Shark

Shark Fin Soup

Cut the wings from every bird,

Swan and dove and owl and eagle,

Making sure they live and breath,

Ignore the fact that it’s illegal.

Hack the hooves from living deer,

Horses, goats and antelopes,

Never mind the pain nor fear,

Hold them down with hooks and ropes.

Snip the paws from cats and dogs,

Lions, tigers, bears and foxes,

Chop the trunks from elephants

And pack them all in cardboard boxes.

Lop the limbs from ring-tailed limas,

Gorillas, bats and chimpanzees,

Tape their mouths to stop them screaming;

Send them back into the trees.

Catch the sharks of every sort,

Remove their fins then throw them back.

Watch them die without a thought,

For you’ll be paid for each attack.

Now cast these trophies into pans,

Tail, finger, fin and feather.

Sell the soup to wealthy men.

Forget the meaning of ‘Forever’.

Forget the crimes that you unfurled,

Forget the beauty of the creatures

Gone forever from our world.

~Andrew CH Howard~


Where you run is where you hide,

Better hope you’re hiding well

Cause when the angel catches you

You know you’re damned to Hell

Damned to Hell is what you are

Can you hear the Church Bells toll

and all the money in the world

Can’t save your sorry soul.

And when you reach the Pearly Gates

And Peter reads your tale

He’ll send you back from whence you came

Back to your living Hell

Damned to Hell is what you are

Can you hear the Church Bells toll

And all the money you have made

Can’t save your sorry Soul.

And I believe there comes a time,

When justice does prevail.

It may not be in my lifetime,

for you that’s just as well.

Damned to Hell is what you are

Can you hear the Church Bells toll

And all the money you have made

Can’t save your sorry soul…

H/T Brittiny Perkins


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