By Daniel Lacalle from EPICENTER.
The position of the European Union (Brussels) and some economic commentators on technology multinationals should not surprise us. However, it is totally wrong. It is a short-sighted view, oriented from an incorrect fiscal point of view, and it hides a bigger problem. Europe has lost the technology and innovation race, and it will not recover its position with fiscal repression.
However, using subterfuges of “tax fairness”, they try. We should remember that: Corporate taxes are not paid where goods are sold, but where the added value is generated. The European Union itself states that when a sale is made via e-commerce, the VAT on that product will be subject to the tax rate fixed in the country of residence of the company, not that of the consumers making the purchase. The same is true with the declaration of VAT itself. To debate now about alleged corporate tax avoidance is funny because the European Union fights tooth and nail to defend this completely logical fiscal policy for its multinationals and industrial conglomerates in their investments in emerging markets. Regardless, it attacks technological companies. Because they are not European monster dinosaur conglomerates?
The Contribution of Modern Tech Giants
When looking at the tax contribution of multinationals, using a localist vision detracts from their global benefit. For example, Google paid more than 18% in corporate tax in 2016, almost €4 billion euros, 80% in the USA, where the company is headquartered and where it generates most of the added value, its technology, and systems. However, it generates almost 38% of its total employment abroad, investing in start-ups and established businesses up to 40% of the total, which generates a multiplier effect throughout the global economy.
But, above all, this misguided attack on technology giants shows the failure of the European model, which has subsidised and perpetuated its industrial conglomerates by putting barriers to the creation, innovation, and growth of the technological sector. Now, the EU finds that it not only has no leaders in the technological race but that it did not “protect” jobs nor tax revenues.
The EU forgets the very important positive impact on employment, quality of jobs, indirect taxes and change in the economy growth pattern that these companies create. Why? Because they are American. If they were French, German or Rent-Seeking sectors, they would be receiving tens of billions in subsidies.
It is no surprise that, according to a Linkedin ranking, the most desired companies to work are Google, Salesforce, Facebook, Apple, and Amazon. Google is a clear example, whose more than 60,000 employees enjoy a better quality and pay (more than 30% above than the average of their similar jobs in the countries where it operates). Meanwhile, some people in Brussels hope that jobs and higher wages will be achieved subsidising unions.
Useless Grants and Wasted Money
The European Union spends more than 1% of its GDP on “employment policies” which include huge government spending in inefficient programs and massive subsidies to obsolete sectors. It also generates thousands of pages of regulation to “protect” its so-called “national champions”, which in turn are also accused of paying little taxes because they go from ruinous acquisition to ruinous acquisition in their empire-building quest for inorganic growth. While in the OECD, the average expenditure on active employment policies does not exceed 0.6% of GDP, and in the US it is 0.15%, in Spain it was 0.9% in 2011 and in France, it exceeded 1.5% of its gross domestic product. What if we spent less on those useless grants and subsidies that have proven to be inefficient, and started to facilitate the implementation and creation of new technology leaders?
The EU’s short-sighted analysis of technology giants also forgets the impact of certain services that are free for users and financed with advertising. For example, a search engine. Or Google Maps. A study by Hal Varian quantifies an impact of 800 billion US dollars created by a search engine due to savings, efficiencies, possibility to compare products by consumers and choose the cheapest, as well as the impact of advertising services.
We should not only ask ourselves why does the EU put barriers to companies that create better jobs and with greater benefits, but to analyse very seriously why the error of “protecting” the so-called national champions lingers on. First, because they do not need it, they have their well-deserved niche, but they are mature businesses and, by definition, wary of change. Second, because we are suffering the consequences of rejecting investments and capital that supports a stronger growth pattern. The European Union should ask itself why Skype was created in Estonia and not in Brussels.
More Ireland, Less Brussels
In addition, we forget the multiplier effect in the non-technological economy. A study by ITSOS shows that SMEs grow and create jobs up to three times more those that do not use those digital services which, in addition, are free for the user. If we really considered the fiscal, employment and growth issues in a serious way, we would support big technology companies, letting them grow in our countries because the tax effect on corporate and income taxes from their contribution to the real economy is much greater. The multiplier effect is very evident in Ireland. The country, with an attractive fiscal policy, has cut its deficit by 12 points, eliminating it, and unemployment has fallen to 6.6% with youth unemployment at 15%, the lowest since 2008. All this, without reducing public services. But, instead, Brussels thinks that the problem is that “technology companies do not pay taxes”. It is untrue, to start with. They all comply with the rules of the country. The real problem is that perpetuating obsolete dinosaurs is useless.
The European Union has a very important challenge, which is to become the engine of change and progress that it deserves to be. Because the process of the democratisation of technology and the new patterns of growth is unstoppable.
Looking at multinationals from a myopic perspective, only leads us to lose the future. If we take into account the immense market that is Europe and the enormous potential of its influence in the world, we should think more about doing what the US does and less about copying Japan. Do you remember the technological “keiretsu” giants that were going to sweep the world in the early 90’s? Exactly. Neither do I.
In Europe, we need more FANG (Facebook, Amazon, Netflix and Google) and less bureaucrat-gang.
Originally Published the 10 April 2017 on Epicenter.
Uber Eats to Offer Europe Couriers Insurance
Uber has announced that it will be offering a free insurance package to its food couriers in nine European countries.
The company has teamed with AXA Corporate Solutions for the insurance product, which will be introduced from January 8 next year. It will cover personal accidents, cash benefits for hospitalisation, property damage and cover for third-party liability of up to a maximum of $1m. Uber eats operates in Austria, Belgium, Poland, Italy, the Netherlands, Portugal, Spain, Sweden and the UK.
If a driver is involved in an accident, they will simply need to fill in an online claim form available on the Uber Eats app.
Previously, both Uber Eats and Deliveroo have come under scrutiny over how workers are treated. In the UK, Deliveroo riders went to court to seek employment rights, including the minimum wage. The UK government has looked at whether the employment law needs to be changed to take account of modern working practices, such as the gig economy.
Google News: The Secret War Against Net Neutrality
Anyone watching Google News can see that mainstream news outlets are a monoculture, with 100 different outlets reporting essentially the same “big” story. That is, whatever is the top scandal of the day. With click-bait headlines the norm, mainstream news and fake news look indistinguishable. Readers struggle to tell the difference. It’s all negativity and shouting. That’s changing our culture, and not in a good way.
Google News is making the news monoculture worse by blocking independent news publishers seeking to join Google News. There’s an almost insurmountable headwind for new publishers who haven’t been “grandfathered in” to Google News. Google urges us to take action to support net neutrality while at the same time defeating net neutrality by giving favoured nations treatment to big business news organizations at Google News. Why is that a real problem? Let’s talk about what happened to news in Spain.
The Case in Spain
Spain’s repressive Google tax, and consequent Google News blackout, crippled independent news there. When that happened at the time, Google may have thought, serves Spain right for passing a stupid law. However, the suppression of independent news in Spain has had consequences. The Spanish news blackout by Google News played into the hands of the Spanish government seizing mainstream media, reducing mainstream news to official propaganda.
In its early days, Google News was a tremendous democratic influence for good. Smaller news sites you wouldn’t otherwise know about could get to the top of Google News based on merit. A colleague once wrote a story about a TV movie premiere starring Jennifer Love Hewitt. There was surprisingly big interest in this story. It was the only story that quoted Hewitt talking about her film. That story went to the top of the entertainment section of Google News on a Sunday morning and stayed at the top all day. It drove tremendous amounts of traffic to the news site that published it. They took a lesson from it.
Their success with that story on Google News changed their editorial mandate. The new marching orders? Find more stories that we can uniquely cover that will put us at the top of Google News. What Google had done, intentionally or not, was support diversity and make journalism better. For years that publication ranked on the front page of Google News almost daily. They survived on that traffic. It doesn’t work that way anymore. It isn’t how good you are. It’s how big you are that gets you into the Google News club today.
Difficulty for Small Publishers
In fairness to Google News, this publication, The Market Mogul, is carried by them, so clearly it’s not impossible for a new publisher to gain access. However, given their loud support of net neutrality, why doesn’t Google News have a program that nurtures net neutrality on their own platform? Why not help small publishers, rather than making it more difficult for them to launch and sustain themselves?
Maybe Google simply hasn’t thought about the consequences of not helping small publishers. After all, it can be more work to deal with them. They may have more questions to answer than establishment outlets. However, big mainstream publishers aren’t actually subject to the official rules. Google News isn’t about to drop the New York Times or Washington Post if they make a web template change that moves the author byline down a line or another superficial change that might confuse Google crawler robots.
In simple terms, the Google News guidelines have tightened up over time. I joke that the NYTimes might not be accepted these days. Yes, that tight. So your goal is not to generate a marginally passable website that might get accepted into Google News, but one that is so wonderful that Google will drop all of your perceived competitors to find room for you.
Why should better journalism mean dropping a perceived competitor? Has the Internet run out of space?
If the above observation is correct, and it is judging from what small publishers have told me and the general feedback on the Google News forum, then Google News has changed. No longer a news democracy with room for every legitimate news publisher no matter what size, Google News has morphed into a walled garden that embraces big business. It’s the opposite of net neutrality. Google News has become a censor promoting the establishment viewpoint. Think that’s bad? It gets worse.
What billionaires think, is the establishment viewpoint. Billionaires control the mainstream press. Google News is boosting the 1%. Whether that’s Jeff Bezos, owner of the Washington Post, which continues to provide outstanding journalism, or Rupert Murdoch, owner and head of Fox News, which does not. Warren Buffet owns 31 news dailies and 50 weeklies. In the UK, five billionaires, Rupert Murdoch, Jonathon Harmsworth, Richard Desmond and the Barclay twins own 80% of the newspapers, plus TV stations, press agencies, book companies, and cinemas. None of the top UK billionaire press owners actually live in England.
A handful of billionaires, many tax avoiders living mostly beyond the law by bending it to their wills, has become our society’s thought overlords through their control of the press. And Google is helping them do it. Why has Google become a gatekeeper to enforce a news mono-culture? Will Google reconsider, stop suppressing small publishers and demanding they be “better” than the New York Times before allowing them a voice?
What society needs is news net neutrality.
Bulletproof Clothing: How US Fashion Is Going Ballistic
As the US continues to allow civilians to carry weapons and gun violence becomes more of a concern, an increasing number of bulletproof apparel retailers are emerging across the country. Their target clients? The average Joe. Or at least those who can afford the hefty price tags associated with the “exotic” new fashion segment.
Miguel Caballero, a Colombian designer, sells his bulletproof blazers for 4,343.50 euros, and his tank tops for 2,023 euros. At a lower price, but still too high for most people, Joe Curran, who owns BulletBlocker, sells his bulletproof leather jacket for $875 and bulletproof classic two-piece suit for $1,200.
Caballero said that his clients include world leaders from South America and the Middle East, and international businessmen. Damien Ross, another manufacturer of bulletproof clothing, said that his clients are mostly college-educated, professional men, between the ages of 34 and 75.
“They [clients] see what’s happening on the news, and, any time they’re in a crowd or an area that can be prone to attack, they are concerned.”
Body armour manufacturing is a $465 million-a-year industry in the US, according to a report in August from Market Research. The retailers, who mostly entered the industry because of the surge in gun violence taking place around them, are presenting upscale bulletproof clothing, from blazers to tank tops.
Owning body armour is completely legal, and does not require a special permit or background check. However, guidelines vary from state-to-state, and felons are not able to purchase it.
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