Sunday, January 31, 2016

Why pay tax you don't have to? If it's legal it's what transnational businesses do all the time.

Let's say I run a Transnational corporation which produces minerals in Harrovia. One of them is called "Slytherin" which costs me £4 a tonne to produce. In the UK Slythern has a value of £10 a tonne. It costs me £1 to transport. So my actual profit delivered in the UK is £5 a tonne. With Corporation tax at 20% I pay £1 in tax. But in Harrovia I have a long-standing tax holiday. The Harrovian Government wants me there. So my operations are tax free. Better to make a profit in Harrovia than the UK. So I assess the value of my Slytherin at £9 a tonne as it is loaded on the ship in Harrovia. When it is sold in the UK I make no profit (having paid my £1 a tonne transport cost). 

The above is a (very) simplistic example of how Corporations avoid Tax by manipulating transfer prices. Obviously the subject is very complex but the basic rule that it pays to make your money where the taxes are lowest applies to them all. This includes putting offices in lower tax jurisdictions - often quite nominally. Look at the brass plates outside buildings in Bermuda or the Channel Islands (etc.) ! 

To tackle this requires international cooperation. In my fictional example the UK would need an agreement with the Harrovian Government to change what happens. Why would the latter do this? It's in their interests to keep me in their country. And why would I voluntarily change my modus operandi and voluntarily pay tax I don't have to? What I do is legal. Period! 

Thursday, January 28, 2016

Even for a Europhile like me there are some dodgy goings on in the "Remain" cause which I don't like.

For this Europhile, whilst I fervently want the unnecessary referendum on Britain's membership of the EU to be successfully out of the way, the means don't necessarily justify the ends. Open borders is a key principle of the EU. There is no way around this. If you're a member you accept that your citizens have the right to live and work anywhere across the 28 member countries. And vice versa of course. The refugees in Calais have nothing to do with this. They are not EU citizens and have no rights of residence anywhere in the EU. They do have the human right to be referred to less contemptuously by our Prime Minister. But they have nothing to do with Britain's membership of the Union.

Dog Whistle politics bring the whole political class into disrepute. The EU Referendum  campaign is already in the gutter before it has really started. The very premise that the UK is renegotiating the terms of its EU membership is a lie. A few minor adjustments on the edges of our obligations as an EU member do not a successful renegotiation make! It's the old marketers game - find something of high perceived value and make it seem more valuable than it really is. Hence all the nonsense over non British EU citizens right to benefits if resident in the UK. It's a very minor issue indeed. But Cameron is focusing on it because he thinks it has high communications value and will prove the pseudo-negotiations have succeeded. Baloney!

Membership of the EU as I say brings wth it free movement of Labour (and Capital of course). This free movement may also mean migration, but the two things are not synonymous. Your Polish plumber is unlikely to be a migrant, he's far more likely to be a GastArbeider who will eventually return to his home Country. The actual number of EU citizens who actually want to make permanent homes in Britain is far less than the number who are presently working here. 

"Immigration" is a code word for "multiculturalism" for many and it's this that UKIP and others seek to exploit in the EU debate.  Some people don't like our multicultural cities (a status which has little to do with the EU of course) and unscrupulous politicians seek to exploit this. "Immigration" becomes important in the EU debate even though in reality it is a subject that is in principle non-negotiable and in fact fairly unimportant! 

As I said I want Britain to remain a member of the European Union and I hope that we will choose to do so. But I don't welcome the lies and obfuscation creeping into the "Remain" campaign's rhetoric and communications. The case for membership is strong. We don't need to play dog whistle politics to win the argument. 

Wednesday, January 27, 2016

Ideology from the Left and Right does not help us find a solution to the problem of the railways - we need a third way.

An independent study has found Britain's railways to be the worst in Europe. No surprise there then. The problem with much of the debate about the Railways is that it assumes that there are only two models - Franchising or Nationalisation. There is woolly and conventional doctrinaire thinking behind both alternatives. We need a third way and if we start with the passenger we might actually find a way of getting there! (I refuse to use the generic “customer” by the way. We are passengers and if we acknowledge that from the start there is a better chance of finding a solution.) 

We need a “solution” because there’s a problem, and that problem is a direct consequence of the botching of privatisation, compounded by further botching in the decades since. The first utterly demented failure was the spouting of the shibboleth that “competition would improve services”. With a few minor exceptions the Railway franchisees are private sector monopolies. This is the worst operational model known to man. There is, by definition, no competition. Equally the driver for the business being profit the monopolist will so finesse pricing and service to maximise it. Then the regulator, or Government, will try and constrain that operator. It leads to shambles and bureaucracy. It has. 

When the private sector monopoly Railtrack collapsed into a mess of its own making it showed that the “Private Sector good, Public Sector bad” war cry was so much baloney. Now, as Network Rail, it does much better what it should be doing. Not because it’s publicly owned, but because its publicly accountable. And there’s the model for you. It applies also to the London Underground which, a few employee relations issues aside, provides a very good publicly accountable service. 

Back to the railways. On the successful model of Network Rail or the “Tube” let’s create a network of train services that fulfils the following criteria: 

1. Service levels that make the Train the preferred option for most travel. The Cost/Benefit Analysis (CBA) of this overwhelmingly positive. The train is green when the alternatives are not. Every rail passenger who would otherwise take a car (especially) helps our environmental goals. 

2. Offers total connectivity across the network. Trains and train times driven by a comprehensive network plan, not the commercial imperatives of individual franchisees. 

3. A transparent and understandable fares policy and one that is designed to attract passengers not put them off and drive them to alternative forms of transport. 

4. Absolute consistency in brand and offer across the network. Obviously consistency predicated on high standards but not skewed by the serendipity of what we have now. 

5. A commercially driven price and service structure which is designed to generate returns, but one that is comprehensible as well as fair. 

6. No overt “subsidies” but an acceptance that some services will have operational losses (see CBA in (1) above) 

7. Reinvestment of operating margins in the network and services. As the London Underground puts it: “We don't make a profit because we reinvest all our income to run and improve your services. We are a public body, with no shareholders or parent companies, which means we can reinvest every pound of income in the transport network” 

The railways should be a “public body” like the Tube but that does not necessarily that everything should be publicly owned and certainly does not mean that all employees should be public sector employees. As I have argued previously in respect of the NHS there should be no objection to the “contracting out” of some services to the private sector. Providing that this contracting out is done against competitive tenders and against agreed cost and service standards. In some cases this may mean a measure of franchising and various other models – including regional structures. But the guiding rule has to be creating integrated services that are accountable not to faceless shareholders but to we the people. 

Plain speaking on the NHS - a great Public/Private partnership

If we discount those self-regarding libertarians who want to dismantle the NHS, and those neo-Marxists who think it should have no commercial targets at all, there is the potential for a consensus on the Health Service. I believe that this enormous enterprise is one of the world’s great public/private partnerships. Its delivery costs are highly competitive compared with much of the Western world. And if we as a nation choose to provide healthcare that is (mostly) free at point of use (we do) then we presently do it pretty well.

Key, to me, is to accept that contracting out against competitive tender is not just desirable but essential for certain things that the NHS does. Similarly that there are some things which should only be entrusted to public employees and never contracted out. The challenge is to decide which parts of the NHS fall into the first, and which into the second category. And to stop perpetrating the lie that contacting out is “privatisation”. It isn’t. The assets used remain State property. There is no actual privatisation at all.

The NHS must meet agreed standards at an acceptable cost. That may seem obvious but how many people in the debate think that everything should be subject to commercial challenge (it shouldn’t) or that nothing should (wrong as well!). 

Monday, January 25, 2016

Corbyn is the polar opposite of Cameron–that can help him win !

“Open-seat presidential elections are shaped by perceptions of the style and personality of the outgoing incumbent. Voters rarely seek the replica of what they have. They almost always seek the remedy, the candidate who has the personal qualities the public finds lacking in the departing executive.”

So writes David Axelrod today in the “New York Times” in an article that argues that the appeal of Donald Trump is substantially because he is the polar opposite of Barack Obama – who himself was the opposite of his predecessor George W Bush. Axelrod goes back further – to young Kennedy (v old Eisenhower) in 1960 and indeed his model works pretty well in the UK as well. Thatcher v Callaghan. Blair v Major. Wilson v Home…

And now we have some good news for Jeremy Corbyn at last. Whether its David Cameron or another Etonian (Boris) or an Old Pauline, George Osborne, his Tory opponent in 2020 will be more of the same. Corbyn can position himself in policy and style not to be the  “replica of what they have”. Not the establishment. Not Oxbridge. Not corrupted by Office. Not in hock to Rupert Murdoch or the BBC or anyone else. More Nigel Farage in appeal than Ed Miliband! (See how Farage also fits the Axelrod model, or did)?

So Corbyn needs to emphasise those of his personal qualities that distinguish him from Cameron – the personality traits which make him, with his long record as an outsider, not the replica of the Prime Minister. Will it work? Well he doesn't have to convince all the people, just enough to build on his hard core (30%?) support. its far from impossible.

Wednesday, January 20, 2016

There's more democracy in the EU than there is in Britain!

I suppose "Democracy" means different things to different people - certainly each of the 28 member States of the European Union has a different system. Different cameral arrangements, voting systems, subsidiarity etc. There is no right and wrong template, no "more democratic" nor "less democratic" - except subjectively of course. This variety brings with it an interesting test. If the EU was really "undemocratic", as many advocating "Brexit" claim, then from these various perspectives surely at least one member would challenge the system and demand change? But they don't and I'll explain why. 

Over the decades the EU and its predecessors has become ever more democratic as it has pursued ever closer union. Above all, the European Parliament, has evolved into a fully-fledged democratic Assembly. Not perfect, of course, but a solid symbol of the democratic principles that underpin the EU. The Parliament has changed over the years and will continue to do so. At the same time the Commision, the civil servants who make the EU work, have become ever more democratically accountable. It's work in progress and not everything that has to be achieved has been achieved. But Europe has not just a coherent Union but one fit for modern times and one that the 28 members can be proud of.

The concept of "subsidiarity" is key to the EU. Take decisions at the lowest level possible. Ensure that decisions taken in Brussels are taken there because it is right to do so - not to reinforce the EU's power. The U.K. is not in a position to lecture the 27 other EU members on this, nor much else in respect of democracy. We do not delegate to the lowest level possible in Britain anywhere nearly enough. Indeed we don't even have the democratic institutions to do so - other than in the Celtic fringe. Similarly our Governance system is no model for any other State. An unelected Head of State. And unelected Upper House. A voting system which utterly distorts election results in respect of Party representation. And so on.

In the modern world crucial decisions which impact on our lives are taken all the time by those who are not accountable to us. By the Boards of multinational corporations. By the leaders of big countries such as the United States, China or Russia. By often unaccountable non Governmental and transnational bodies of various types from the UN to FIFA (etc.). Are we more likely to be in a position to challenge these processes together with 27 other nations or on our own? Obvious isn't it? So the EU, as well as being increasingly democratic as an institution, has the power to act together and make a difference. It protects our democracy rather better than we do! 

Monday, January 18, 2016

“Even the Band was white”– thoughts on a visit to the “New” South Africa

Even the Band was white

[Above: New Year’s Eve at the Kelvin Grove Club, Cape Town]


At our guest house in Franschhoek the proprietor made a couple of references to the "New South Africa" in explaining things to us. The things she was explaining were mostly things that didn't work very well, or at all, as she saw it. She was an Afrikaner - a comfortably off and successful one. We didn't talk politics and my impression that she was a decent as well as an able person. But over 20 years since the Republic entered the civilised world clearly not everything is rosy. The hideous Shanty Town close to Cape Town Airport is still there and the poverty gap between the have’s and the have not’s seems as wide as ever. And with the Rand hovering around 25 to the pound (it was 12 six years when we were last there) South Africans struggle to import the commodities they need (though the tourists and some of the exporters are happy).

The most positive development is the continued rise of the Black middle class. The children who at last got a decent education after apartheid was dismantled are arriving in the workforce - many with good schooling and University. They along with their White, Coloured and Indian compatriots inherit a situation of which the memory of Nelson Mandela can be proud.

"Apartheid" is an Afrikaans word meaning "separate development" a concept that institutionalised and exploited South Africa's racial differences. Of course it did not mean "separate but equal development" - it reinforced and passed into law privilege on racial grounds. In "Cry the Beloved Country" (which I re-read during this trip) written and set in 1947 Alan Paton held a mirror up to the reality of that privilege. The white characters are mostly good people many of whom are concerned about the "natives" but only one, the (ironically) murdered by a Black criminal Jarvis, sees the need for a moral crusade and for change. Within a year of this great book's publication Apartheid was formalised - including the hideous "petty apartheid" of separate park benches and the like.

So 65 years on from "Beloved Country" and 25 from Mandela's release where is South Africa now? My first conclusion is that, awkward though they may have been, quotas have worked. Shell South Africa when I used to visit it was an 80% white company - it is now 80% black. A black man scored a fine century at Newlands. Neither of these things would have happened without "positive discrimination". And countless other changes of course. There is also a sense of confidence that the outside world, like me, is comfortable with visiting a society that is so much more equal (though some of that equality is superficial and/or artificial). But there is a long way to go to achieve genuine equality of opportunity.

The weakness of the Rand is a measure of the weakness of the economy as a whole and of the failure of Zuma's Government. In the early days of Mandela's presidency the great man tried to ensure that he had the best people in top Government jobs irrespective of race. This is no longer the case and Zuma is accused of cronyism, or worse. The emergence of better educated blacks in the coming years should mean a broader pool of good people across the races. But to institutionalise a different form of privilege, as Zuma has done, in place of the old one is hardly progress!

At the social level I saw few signs of real progress towards an unselfconsciously multiracial society. Apartheid might have gone but separate development and social barriers are still very much present. An extreme example was the Kelvin Grove Club in Newlands where I had reciprocal membership. This has all the appearances of the expatriate clubs of Hong Kong and elsewhere very familiar to me. At these the Brits (mostly) were the members and the local Chinese served at table (etc.) But Kelvin Grove is not an expatriate club at all. It's members are South African citizens from the white English speaking Cape Town tribe. Not even Afrikaners let alone coloureds or Blacks or Indians. The non whites do the work though. On New Years' Eve not one guest at the dinner dance was non-white. Even the band was white!

In writing about Kelvin Grove I am observing not criticising. I can't see any reason why so long as there is no colour bar (there isn't) a club can't operate broadly as it always did and make an offer that is more likely to appeal to one tribe than others.

Another book I read during my visit was "A racist's guide to the people of South Africa". This very funny and irreverent book describes the English White, Afrikaner, Black and Indian racial groups in terms of their behaviour and aspirations. They are very different - no surprise there then. The author discusses the rising Black middle class - "Black Diamonds" they are called. A subset of this group are those Blacks who don't speak like blacks - the "Coconuts" (brown on the outside, white inside). Unsurprisingly it is this group that the Whites find it easiest to relate to because they are intentionally or not aping the whites in speech and behaviour. But the overwhelming majority of Black South Africans are not Coconuts and have no wish to be. They have no more intention of changing their cultural norms than the Members of Kelvin Grove or the Voortrekkers of Natal!

I remember visiting Nairobi a few times some years ago where a senior Board director of Shell Kenya was Black. He was almost schizophrenic in his lifestyle. During the week he was besuited, spoke educated English and was a highly skilled senior manager. At the weekend he travelled to his “native” village, wore traditional dress and spoke his tribal language. I don't know whether this is common in the “New” South Africa, but it wouldn't surprise me. And, let me stress again, it seems a perfectly acceptable and rational behaviour.

In his “I have a dream” speech Martin Luther King said this:

I have a dream that my four little children will one day live in a nation where they will not be judged by the colour of their skin but by the content of their character.

I have a dream that one day … little black boys and black girls will be able to join hands with little white boys and white girls as sisters and brothers.

This was not a “Melting pot” argument. It acknowledged differences and argued for respect of them. But even if massive progress has been made in the “New” South Africa there is a still a way to go. Within the last few weeks some prominent members of the White communities (including broadcasters and Government employees) have been, as the “Cape Times” put it “…embroiled in racism allegations”. This has, they say,  prompted Government to “…include  hate speech and racist behaviour in the Hate Crimes Bill”.

Multiculturalism (and there is nowhere on Earth more multicultural than South Africa) does not need to be changed so that the Blacks all become Coconuts or Kelvin Grove makes their dinner dances wider in their cultural content. What it requires is respect and when that respect is absent then Government needs to act – as it appears to be doing in this one respect at least. On the other hand whilst “Positive discrimination” and quotas was uncomfortable for many it was a necessary thing. But now there needs, it would seem, to be an acknowledgment that there is a sub-optimum situation in some crucial areas of Government (etc.) with able people not being given a chance because of their (white) colour. Far worse than this there is compelling evidence of Afrikaners being murdered on their farms - a scandal of such horrific proportions that it is extraordinary that it is not more in the public eye both within and outside South Africa.

I only go to South Africa every few years and I always enjoy it and marvel at it because of its variety of geography, lifestyle and people. This time I saw nothing that troubled me particularly but old friends I met, and new ones I made, were worried. There is evidence that White administered Apartheid has been replaced by a Black-administered structure which in some respects is not that different. It may be too early to cry again for the beloved country – but it may come to that.

Friday, January 15, 2016

Scotland's oil? It's a red herring in the Independence debate.

The issue of the oil price is something of a red herring and Nicola Sturgeon and Ales Salmond should say so. The decision as to whether Scotland stays part of the UK far transcends economics. It's an emotional and patriotic choice - do the Scots want to be an independent self-governing nation or not? Does their Scottish patriotism/nationalism trump their Britishness?  

Ireland has only limited hydrocarbon resources and few other exploitable natural resources. Yet it has a viable and successful economy (the overheating of the first part of the century aside!). The Irish benefit from their EU membership and, yes, from their use of the Euro. That is the model for Scotland.  

I don't want Scotland to leave the UK - the country to me is as much a part of my Britishness as England is. But if the rest of the U.K. is insane enough to vote to push us out of the EU then the Scots case for independence would be greatly strengthened. And if that happens and they become an independent State within the EU and adopt the Euro as well (end of silly currency issue which bedevilled the Referendum campaign in 2014) then not only would it work but I might move north of the border! Better a proud European in Scotland than a cut-adrift Little Englander!

Thursday, January 07, 2016

How to deal with a problem like Jeremy...

Jeremy Corbyn is a problem. A problem, that is, if you are more concerned with his sometimes murky past than was he says and does in his current position as Leader of the Opposition. Yes Corbyn mixed at times with a ragbag collection of terrorists and anti-Semites. He, of course, was neither and a case can be made that his motives in what he did were sincere - though he was surely foolish in some of these associations. But this was the Corbyn who never stopped bring an activist and a protestor. The ever-present on a march and the go-to man of the Left for any organiser of a Left wing protest. He occupied a position on the political spectrum in Parliament (though not in the country) on the extreme Left rather as (for example) Conservatve Peter Bone does on the extreme Right.  But Corbyn was no more a Marxist than Bone is a Fascist. He was a good parliamentarian and a democrat, a good constituency MP and a Labour loyalist. "Loyalist" you cry, "a man who was a serial voter against the Blair/Brown Governments" ? I would say so yes because loyalty is about more than being lobby fodder - it is, or ought to be, about being loyal to your socialist principles - especially when you see that your Party in government appears to have abandoned theirs - if they ever had them.

Jeremy Corbyn never sought preferment or office - he was content in his role, as he no doubt saw it, of being a conscience of the Labour Party. But cometh the hour cometh the man. That hour was the 2015 General Election debacle. Corbyn believed that this defeat was because Labour was reverting to its "New Labour" posture and that the voters turned away from this "grey men of the centre" positioning. There is some evidence of this - especially in Scotland where the SNP was elected on the grounds that it was more socialist than Labour. Although some in the media and the Conservatives spread the "Red Ed" jibe constantly it was never true. Ed Miliband was a classic product of the modern political career politician Oxbridge machine. A bit redder than David Cameron for sure, but hardly the mad man of the Left he was portrayed as.  Corbyn, on the other hand, is as "Red" as they come. The Labour Party has a socialist as leader, shock horror!

Those in the Labour Party opposed to Corbyn constantly shout "Boo" - or worse - from the sidelines. The Tories have no need to do anything, just let Labour carry on tearing itself apart and an election win in 2020 is certain. Let's be clear on this. Corbyn's position is likely to be increasingly untenable not because the Conservatives beat him but because those in his own Party who don't like him destroy him - which they are determined to do. This group is often referred to as "Blairite" and certainly their anger is because the New Labour positioning has been overturned by the more authentic Labour positions favoured by the new leadership. But virtually all of their criticism is about the Jeremy Corbyn of the past - the man who opposed not just Blair's wars but much of what Blair and Gordon Brown did over their thirteen years in power. Understandably if you could stomach the barely even Social Democratic positioning of New Labour - a positioning which made the Liberal Democrats the more left of centre Party on many issues - you won't support a Labour leader who is a genuine socialist!

Since becoming leader Corbyn has made some mistakes - especially if you judge him by the establishment norms of a Blair or a Brown. The former was ideology Lite - throughout his career pragmatism ruled and it worked, at least for him. Brown was more principled and did have a sounder connection with Labour values than his middle-class and more privileged Public School educated rival. But neither of them had the value set of the Labour left. But it is that value set which led Labour members overwhelmingly to choose Jeremy Corbyn last year. They were saying that at last there was a way to get traditional Labour policies onto the agenda under a leader whose track record was consistently over his entire political life rooted in democratic socialism. This had never happened before. At least not in the post war era after Attlee. A few policy nuances aside Labour leaders from Gaitskell through Wilson and Kinnock to Smith and Blair have been pragmatic pursuers of power and as a consequence centrist in their politics. Michael Foot was the only exception to this - though actually Foot was a more establishment figure than many think and certainly more of one than Corbyn. 

So in short Corbyn actually reflects the views of those who elected him and therefore of the overwhelming majority of Labour members as well, I suspect, of hard core (not floating) Labour voters. The problem is that you can't win elections from this postion. Wilson and Blair won elections by marshalling votes from those who were not automatically Labour voters. Floating voters. Including many who had previously voted Conservative. It is inconceivable that Corbyn can do this. And when it comes to the crunch that is the problem with Jeremy. Not his murky past. Not his rather ham-fisted attempts to marginalise those who don't share his ideology. Not his anti-establishment past and present. No. The problem with Jeremy is that he cannot appeal to sufficient numbers of the electorate to win an election.