Vir Cantium

I'm right, you know …

The EU Endorses International Price Fixing

Let’s imagine for a moment that there was a collection of large corporations which held monopolies, or at least pretty unassailably dominant positions, in a number of key markets in their respective countries.

In each of their home territories these companies had the ruling politicians, and much of the opposition, on their payroll.

Abusing their monopolistic positions they were delivering poor quality services to customers who had little other choice but to take such services, and so they were able to charge pretty much whatever they felt like.

You would think that such corporations would be the target of some ire, not least among the Left. There would be calls to break up these organisations. They would be held up as an example of the ugly face of capitalism and certainly, in the current times, UKUncut and their fellow soap-dodging travellers would be occupying their branches, boycotting their businesses, marching and violently smashing their way to “social justice”. The intelligentsia and self-appointed experts would opine about the morality of such companies and what should be done to cut them down to size.

Then, as if to rub salt into a fatal wound, these companies openly colluded to fix prices across the EU. Those more enlightened businesses who saw an opportunity to benefit, by not going along with the racket, were bullied into line. Would you not expect – be you of the Left or Right – something to be done?

Well, yes, you would, except the organisations in question are national governments, and far from blocking such price fixing the EU are actively discouraging competition between states on tax rates; allowing the big boys (in this case, the UK) to come down on the mad, bad low tax territories (CI).

Scottish Government logo

The Scots: not following the socialist script (for once).

And so we come to the likes of Richard Murphy (who is so firmly on the loony left fringe that he even suggests that the BBC is right-wing). He is complaining even about competition within the UK on corporation tax rates, on the grounds that the sky will fall in. (OK, he puts it in his usual faux-economist hysterical socialist terms, but that’s the executive summary.)

One cannot possibly allow Scotland to set lower tax rates, because then business might move north, and the Scottish government would have to find the lost revenue from somewhere – no, you don’t need to read it again, it really doesn’t make much sense. (Incidentally, the Barnett formula grant would be reduced so no, England would not be subsidising the rate cut.) This would mean cuts in spending investment and that would be bad for the trade unions who fund him everyone.

To quote him directly, turning Scotland into a “tax haven” will lead to…

more cuts, an increase in the income and wealth gaps, more chaos in society and diminishing social cohesion.

As yours truly pointed out over there, the Isle of Man and Channel Islands are hardly on the brink of civil war. Anyway competition on tax rates, combined with easier movement of capital and labour across Europe, are useful ways to ensure that states face a natural check on how much they can extort from their populations (either individuals, or those groups of people who choose to organise themselves into businesses).

This, apparently, is bad. He says the EU has already ruled the tax status of the Channel Islands to be “illegal” (his interpretation). Just imagine if, say, Rupert Murdoch had somehow been able to declare the lower prices of a rival newspaper as being unlawful?

So we see the EU effectively endorsing international price fixing, as long as the business in question is that of  ‘government’, much like – to use an alternative analogy – an over-powerful trade union would bully an employee into joining the closed shop.

Rupert Murdoch, though, only has any position in his markets because people choose to buy his products – it is a democratic process. The EU, on the other hand …?

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