Multinationals (including Financial sector )and taxation

geordief

Does anyone agree with this "analysis"?

The reason for the credit crisis is that the private companies have so much instantly investable funds that they dwarf the finances of individual countries .
In the past (I am surmising) they were subject to tax from their country of origin and so there was a measure of control over them (including moral control).
Now however , like a ship that has broken its moorings they are free to disrupt (and threaten) national economies (even the Ratings agencies feel free to threaten - who rates the credit ratings agencies?- and cajole democratically elected states ).

Does that make any sense?(or is it less than half baked?)
If it does could anything be done?

Seth Brundle

College assignment?

geordief

I don't follow you but my college days are very far behind me.
I have admitted this idea may be less than half baked ....

wanlabanchang

When is the hand up date for that essay?;)

geordief

Ok I realise you are taking the piss but what is the logic behind the piss taking?
Is it just for its own sake or is it intended to say that the question is beneath consideration (or that the subject has been done to death)?

Dannyboy83

geordief wrote: »

Does anyone agree with this "analysis"?

The reason for the credit crisis is that the private companies have so much instantly investable funds that they dwarf the finances of individual countries .
In the past (I am surmising) they were subject to tax from their country of origin and so there was a measure of control over them (including moral control).
Now however , like a ship that has broken it moorings they are free to disrupt (and threaten) national economies (even the Ratings agencies feel free to threaten - who rates the credit ratings agencies?- and cajole democratically elected states ).

Does that make any sense?(or is it less than half baked?)

None, to me.
First, Only a handful of the largest companies in the world have revenues which dwarf the smallest countries in the world.

Second,
Ireland has the highest level of FDI in the world I believe.
The IDA basically do everything in their power to attract MNLs here.
If MNLs were roving pirate ships disrupting and threatening economies, we wouldn't have organisations which exist solely to try draw them here.
We pretty much ignore indigenous business in this country while putting all our efforts into attracting MNLs.

The government is supposed to create a climate in which jobs can be created. Some countries are very good at this e.g. Hong Kong.
The Irish government are fairly miserable at this, especially for indigenous business which is strangled.
This is why we have the low CTR.

It's significantly attractive enough to companies who have significantly large revenues and (potentially) significantly large tax bills, that they can ignore the litany of areas where we are a clusterfcuk.

geordief

thanks for taking my post seriously (even if it may not have deserved to be taken as such)
to answer your first point (without proof) I was fairly convinced that the amount of liquidity sloshing around the financial sector did dwarf most countries' financial ability to respond.
Perhaps I was being too sloppy (sorry) in not specifying the Financial sector as being part of the Multinational category -but I did have them in mind and they would seem to be the prime example if included.
On your second point as to why the different states are so keen to attract Multinationals if they are such a bad idea I would reply "fear ,if they don't come here they will go elsewhere" .

Seth Brundle

geordief wrote: »

I don't follow you but my college days are very far behind me.
I have admitted this idea may be less than half baked ....

Fair enough - too often students ask questions on forums that are college assignments that they can't or won't do themselves and I initially thought that yours may have fallen into this group. I accept that this isn't the case.

thebman

One of the problems for us in creating an indigenous sector is that any company that gets big enough will most likely be bought off by a UK rival and run as an Irish wing of the UK business unless the owner refuses to sell.

The owner would generally be mad not to unless they have a strategy to take on the UK and European players.

Scofflaw

I think you might be conflating two things there. Companies aren't all that mobile, but capital is.

For a company like Dell, say, to move manufacturing operations from Ireland to Poland is a move that takes a couple of years after the decision has been taken. Similarly, the process of attracting new MNC business is quite a long one, measured in years.

Capital, on the other hand, is extremely mobile. If everyone with a deposit in an Irish bank decided at the same time to move their deposits electronically, the movement of tens of billions of euro could in theory be complete within five or ten minutes.

And the amount of capital sloshing around the world system does indeed dwarf the resources of countries. The total size of capital markets in 2007 was $194 trillion, 3.43 times global GDP - whereas in 1980 world capital markets were somewhat smaller than global GDP.

cordially,
Scofflaw