Last year, non-financial firms capital spending was equivalent to just 65.7% of their retained profits – the lowest share ever. To put this another way, firms’ desire to build up cash and/or reduce debt is at a record high – despite negative real interest rates….. [Moreover], capital spending as a share of retained profits was trending downwards before the recession. This suggests the reluctance to invest is a longish-term problem, reflecting the dearth of investment opportunities, and not just a cyclical one.
And it’s not just Marxist Chris saying this. The Ernst and Young Item Club says much the same:
The corporate sector is accumulating cash at an astonishing and accelerating pace and acting as a major drag on the rest of the economy, keeping it close to stall speed. It is hard to see any strong revival in the economy until companies start to release this cash by spending more on acquisitions, investment or dividends.
Even the Bank of England seems to agree:
Private domestic demand growth could be boosted if more of the historically large corporate financial surpluses were spent on capital investment or transferred to households in the form of higher wages or dividends (May 2011 inflation report, quoted by Frances Coppola).
So what to do about it? After all, we’re talking about very large sums here. The EY Item club estimate that there’ is £754bn held in cash by the corporate sector may be up the wall (it seems likely that they’ve included overseas cash holdings in this figure, which is a bit thick), but Frances’ estimate of £251bn (from BoE’s figure for M$ sterling liabilities for non-financial firms) is still a pretty hefty sum. Even releasing 10% of that into the real economy would make for a pretty decent economic push.
To date, the main leftist argument has simply been for a retention of corporation tax, on the basis that:
The corporation tax cut will…. simply add to the cash pile of large companies, giving them more than £400 million (page 50) this year to tuck away, and much bigger sums in years to come. This increases the wealth gap in the UK by giving away a wholly unnecessary tax cut to big business.
That might simply stop the problem of non-investment getting worse, but it doesn’t resolve it.
Perhaps the best way is introduce a ‘non-investment tax’, whereby corporations are taxed at a certain rate on retained profits if they fail to release a certain percentage of those profits – whether through capital reinvestment, dividends, acquisitions, pay rises or new jobs.
This mirrors Modern Monetary Theory (MMT), which sets out how governments can simply use the advantages of fiat currency to stimulate aggregate demand when the economy needs it. Indeed, to the extent that taxing non-investment in this way might simply lead to corporations keeping their retained profits in gilts, it might in any case create a ‘secondary MMT’, as lower demand for gilts leads to governments buying their own gilts (the same as printing money).
But the advantages over normal MMT are clear. First, it gives corporations the opportunity to invest in the way they wish, with government coming in to do it for them (through taxation) if they choose not to abide by their ‘ social responsibilities’.
Second, and related to this, it moves away from the disturbing logic of some MMT advocates, that anyone unemployed at the time of the MMT release would be forced to work on the government payroll at the minimum wage created under it.
Of course, any such move towards a non-investment tax would have fierce opponents, wielding two main arguments.
First, there would be the argument that corporates would simply leave Britain and head for countries where such a draconian tax regime does not exist.
This is the same argument used against all higher tax countries, of course, and is based largely on myth. Moreover, the move towards a Financial Transaction Tax does show that international agreement can win out over fears of freeloading, if one or two countries are brave enough to lead the way.
Second, there will be the argument that such a tax system, which would depend on increased transparency from firms and good auditing, would be very difficult to administer, given the need to use some kind of MMT-style sliding scale for the non-investment tax rates in ‘good’ and bad times’ (when a reduction of the non-investment tax to 0% might be appropriate).
Certainly, the introduction of such a tax wouldn’t be for a faint-hearted government. There may well be a need for a Made In Dagenham Barbara Castle figure to stand up to the corporate sector and effectively announce ‘It’s a risk we’re going to take’.
Even so, an incoming socialist government might want to give some serious consideration to how we might, through a progressive but malleable tax regime, create a more stable economy more resilient to capitalist boom and bust as a result of some enforced ‘corporate social responsibility’.
It might be an approach that will find support from across the channel if May 6th goes well. Come to think of it – I might just translate this into French and get tweeting @fhollande.
During this afternoon’s relatively brief Tottenham Court Road siege, Nick Griffin apparently sent the following tweet:
If hostage taker angry coz refused HGV licence then won’t be a Muslim bomber. They don’t work!
Now, given recent controversies over people sending tweet messages and ending up in court/prison, the obvious question arises: should Nick Griffin be prosecuted?
The most obvious charge that might be laid would be under Public Order Act 1986 (c.64, paras. 18-19):
A person who uses threatening, abusive or insulting words or behaviour, or displays any written material which is threatening, abusive or insulting, is guilty of an offence if:
(a) he intends thereby to stir up racial hatred, or
(b) having regard to all the circumstances racial hatred is likely to be stirred up thereby.
Prima facie, there would seem to be a case for Griffin to answer; it looks and feels like an absolutely gratuitous insult to Muslims, and his background might suggest that he intended, in sending the tweet, to do some hatred-stirring.
There are, I think, three technicalities which might make it difficult to secure aa conviction:
i) hatred towards those of a particular religion does not necessarily indicate racial hatred (though I would contend we might make the assumption in this case);
ii) it might be argued that Griffin was making the point that it is Muslim bombers, as opposed to Muslims in general, who do not work;
iii) The statement that somebody doesn’t work is not, per se, an insult, and can only be construed as one in the context of the tweet.
Nevertheless, it’s arguable that the CPS, if asked by the police to consider this case, might feel that there is sufficient change of securing a conviction for it to pass the first stage of its Full Test Code, the Evidential Stage.
Next in this Full Test Code comes the decision on whether it is in the public interest to make the charge. As set out here, this is always a matter of judgment, but one factor set out in the code weighing in favour of proceeding to prosecution might be considered in this case:
the suspect was in a position of authority or trust and he or she took advantage of this;
In Griffin’s case, his status as an MEP and leader of a registered political party might therefore count against him.
So should Griffin be prosecuted?
Of course not. It is decidedly not in the public interest to give someone like Griffin the opportunity to peddle his ‘victim status’ myth. Nor does it do any of us any favours if the CPS continues prosecuting people for silly tweets, however insulting and offensive they are.
The reason I write all this is simply to show that people like Griffin (and before him Rod Liddle) are utterly wrong when they peddle the myth that the establishment is against them.
Yesterday morning on the Radio 4 Today programme (from 2hrs 25mins 15secs), the BBC aired an apology and correction for comments made 48 hours previously about Philip Green, the retail multi-millionaire, and his wife.
That is, a correction and on-air apology was issued in 48 hours.
By contrast, it took the BBC 50 days to send me a written apology for its false headlines about the government’s ‘Youth Contract’, and the BBC refused to consider an on-air correction, despite my explicit demand for this.
This does not seem fair to me, so I have complained again to the BBC:
I am writing to complain about the inequitable treatment I have received from the BBC in respect of my complaint, in comparison to the treatment afforded to another, higher profile complaint.
The facts are these.
1) On 28th November 2011 I made a formal complaint to the BBC about its incorrect news bulletin of Friday November 26th 2011. This concerned the launch of the government’s ‘Youth Contract’.
I received a formal letter of apology on 19th January 2012 (your ref: CAS 1162493-MG3CQ7), in which you accepted that the information provided was incorrect, and should not have been given.
I had suggested in my letter of complaint that, by way of redress, a correction should be made on the same programme during which the incorrect news information had been delivered, namely the Stephen Nolan show. No mention of this was made in your letter of apology, and to my knowledge no such correction has ever been made.
2) On the Today programme of Wednesday 25th April 2012, an apology and correction was provided, at around 8.25am, in respect of comments made about the tax affairs of Philip Green, the well-known retail businessman, and his wife. These comments had been made just two days previously, on the Today programme.
It is my contention that the two courses of action taken by the BBC, in respect of the two separate events set out above, together constitute an act of discrimination against myself, and potentially other complainants.
Clearly, I am not in a position to know whether the on-air apology to Mr Green and his wife was made in response to a formal complaint, or whether there was some other reason that led the BBC to react so quickly, and in this manner.
Whatever the reasons for the BBC’s course of action, however, it seems clear that the BBC undertook a very different process of investigation and apology in the two cases.
Specifically, the reply to my letter took 50 days, with no on-air redress, whereas the BBC sought to resolve the matter with Mr Green and his wife within 48 hours, with on-air redress.
I contend that there is no valid reason for this difference in response time and mode of redress.
It is surely unacceptable to argue that Mr Green and his wife’s case merited a swifter response, with an on-air apology, simply because they have a higher public profile than I do.
Moreover, I contend that the public interest implications of the misleading ‘Youth Contract’ news headline are far greater than they are in respect of any misleading information about two people’s personal tax affairs.
I suggest that my current complaint might be resolved through the following forms of redress:
- An on-air apology and correction for the incorrect news information provided during the Radio 5 Live Stephen Nolan show of ???, to be made during a Stephen Nolan show and with an explanation as to why the apology and correction comes so long after the event;
- An explanation on the Radio 4 Today programme, at around the same time as the apology made on Weds 25th April, of the editorial decision making process and factors which led to that apology, how this differed from the complaints process followed in the case of my complaint, and what the BBC is doing to ensure that such editorial discrimination in respect of complaints and apologies does not happen again.
I look forward to hearing from you in due course. For this complaint I would want to see adherence to the time limits stipulated within the BBC’s Stage 1 complaints process.
If the 2012 US election was based on cool, I wonder who would win out of Barack Obama and (presumably) Mitt Romney?
The Democrats have it!
I have an article on the New Statesman blog “Current Account”. Read it here.
Update: proved wrong. 13.00
Jubilant UK Uncut activists yesterday claimed vindication – one among them recalling how, at the time the protest grouping interrupted an LSE talk given by Jeremy Hunt, many criticised the moves as premature and worse.
For UK Uncut, at least, they were right then, and they were right now.
But what happens now?
Many have said they are looking forward Prime Minister’s Questions, not least because Ed Miliband will have a pop. Others have expressed caution – namely because, now the country has fallen back in favour with Vince Cable, the one who “fended off Murdoch camp’s overtures”, previous statements made by Miliband may come back to haunt him.
In 2010, finds Stephen Tall for Liberal Democrat Voice, Ed said:
Having apparently breached the ministerial code and having said what he said, he shouldn’t be remaining in office and I fear that David Cameron has made this decision not because it’s good for the country, but because he is worried about the impact on his coalition of Vince Cable going.
In short, and as the news items ran with it, “Labour leader Ed Miliband said he would have sacked Mr Cable”.
Clearly concerned about this, Tom Watson made his apologies this morning.
the saddest thing in this affair is that all of us in parliament knew these shadowy contacts existed and failed to act. It was as if nobody was prepared to challenge the might of Rupert Murdoch. The one person who looked like he was prepared to stand up for something was Vince Cable. But caught in the Daily Telegraph sting he had to stand down for expressing what most people now know to be true: it is wrong to give Murdoch yet more control over our country’s TV and newspapers. Poor Vince. I criticised him at the time and I shouldn’t have done. I apologise to you, Mr Cable. Your methods were wrong, but your motives were right.
It would provide political capital in more ways than one if Ed Miliband put up his hands in PMQs and said Vince Cable was right and that he was wrong at the time – as much as Cameron would want to draw points from Ed’s admission he couldn’t given the context and nature of Vince’s sudden vindication.
Cameron will lose today’s PMQs – but this is just theatre for the Westminster village.
Rupert Murdoch is up with Leveson today and as the Telegraph have it, “is expected to disclose his private meetings with a series of senior British politicians”.
This should put the willies in both Cameron and Jeremy Hunt.
All signs point to Hunt being scalped. Cameron is shallow in the polls, the Daily Mail poll asking whether Hunt should “resign” has the overwhelming majority saying yes, and last night on Newsnight nobody came to Hunt’s defence – oh apart from Jacob Rees-Mogg who, when asked if he had seen Hunt recently, explained that they hardly know each other.
For Cameron, giving Hunt the boot looks like the better of two shitty options. Hunt has been hunted, caught out, and Cameron, through sacking him, can at least look as though he has some kind of moral direction.
The question is when will Hunt go?
If he was sensible, Hunt would have gone before Murdoch gave his evidence to the inquiry. But then if Hunt was sensible he wouldn’t be in this mess to start with.
He’ll be gone by tonight, but I do wonder why Hunt’s last act of stupidity, and Cameron’s one of many such acts, was to stick it out until Murdoch has turned the knife one last time.