In your editorial of 22 September (MoneyWeek 863), you discussed the increasing likelihood of governments introducing legislation to force big tech companies to pay a more appropriate level of tax, and to clamp down on terrorism. I’m not sure that this is a very effective way to proceed. Government legislation is often a clumsy way to force companies to comply, and the time it takes to introduce a piece of legislation means it is often out of date before it is introduced.
Multinational companies are also very adept at using their operations in different jurisdictions to avoid their moral, if not their legal, obligations, and circumvent any legislation. Governments are also unable to apply legislation outside their borders.
We, the consumers of these services, seem to adopt an increasingly passive approach to all this. Whether the issue is tax contributions from multinational companies, online recruitment in support of terrorist activities, internet trolls or general online abuse, we wring our hands and rail at our governments to fix these issues. Yet the power lies with us.
If we stopped using Amazon for a 24-hour period, if we boycotted Starbucks for a day, if we targeted Facebook’s main advertisers, these companies could quickly be made to change their behaviour. If they don’t give a satisfactory response, then boycott them for another 24 hours.
The companies targeted would not like the publicity, nor the disruption to their operations. They would soon smell the coffee. Consumer power, when harnessed appropriately, can be very powerful, and is not limited by geography – campaigns can be local, national, or worldwide.
I believe this approach would work, and give an appropriate counter-balance to the power exerted by these huge multinationals. I’m sure there are many pressure groups currently operating who would be interested in taking up this challenge. However, it requires one with widespread credibility to make it effective.
A consumer group, such as Which, may be a useful starting point. Above all, it would make each of us feel less like victims of the multinationals, and allow us to take positive action in the struggles against tax evasion, terrorism, and online abuse.
In many ways it would be better if public pressure forced tech firms (and other large multinationals) to comply with existing rules or to act in the best interests of society. However, as you note, there’s little sign of this happening. Meanwhile, governments are desperate both for tax revenue and to appear to be doing something to improve security. For good or ill, more regulation seems inevitable.
A retort from the 99%
Congratulations to Bill Bonner on the boost to your income as a member of the 1% (MoneyWeek 866). I’m somewhere in the middle %, wishing I could get an annuity rate of £15,000 per annum on a hundred grand rather than £5,000 and wo breathe a sigh of relaxation at being able to retire and still eat! I can’t help but see parallels today with the surge in revolutions that happened between the 1700s and the early 1900s.
The aristocracy were behaving much like the 1% today and often not through their own fault but policies enacted by kings and ruling elites. Their wealth and privilege increased year on year, while the poor became poorer until they struggled for food. The rich were often completely ignorant of the way these people lived.
We, in England, were incredibly fortunate that in 1688, in response to King James’ abuses of power, we were invaded by the Dutch without a single shot being fired. We were exhausted by the English Civil War – a war of elites (aren’t they always?). William of Orange rode to Westminster to depose James (although James was allowed to escape to exile in France) and was allowed to take the throne if he signed up to substantial people’s rights.
This is often called the glorious, or bloodless, revolution for England. The rest of Europe carried on with their abusive systems which boiled over into revolutions and the executions or exile of aristocracy, from 1789 in France right up to 1917 in Russia.
If we are to once again avoid civil unrest, we need to restore the balance between the 1% and the 99%. We need to enact policies which oust cronies before they oust us. Going through the pain of Brexit now could be cathartic and head off unrest that may rock Europe in years to come.
European integration isn’t a bad thing – it’s the cronyism that is embedded in it that’s bad. If we sort out our cronyism and give people a stake in their country and their lives, we could sit back and watch as Europe and other world regions deal with the problem in their own ways.
Yes, we’d agree that much recent turmoil is down to anger over rising inequality. Tackling this will indeed be crucial to avoiding worse upheaval in future.
On our pensions page in issue 868, we wrote that “Which published research earlier this year suggesting that to enjoy a comfortable retirement – with enough cash to cover the cost of living plus some luxuries such as an annual holiday – couples should aim for an annual income of £26,000.
That would require a defined-contribution pension fund worth £210,000 in today’s money.” Owing to an editing oversight, this article did not make it clear that the calculation by Which assumes that the couple will each receive a full state pension and that the income from this was included in the total income of £26,000.
It is exceedingly unlikely that any retiree would be able to generate a sustainable income of £26,000 from a pension fund of £210,000 alone, as several readers have written to point out (some more politely than others). Sorry.
We should also have commented that this estimate, while plausible, is relatively optimistic. Even drawing the required balance of just under £10,000 per year from a £210,000 fund would risk depleting it too rapidly in this low-return environment (the original calculation assumes 3% investment growth per year).
Securing the same income through an index-linked joint-life annuity would require a pension fund of around £370,000 at state pension age. A reasonable assumption of how much you should aim to accumulate probably lies mid-way between the two extremes.
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