Opinion

John Lloyd

A taxation conundrum

John Lloyd
May 28, 2013 18:23 UTC

For the giants of Silicon Valley, the fall from freedom’s children to social pariah has been something of a Shakespearean reversal of fortunes. Google, Apple and Facebook might be Lear, Othello and Macbeth in the suddenness and completeness of their fall from a grace that was bequeathed to them by the generations that found their technologies liberating, empowering and even beautiful.

These companies are nothing like the robber barons that were rebuked by the U.S. government a century ago. They are not locking out workers or running sweatshops. On the contrary: They’re hiring people. Led by Facebook founder Mark Zuckerberg’s advocacy group FWD.us, they are agitating for immigration laws to be loosened so they can hire clever Chinese, Indian and other citizens and pay them lots of money. Those lucky enough to get into their now-sprawling campuses gain access to a kind of gold-plated welfare state where choices of delicious food, health centers and dental clinics are theirs for the using.

The companies say transparency and freedom of speech are at the heart of all they do. Transparency is a Google “Core Value”; Facebook has signed up to the Global Network Initiative, dedicated to advancing freedom of expression to help “shed a spotlight on government practices that restrict expression and seek over-broad requests for user data.”

Freedom and transparency make up one of the largest battlegrounds between states and citizens today, and the fact that the Silicon Valley companies put themselves on the side of citizens has attracted high-profile recruits to their offices. In the UK, two big-time journalists renounced their trade to work for Google: John Kampfner was editor of the leftist New Statesman and head of the NGO Index on Censorship. He is now an external adviser to Google on free expression and culture. Peter Barron edited the BBC’s probing Newsnight program and, while a reporter on the program, won a 1995 award from the Royal Television Society for reports on the arms-to-Iraq scandal. He’s now head of external relations for Europe, Middle East and Africa at Google.

As unlikely as it is that the rich, clever people behind these companies will lead their employers to tragic fates, they have a very large problem on their hands. Relative to their earnings, these companies pay very little taxes. This is not, it seems so far, a crime. But it may be worse than a crime; it is a product of their philosophies.

The European Union’s unending quandary

John Lloyd
May 21, 2013 15:45 UTC

The pace of European disintegration continues to quicken. Recession deepens in the 17-member euro zone; it is now the longest downturn since the currency was launched in 2000. In Italy, a new left-right government, launched on an anti-austerity program, finds the neighborhood more austere than it had hoped. In France, Maurice Levy, boss of the advertising giant Publicis, did a survey showing that northern Europeans – Poles, Germans, Brits – were moderately optimistic while southerners – Spaniards, Italians, Greeks and the French – were deeply pessimistic. France dipped into recession earlier this month, for the third time in four years. The union is pulling apart.

Nothing brings relief. In the Netherlands, a TV show persuaded the country’s deputy finance minister, Frans Weekers, to watch clips of Bulgarians boasting about how they had defrauded his country’s government of welfare benefits. Bulgarians and Romanians, the poorest members of the European Union, will be able to move to any state in the EU next year. What had been presented to the poor as a new freedom is now an imposition for the rich.

Those who have been most enthusiastic for the union now proclaim that it is in grave danger. In an interview earlier this month the financier and philanthropist George Soros said European leaders, in trying to find exit routes from the crisis, have “generated political dynamics that are leading toward the EU’s disintegration.”

Scrambling for the immigrant elite

John Lloyd
May 14, 2013 19:32 UTC

A new era has arrived in immigration. Many countries – the United States, the UK, France, Germany, the Netherlands – have for decades taken in poor immigrants with the express intention that they would do work that native citizens had become reluctant to do. The labor was either too hard, too cheap or too dangerous for the locals.

Now the rich countries don’t want poor people. Many of the production-line jobs they came to do have been automated – or the industries they came to work in, as the cotton mills of Lancashire in the UK, have mostly closed. The Immigration Bill now before the U.S. Congress and Senate is crafted to legalize the estimated 11 million illegal immigrants and to “attract… the world’s brightest and best-educated people.” As automation takes over more unskilled work and as the demand for labor emphasizes skills that higher education usually teaches, the needs of the United States and other developed countries change.

The heated debates over immigration and its consequences power the rise of the populist parties in Europe and push centrist governments towards tougher curbs. But the debates may soon seem beside the point: The traditional emigrant states are beginning to want their best minds back. The hunt for clever people is globalized: Universities, companies, even government bureaucracies seek them here and seek them there. The needs of the developed world and the greater needs of the developing world now conflict.

Russia’s reckoning

John Lloyd
May 7, 2013 18:05 UTC

Russia is now in a hard, even dangerous, place. A series of shocks are coming, and it is not well placed to weather them. It has, to be sure, little debt: Vladimir Putin’s administration is proud that the state has borrowed little and has built up a multibillion-ruble national reserve fund. Yet even that is ending, and the basics of the economy are weak. The former Marxists among Russia’s ruling class will know that the economic base determines the political and social superstructure. It is not looking good for them.

What’s worse, Russia isn’t a major player in the global economy. According to Eurostat figures, it has 2.4 percent of world gross domestic product, slightly under that of India; and 2.6 percent of world trade, slightly more than India has. It’s important, especially to Europe, in one significant economic aspect: It ships very large amounts of energy: 63 percent of European Union imports from Russia is oil, a further 9 percent is natural gas, with a further 3 per cent for coal. Icy Russia heats Europe. In return, Russia has, for the past decade, been enriched, as a once impoverished nation, which defaulted in 1998, surged to a lifestyle that supports a burgeoning middle class.

But oil and natural gas prices are falling now, and don’t look like they will rise again soon: “Over the coming few years,” writes Forbes commentator Bill Conerly, “look for oil prices to decline at least below $80 a barrel and quite possibly more” because of increased production. Gas prices are worse: The once-mighty Gazprom, which had dictated prices and terms to those it supplied, has been forced to discount and saw its profits fall last year by $6.5 billion, or 15 percent. The warnings, inside and out of the country, that it was dangerously dependent on fossil fuels for its newfound wealth and strength are coming home to roost. Russia may face recession.

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