Monthly Archives: October 2014

Tax Reform: More Urgent Than You Think!

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Priority urgent 26502187_sTax reform is more urgent than you think. The implications of “The Disappearing PLC”  an article in the October 2014 issue of Management Today make this clear. To say it is food for thought is to significantly understate the case.

The article highlights the fact that, since 1997, the Wall Street high, public listings have declined 50% in the USA and UK, 23% in Europe, and 5% in Asia. It goes on to say “Few observers doubt that something fundamental is afoot – and it’s structural rather than cyclical. In other words it is not a blip.” It explains this is driven by two converging forces.

The first is economic. Here the article states, “The publicly quoted company essentially looks like a creature of the 20th century. Modern business is cash generative far earlier and much less capital intensive then even half a century ago. The need to mobilise outside sources of capital is so much less.”

The second is managerial or ideological. The article cites concern about “public companies fading innovation mojo” and quotes Professor Clayton Christenson “who has the unofficial title of the world’s most influential management guru”  as fretting that “companies anaemic appetite for investor capital is further evidence of this of just this, boding ill for US jobs and growth.”

Another cause of this decline that the article does not specifically identify is what can only be described as “merger mania.” With public companies like Cadbury being subsumed into organisation’s like Kraft Foods it seems inevitable that the number of listed companies must shrink. This compounds the apparent the apparent dearth of new listings that the article bemoans.

Add to this the points I make in “The Democracy Delusion” about industrial scale tax avoidance (epitomised by companies like Amazon and Starbucks making profits of billions in the UK and paying no taxes), and it becomes abundantly clear that this has massive implications for governments. How are they going to replace shrinking tax revenues? Only last week there was an item on the news about tax revenues in the UK being less than forecast!

All this makes makes tax reform more urgent than you think. It imperative that we revisit and reform our national tax systems – URGENTLY.  If we don’t we will be walking blindly into socio-economic and political crisis that will by far exceed any of the major calamities of history in scale. That is why I wrote the book: to try to offer a solution that will help prevent this. Of course it does not have all the answers, but at least my suggestion that companies should not pay tax at all is a provocative starting point for a very important discussion.

Rethink the Response to Civic Nationalism

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The status quo is not what it was. The recent referendum in Scotland is having an ongoing ripple effect that carries the promise of inevitable change. And we need to ensure that we shape that change to safeguard a better future.

Many people are still wondering how the result turned out to be as close as it was and how a relatively small and seemingly innocuous minority reached a groundswell of over 2 million people. Yet, for once, political analysts seem united.

They all agree that the separatists were able to exploit the percolating prevalent and persistent dissatisfaction with central government and surf the wave of discontent. They call this “civic nationalism.” They see this as disillusionment with politics and politicians, resulting in people looking to regain control of their own destiny.

Feeding Frenzy at the trough 14289342_sIf, however, that is the case, the answer is certainly not to create more levels of government. Not to create more troughs for incompetent, self-satisfied and self-serving politicians to feed at.

The answer to any problem cannot be more of the same. Yet, all the solutions currently being proposed to civic nationalism revolve around a model that offers more of the same. You need to think very carefully before you allow this to happen.  Einstein said, “You cannot solve a problem from the same level of consciousness that created it.” If the system is not doing what it is supposed to, then you have the wrong system. You don’t need to repair the system, you need to replace it. So let’s rethink our response to civic nationalism and focus on the causes.

While the situation seems unique to the UK, civic nationalism is a widespread problem with the causes fundamentally the same everywhere. So let’s work together to develop a new system and not be rushed into anything that will not solve anything and ultimately leave us even worse off. Let’s ensure that we enable a future that is better for all.