Wednesday, 20 May 2015

Labour anti-biusiness?

When she entered the contest for the Labour leadership two days ago Yvette Cooper apparently criticised Ed Miliband's campaign for being "anti-business."  The only appropriate response I can think of involves too many expletives which would need  to be deleted.

I haven't studied Miliband's comments on business in any detail, but, for heaven's sake, it is not being unfriendly to business to suggest that they should:
  • pay their taxes;
  • observe health and safety laws;
  • offer employment contracts which respect the needs of their employees as well as their own.
That seems to me to have been the gist of the Labour campaign.  Throughout this blog I have lamented sadly on Labour's crass failure to defend their economic record in government, and to allow the Tories' risible claim for economic competence to pass unchallenged.  If Labour is now so terrified of right-wing propaganda that they chicken out of demanding that  businesses  play a fair and constructive part in the society which sustains their activities then what is the use of it?

A letter from a former Cambridge professor, Roger Carpenter*, in last Saturday's Guardian asks: "[I]s it not time for those who care about creating a society that is fair, civilised, compassionate, and protected from the power of the big corporations . . ." to agree that [the Labour party] "be left to die" and "to start again."

Without being explicit the letter seems to favour a Rainbow Coalition of a reformed or replaced Labour party with the Greens and Liberals."who still believe in a decent society."

Whatever the solution that is something to think about and  prepare for during the next five years, as the Conservatives exercise unbridled their instincts as the "nasty party," pandering to the powerful and letting the weakest go to the wall. 

*Professor Carpenter also usefully defines "aspiration" as "greed and selfishness," also something worth thinking about.


  1. I haven't studied Miliband's comments on business in any detail

    Did you not hear (I believe there were a couple of pieces in the press at the time) of his plan to 'freeze energy prices'?

    Legislating to stop businesses being allowed to set their own prices, but instead sell at a price determined by the government, seems pretty anti-business to me (as well as not likely to work very well, as anyone trying to go to the toilet in Venezuela could probably tell you).

    it is not being unfriendly to business to suggest that they should:

    pay their taxes;

    Well, everyone agrees that businesses should pay their taxes, but the issue is what those taxes ought to be, isn't it? you can have taxes which are friendly to businesses (low corporation tax, for example) and you can have taxes which are unfriendly to businesses (high turnover taxes like VAT, for example, or transaction taxes like a Tobin tax that would make it more expensive to do some of the things businesses (either all businesses or businesses in a particular sector) need to do to operate).

    Everyone agrees that business ought to pay all the taxes they are legally due to pay (and by and large, they do). But some people think they ought to be legally due to pay rather more taxes than they currently are (for example, by taxing foreign profits on whihc tax is not currently legally due), and it hardly seems a stretch to describe such policies as unfriendly to businesses given they would raise operating costs and almost certainly drive some companies out of business.

    I mean, if I think that personal taxes should be lower than they are, it doesn't mean I think people shouldn't pay their taxes, does it? It doesn't mean I am saying evading tax is okay. It means I think people should pay all the taxes that they are legally obliged to, but that thy should be legally obliged to pay fewer taxes.

    1. We've disagreed on taxation before, so I'll not go into that, except to point out that there's a firm in the news today for "aggressive" tax evasion which it seems to me it is not "unfriendly" to try to prevent.

      Re the energy companies, they seem to have various obscure devices which enable them to overcharge and maximise their profits. If there is competition it needs to be much more transparent.

      You seem to have no quarrel with requiring businesses to observe health and safety laws and to use employment contracts fair to both parties.

    2. except to point out that there's a firm in the news today for "aggressive" tax evasion which it seems to me it is not "unfriendly" to try to prevent

      Yes, but that is tax evasion (they were lying about how many companies they were), not tax avoidance. That is, any company using the scheme was not paying al the tax that they owed, whereas companies like starbucks do pay all the tax they owe, it's just some people think they should be made to owe more (which is a reasonable position and why we have elections, to find out how many people agree with them and if they are outnumbered by the people who disagree).

      You seem to have no quarrel with requiring businesses to observe health and safety laws and to use employment contracts fair to both parties

      Well, those are subject to the same principles, aren't they?

      Obviously no one says that there should be no health and safety restrictions; but equally obviously every additional bit of health and safety restriction adds a little bit to the cost of doing business (and it is not possible to make life totally risk-free in any case). So the question is, what is the optimum balance between safety and cost? Again, this is why we have elections, to find out what most people think the balance should be: if they are prepared to put up with a bit more risk to make things cheaper in the hopes that it will help the economy grow, which is good for everyone, or if they would prefer to reduce risk as much as possible, even if that means firms which can't afford the to comply with they extra regulations (maybe because they are competing with firms in other jurisdictions which have less regulation and so can undercut them, or maybe because they are producing good where demand is highly elastic so if they charge over a certain amount people just stop buying them) go bust and their employees end up out of a job.

      And it doesn't seem unreasonable to suggest that someone whose answer is, 'All the additional restrictions we can think of, and businesses will just have to bear the cost and go bust if they can't' is anti-business.

      Of course if somebody does say that, and everybody else agrees with them, we will do it; that's democracy. But still, the point is not 'thinking firms should observe health and safety laws' is inherently anti- or pro-business; it's where you lie on the spectrum of less to more regulation that determines that.

      And the same applies to employment contracts, obviously: everyone wants employment contracts to be fair but everybody has a different idea what 'fair' means (indeed you could say that the whole reason we have democracy is that everybody has a different idea what 'fair' means; if everybody agreed we wouldn't need to have a vote to decide what is 'fair', we could just implement it).

      And there are some definitions of 'fair' which could definitely be described as 'anti-business', at least as compared to other definitions of 'fair' which are more, well, 'pro-business'.

    3. The point is that in each of the things you mentions, there is a continuum of opinion. Everyone thinks businesses should pay their taxes; but there is a continuum of opinion as to whether those taxes should be higher, lower, or about the same as they are now. Everyone thinks they should obey health and safety laws; but there is a continuum of opinion about whether current health and safety laws are too burdensome, not strict enough, or about right. Everyone thinks that contracts should be 'fair', but there are different definitions of what 'fair' is.

      So you can't reduce each issue to a binary, 'either you want businesses to pay their taxes or you are fine with tax evasion', 'either you want businesses to obey health and safety law or you are fine with them flouting it'.

      It's all about where you are n the spectrum of opinion and, in rhetoric at least, Miliband was often on the anti-business side of each spectrum (although interestingly his policies often differed from his rhetoric: listen to his rhetoric and you might think he was going to ban zero-hours contracts, for example, but in actual fact his policy on the matter, if you looked at the detail, would have made almost no difference to the current situation).

  2. You're right, of course - there are continuums for all of these things and in the end the points we choose to be on are decided democratically.
    L abour certainly failed to make the case for their chosen forms of higher taxation, though the arena for the discussion is hardly a fair one, with the Tories probably outspending Labour by about three to one, and having some 85% of the press on their side. Personally I'd like to see a shift in taxation from taxing employment towards taxing land, property, possibly even wealth. The case for land value taxation is overwhelming, but of course the owners of land are very powerful and wield a lot of influence over those who make the decisions. (Cameron doesn't seem to have done much about curtailing lobbying, or making it more transparent)
    In the area of health and safety I'd like to see the decision as to where to be on the continuum decided by management and employees (the well established Liberal policy of employee participation) rather than laid down by those who have a financial interest in keeping regulation to the minimum.
    Similarly flexible contracts should be agreed by and take into consideration the needs of both parties, and not just the employer.