Posts Tagged business
The Real Wealth of Fizz
Posted by diarmid in Business and Society, Economics on May 13th, 2013
Amol Rajan, whom I have had cause to praise previously, wrote last week about Coca-Cola’s self-serving ‘anti-obesity campaign’. While much of what he writes is refreshingly scathing, I would take issue with the following statement:
[Coke] is a massive corporation that exists to make huge profits. This is fine by me, because I like big corporations: they create wealth, tax revenues and jobs.
3Z9KAQSQT4NC Clearly the first part is mostly true. Mostly in the sense that a company also exists to expand the empires, wealth and reputations of its executives – which is generally also tied up with making ‘huge profits’. The problem I have is with the idea that big corporations necessarily ‘create wealth, tax revenues and jobs.’ Whether they create real wealth is often doubtful.
In the case of Coca-Cola what it mostly creates is sweet fizzy drinks and the additional pleasure that comes from drinking their drinks rather than those of any competing suppliers. If we wanted to monetise that real ‘wealth’ it would be in terms of the additional price we are willing to pay for Coca-Cola products over other similar drinks. Note that we have to pay that surplus freely – if we are forced to pay it because of local monopolies or persuaded by misleading advertising than it represents not a social gain but a loss. Read the rest of this entry »
Forget GDP – Tory in Fairyland
A successful export industry.
There’s a funny little Panglossian piece by Tory peer and former minister Michael Bates on ConservativeHome. If it’s any indication of the thinking going on among ministers at present, however, it’s deeply worrying. The ex-Paymaster General displays an extraordinary lack of understanding of basic economic accounting and logic.
His main idea is that despite the current GDP figures, ‘the economic recovery is underway’. Now, while it’s true that GDP is in many senses a flawed measure of annual additional national wealth since it ignores (and may count as positive) environmental and human costs, it is the best available measure of what’s really going on in the economy. Contrary to the Tory peer’s claim, use of this measure is not ‘a bit like judging the health of a private corporation by its turnover alone’. The calculation of GDP specifically cancels out all the in-between costs in exactly the same way as a business cancels out turnover and costs to arrive at a profit figure. As a result GDP measures only those payments that are made in exchange for ‘final goods and services’ that are actually used, whether by the purchases of ordinary citizens, in the provision of public services or the investment of companies. Read the rest of this entry »
Leveson Heat Rises for the Press
Posted by diarmid in Business and Society, News on August 30th, 2012
Since my post Leveson, the Press and Labour there have been further developments. The Prince Harry photos episode was hardly edifying for the press or the Royal Family. That the Sun editor could claim that publishing these photos of a silly over-privileged young man was somehow ‘about the freedom of the press’ should re-inforce my main point. The primary freedoms most of the current press industry are ultimately interested in are the freedom to make money and the freedom to promote their owners’ interests.
That News International in particular are an organisation whose values are seriously removed from human concerns was re-inforced today by the publication of a seriously awful picture of Cheryl Cole. She had been photographed through a car windscreen bleeding from the nose after an accident. For all the photographer knew at the time this image was taken, this woman had a basal skull fracture and was minutes from death. The fact that she is well known for her celebrity career gives only public prurience rather than public interest to this photograph.
The tendency for the press to close ranks in denial at the overall damage done by a press with skewed ambitions was emphasised yesterday in the Independent editor Chris Blackhurst’s BBC Radio 4 interview on the ‘Section 13′ letter he has received from the Leveson Inquiry outlining the criticisms likely to be made. Read the rest of this entry »
Leveson, the Press and Labour
Posted by diarmid in Business and Society, Politics on August 17th, 2012
This post was published on LabourList on 16th August 2012, under the title ‘Labour must free the Press’.
The first instalment of Lord Leveson’s inquiry report into the Culture, Practice and Ethics of the Press is due in the autumn. It’s vital that Labour are ready to argue for a truly free press. We should be well aware that the political right and the press industry itself have major combined interests in adhering as closely to the status quo as possible. Although the issue of privacy was the final trigger for the inquiry, the most important failure of our press is to provide high quality information about current events and a true variety of interpretations of their causes. We need these if we are to make good collective decisions on important matters. The truth-distorting bile that issues from some outlets has had a measurable effect in false impressions left on the public. Read the rest of this entry »
What Equality? – Equality of Voice
Posted by diarmid in Business and Society, Economics, Politics on February 2nd, 2012
‘We need to be clear how equality, and what kind of equality (including of what), services our notion of the good society.’
To give David Miliband some credit, he is asking the right question. It’s not clear from his New Statesman sally whether he has the right answer.
As characterised by the older brother, ‘Reassurance Labour’ believes that the state is the primary bulwark against the inequities and inefficiencies thrown up by a globalised market economy. It seems that David M. believes that empowered regions and communities should be cast in this role.
Now in general terms, I think David has a point. But there are major gaps in his thinking. As he clearly acknowledges, the state (and frequently bodies stretching their remit even wider – the EU and beyond) must set the framework for individual rights and responsibilities. This is necessary to ensure that the relationship between devolved structures is one of co-operation and constructive competition rather than the beggar-my-neighbour variety.
But there are other crucial relationships about which David says nothing. These are those between the power of business on the one side and communities and individuals on the other. If the state has been unable to resist the power of big business and finance to capture huge rewards while making the public responsible for clearing up its messes, there is no hope for smaller regions and communities. As it stands, Miliband senior’s recipe is one of surrender to the interests of money-profit. Under these conditions ‘growth’ means little more than bigger bonuses and more efficient tax-avoidance. Read the rest of this entry »
Economics and Perception
Posted by diarmid in Business and Society, Economics, Politics on January 19th, 2012
I’ve read with interest the recent Labour List posts of Owen Jones and Emma Burnell. I think on the politics Emma is right, but on the economics Owen is right to call for a fresh plan of action.
Politics these days is a performance, and it’s increasingly a self-interested one where concern for the greater good is either absent or on the back burner. How we tackle that is an important issue in itself, but let’s just assume for now that the general welfare of the UK population is really at issue.
Ed Miliband is a human being, with all the faults and idiosyncrasies that entails. When they see him through the lens of the media (as most only do) some people will instinctively find him sympathetic, others will not. On what grounds, who knows? In the end, whatever this effect, it only has to allow Labour to be voted for ahead of the parties of his rivals, Cameron and Clegg. Read the rest of this entry »
Austerity is political
Posted by diarmid in Business and Society, Economics, Politics on January 12th, 2012
Wealth, US style
This article was published on LabourList on Thursday 12th January 2012.
That there is ‘no money left’ is presented to us as an economic fact of life. The Conservatives have embraced it and the Liberal Democrats accepted it. Led by the authors of ‘In the black Labour’ we are at risk of falling in with the inevitability of public squalor and private misery. Yet let the fog of this delusion lift briefly and we see around us the extraordinary wealth of a modern developed nation. The imperative that apparently forces us to accept a significant reduction in the quality of life of the majority of the population is almost entirely political. We should reject it. Read the rest of this entry »
What is economics for? Part 2
Posted by diarmid in Business and Society, Economics on July 24th, 2011
My last blog claimed that equilibrium economics is a fig-leaf for the rich and powerful – because it is a justification for preserving the status quo. But it is more than that, because the conditions required for reaching any such equilibrium (the point at which prices of goods and services have adjusted so that everyone wishing to buy is partnered by someone wishing to sell) are exactly those that are likely to allow those with existing wealth to become richer.
In the theory, this can’t happen, because in equilibrium everybody pays everybody else exactly what is needed for them to provide the good or service desired – no more and no less. Extending this idea a little further, it’s still reasonable that in an economy that is developing new goods and services we might allow a firm to charge us a bit extra on the promise of working on some new and better products. But what if we knew the firm were wanting these extra funds to produce misleading advertising, to bribe officials to cover up evidence of pollution, or to cover the costs of a temporary loss while they push a competitor out of business? We would surely then refuse to pay the prices demanded. Read the rest of this entry »
What is economics for? Part 1
Posted by diarmid in Business and Society, Economics, Philosophy on June 23rd, 2011
Wall Street, NYC
What is economics for? It’s often characterised as being about the choice between ‘guns or butter’. This choice is one not only about which we want to consume, but also about which we want to produce. Strangely, the dominant neoclassical paradigm attempts to render this a choice that need not be made, since it proposes the possibility of an entirely voluntary and stable production and trading outcome (equilibrium) that cannot be bettered. Or at least it cannot be bettered in the sense that no change is possible without making somebody worse off.
This process was described by the ‘father’ of modern economics Adam Smith as being an ‘invisible hand’ that brought about the welfare of all through the self-interest of traders, and that this is possible with markets and a set of prices for goods has been proven mathematically. It forms the basis of an approach to economics that starts from the position that in the absence of identifiable forces shifting things in the other direction, the economy will tend toward the ‘equilibrium’ outcome. In the apparent absence of a way of establishing the relative merits of individuals’ claims against each other this outcome is the best we can or should aim for, and so provides a justification for doing everything we can to remove any forces that might prevent this equilibrium being reached and maintained. Read the rest of this entry »
Towards ‘Clever capitalism’
Posted by diarmid in Business and Society, Economics, Politics on October 29th, 2010
New York Financial District
The lesson of the New Labour years that ended in the biggest global economic crisis since the 1930s is a simple one. ‘Shareholder value’ capitalism is a beast that cannot be made to serve social democratic purposes. By social democratic purposes, I mean those that see harm done to one citizen as harm done to all, and accept the value of collective institutions as positive means to limit that harm and so promote the general good. Social democracy doesn’t assume all ‘good’ is done collectively, but it certainly doesn’t have a general individualistic assumption either. In particular, social democracy gives weight to the idea of ‘solidarity’, which is why great inequality is so corrosive of its aims, and why universal welfare benefits, even if symbolic, cannot be given up too lightly.
The assumption of late twentieth century social democracy was first that unionised labour plus a strong state, then the state alone, and finally perhaps accounting sleights of hand by a clever chancellor, could offset the economic power concentrated by banks and large corporations. Pretty clearly, by the end, this social democracy wasn’t worthy of the name. Read the rest of this entry »