It is time for the politicians to stand up against the power of the corporations
Opinion: Public services are in decline because of huge companies’ ability to avoid tax
While we must be worried, there are still some countervailing forces. The boards of many leading companies are not led by predators and strive to be good corporate citizens. They know that the best way to make profits is to treat the customer well, give value for money and try to be ethical. This is achieved by actually paying taxes to pay for public services and knowing that if profits are excessive, if wages are poor and if no taxes are paid, they undermine their own consumers’ spending power and thus demand for their products and services.
Powerlessness of nation states
The powerlessness of nation states was seen to be greatly exaggerated when even tiny states such as Ireland were able (at some great cost) to take over and rescue its top three banks, the biggest private firm in Ireland and the debts of all the property speculators, overnight. States are putting regulation back and in the near future even the European Commission is likely to split up monopolistic firms such as Apple, Google, and Microsoft, just like the US did with Standard Oil in 1911.
The massive decline in the share of national income going to workers and self-employed has be reversed soon, or economies will weaken further as demand continues to decline, because too much income is going to corporations and the new wealthy elite. These two groups have increased their share of national incomes from 25 per cent to 40 per cent in 30 years. They are investing less and less in wealth creation compared with companies in the past, but are increasingly buying back their own shares and returning more in profits to shareholders (to themselves – corporations and the wealthy). They are paying far less in taxes and so public services are in decline.
The actions required to restore balance between corporate power and functioning economic democracies are to increase corporate and income taxation and to reverse the decline in the collective bargaining power of trade unions.
Additionally, we need to enhance the European social model and have robust environmental and labour regulation.
But for this to happen, more coherent and determined political leadership is required. The widespread cynicism of politicians has arisen partly because they have too often failed to stand up for citizens against the wealthy elites.
It takes a level of political commitment to stand up against immensely powerful, big-investing, tax-evading, tax-avoiding corporations, some of which are spying on our every move, some of which are perverting research by buying /“endowing” university chairs, and importantly, control much of the media. It falls to the State, led by courageous politicians, with long term vision, to reverse these trends.
Paul Sweeney is an economist