New research: the race to the bottom doesn’t stop at zero

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Update: Farnsworth’s work has been generating huge media coverage in the UK, because of the role it has played in new Labour Party’s preliminary economic platforms – making it subject to attack from many different people. See Farnsworth’s responses here.

Kevin Farnsworth at York University has been exploring the scale of corporate handouts in the UK. Via The Guardian:

“Taxpayers are handing businesses £93bn a year – a transfer of more than £3,500 from each household in the UK. The total emerges from the first comprehensive account of what Britons give away to companies in grants, subsidies and tax breaks, published exclusively in the Guardian.”

By contrast, the UK government took £41.3 billion in corporate tax receipts.

Corporate free-riding, in pictures.

Now we should be clear that one person’s subsidy is another person’s incentive: so many of these giveaways have varying degrees of legitimacy, from the acceptable to the outrageous. There is an element of judgement here. But it’s also worth noting that this graph doesn’t measure the other component of the handouts – which is the educated workforces, the roads, the courts and other good things that corporates benefit from. They should benefit from these things, of course: but they should pay their share of the costs and not free-ride off others.

However one wants to assess these numbers we are using them to stress a generic point, which the above graph illustrates: there is no reason why the race to the bottom between countries, in terms of their desperate attempts to shower goodies on businesses in the desperate hope that this will make the countries ‘competitive’ (whatever that c-word means), will stop at zero. It just keeps heading downwards, as handouts start to grow larger than contributions.

In short, there is literally no limit to which corporate actors would like to free-ride off the public services paid for by others.

And as many people have shown, such national self-abasement is unnecessary. National ‘competitiveness’ is a fools’ errand. Fools’ Gold, if you will.

Take a look at Farnsworth’s new UK Corporate Welfare Database, here.

In future posts, we will look at the work of Greg Leroy and Good Jobs first, which have their own excellent repository of corporate welfare data and analysis.



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