Quote of the day – Germany and ‘competitiveness’

   0   0 Blog

Legrain photoThe quote of the day, from an article entitled Germany’s Economic Mirage. It’s by Philippe Legrain, former adviser to the European Commission President:

“Policymakers should focus on boosting productivity, not “competitiveness,” with workers being paid their due.”

We have focused for a long time on this weasel word ‘competitiveness,’ mostly but not exclusively in the area of tax.

There is a fairly close analogy here between wages and tax, in the context of ‘competitiveness.’

As we have often noted, tax is not a cost to an economy, but a transfer within it. To argue otherwise is to fall for the fallacy of composition. The truth is that tax cuts in one area, providing benefits to one sector at the expense of losses elsewhere, don’t automatically improve anything that one might call “competitiveness.” Read more on this here.

Similarly, wages are not a “cost” to an economy either, but a transfer within it: from a capital-rich corporate sector to their employees. Hence wage cuts don’t automatically make any economy more ‘competitive’ either.

In this word ‘competitiveness’ there is a whole realm of economic theory here, waiting to be properly explored.

 


Related Posts

The Offshore Wrapper: the Panama Papers, one year on

Photos from the Protest outside PwC 1 Embankment Place, part of the Global week of action for tax justiceWelcome to the Offshore Wrapper – your weekly update from TJN.  Happy Paniversary! This week it’s been one year since the Panama Papers were leaked, and a number of organisations around the world have been marking the occasion though the global week of action for tax justice. In London, activists from the TJN and the […]

READ MORE →

Protesting PwC: Professionals Without Conscience

Photos from the Protest outside PwC 1 Embankment Place, part of the Global week of action for tax justiceThis week is the global week of action for tax justice and on Wednesday 5th April activists from the Tax Justice Network and Methodists for Tax Justice held a protest outside the London offices of Price Waterhouse Coopers. The global week of action for tax justice is happening one year after the release of the […]

READ MORE →

Germany moves forward on corporate transparency

ReichstagThe Bundesrat has today voted to recommend implementing a public register of the beneficial ownership of companies and trusts.  Great news from Germany, as the country takes an important step forward towards corporate transparency.

READ MORE →

New estimates reveal the extent of tax avoidance by multinationals

Price Waterhouse CoopersNew figures published today by the Tax Justice Network provide a country-level breakdown of the estimated tax losses to profit shifting by multinational companies. Applying a methodology developed by researchers at the International Monetary Fund to an improved dataset, the results indicate global losses of around $500 billion a year. The figures appear in a […]

READ MORE →

Banking Secrecy in China, its related territories and Taiwan

Hong Kong from Sky 100Foreword. The Tax Justice Network is a non partisan network of experts working towards transparency, so we do not take any position about countries’ territorial and political claims. However, we do expect countries with a de jure (legal) or de facto (in practice) influence over other territories, to take responsibility for their power. We point […]

READ MORE →

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top