Fools’ Gold inaugural blog: rethinking competition

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Pyrites, otherwise known as Fools’ Gold. It looks valuable, doesn’t it?

Welcome. This is a new blog dedicated to skewering some of the myths and fallacies the lie behind words such as ‘competition‘ and ‘competitive‘, when applied to countries or states.

Put most simply, competition between firms is one thing, and for all the warts and problems with markets, a lot of good has flowed from it too. In general terms this kind of competition keeps firms on their toes, producing better and cheaper widgets and stuff for us to enjoy.

This isn’t the kind of competition we’ll be focusing on here.

What we’re interested in is so-called ‘competition’ between countries on things like tax or financial regulation, which is quite another thing.

So for example, a country creates a corporate tax loophole or enacts some financial services deregulation, to try and tempt some of the world’s flighty hot money to relocate there, at least on paper. Other countries copy them, or go further, to stay in the race. The result is a growing feast of tax cuts and other privileges for mobile, flighty capital – which generally means, at the end of the day, rich folk. People who aren’t so mobile then have to pick up the pieces: paying the taxes they won’t, or paying for bank bailouts, and so on.

International ‘competitive’ forces are creating one set of rules for wealthy folk, and another set for everyone else.

Today’s inaugural blogger (this is me) thinks this kind of ‘competition’ is pretty much universally harmful: a race to the bottom.

But of course politicians, demagogues, ideologists and those seeking privileges for the wealthy owners of capital love to pretend that the two kinds of competition are the same thing. They cover the bad kind with the more familiar “good” kind.

And this tactic works. They say things like “we must have a ‘competitive’ tax system!” and to most people who haven’t thought too deeply about it, this sounds like a great idea. Of course we must!

Well, the purpose of this blog is to think deeply about these things. We’ll start with a fair bit of tax stuff, but we’ll soon be looking at things like financial regulation, corporate governance, transparency, wages policy, and more. We’ll be inviting others in to write for us.

We’ve called this blog Fools’ Gold for pretty obvious reasons. Because “competitiveness”, as it emerges from the mouths of certain people, is the bad stuff dressed up as the good stuff.

The Tax Justice Network provides some introductory texts on these race to the bottom dynamics, here. We’ll be building up a lot of material of our own on this blog, over time.



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