Fools’ Gold links, March 2015

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The first in an occasional series. Some further reading material, from recent articles elsewhere. 

Public risks, private rewards: how an innovative state can tackle inequality Mariana Mazzucato, New Statesman.
An original and important examination of the role of the state in promoting entrepreneurship and innovation, by prize-winning Prof. Mariana Mazzucato at Sussex University in the UK. “When we have a narrow theory of who creates value and wealth, we allow a greater share of that value to be captured by a small group of actors who call themselves wealth creators.” (FG: The dominant ‘competitiveness’ agenda involves showering these supposed ‘wealth creators’ with subsidies, paid for by others.) She is author of The Entrepreneurial State: debunking public vs. private sector myths.


Tax competition could destroy EU – Economia.
A comment by the the chairman of the European Parliamentary tax rulings committee. “This competition is harmful when it sparks a fiscal war between the different EU member states” Indeed, ‘war’ is a more accurate and appropriate term than ‘competition’ to describe these processes. But he seems to think that there are circumstances where such fiscal wars could be beneficial. Would he like to spell out exactly how this could happen? The Tax Justice Network has for years privately and publicly challenged OECD and other officials to identify such circumstances, and we haven’t yet come across a convincing response. We don’t necessarily discern any circumstances where tax wars are beneficial.


Greater National Competitiveness doesn’t lead to more entrepreneurship – Entrepreneur.
Looking at recent analysisby the World Economic Forum and the Global Entrepreneurship Monitor. Noting a “striking inverse relationship between competitiveness and entrepreneurship.” Perhaps there are problems with measuring ‘competitiveness’ (and entrepreneurship?)


Corporate Taxation Under the Coalition Government – Giorgia Maffini, Saïd Business School.
A peculiar article, looking at the UK government’s tax-cutting zeal and asking whether it has been good for Britain. After noting academic research that these tax cuts “should” stimulate “investment” into the UK, it then notes, in a very short section: “Such a comprehensive reform of business taxation implies large costs. In terms of foregone revenues, the reform will cost £7.5 billion a year by 2015/16 (or 21% of average annual corporate income revenues). Adding the initial version of the PB [Patent Box] brings annual costs to £8.2 billion (or 23% of annual corporate income tax revenues). By any standards, these are large costs. . . was the increase in competitiveness worth £7.5 billion (or more)?” At the end, however, the blog concludes by effectively recommending further tax cuts.  See also Matthew Watson’s last post: The False Promise of Corporation Tax Cuts.


Picking Losers: Why the Majority of NC’s Incentive Programs End in Failure – North Carolina Justice Center.
All told, the state has cancelled 60 percent of JDIG projects after recipient firms failed to honor their promises, with even higher rates of failed projects in the rural and most economically distressed areas of state. For more on U.S. subsidies to business, see Good Jobs First, which tomorrow will release the new 3.0 version of its Subsidy Tracker search engine that incorporates federal data as well, with over 160,000 entries from 137 federal programs providing business grants, loans, loan guarantees and bailout assistance. Including all of the Federal Reserve Board’s bailout money to European banks, all in one place.


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