Monday, 28 January 2013

Starbucks versus Nick Cohen

John Phelan has a good article at The Cobden Centre, attacking a ludicrous piece in The Spectator by Nick Cohen.

It's hard to say whether Cohen is ignorant or disingenuous. He writes:

Now libetarianism, once an interesting anti-authoritarian philosophy, has degenerated into servile money worship, and taken large numbers of right-wing thinkers down with it. Conservative writers cannot see anything wrong with plutocrats gaining an unfair advantage, and do not think about how powerful interests that can demand state bailouts distort markets.

Libertarian is by definition an anti-authoritarian philosophy. Any philosophy that supports authoritarianism is not libertarianism.

As for 'money worship', this plays no part in libertarian theory, nor do I see it in practice. Libertarians respect honestly earned wealth because they recognise that businessmen in a free society are compelled to serve their customers, and those who serve their customers best deserve to be best rewarded.

Far from libertarianism taking "large numbers of right-wing thinkers down with it", it is libertarianism that stresses "how powerful interests that can demand state bailouts distort markets" and libertarianism which condemns "unfair advantage".

Cohen seems to think that corporations only contribute to society by paying taxes:

[Starbuck’s UK managing director] has not asked himself why the British should care if Starbucks cuts back on investment or leaves altogether. It has paid £8.5 million in corporation tax, despite total sales of £3 billion.
From the point of view of the Exchequer, it is a matter of supreme indifference whether Starbucks stays or goes.

The Exchequer probably would care, because the central government creams off 20% of all coffee sales in the form of VAT. They also take income tax and national insurance from thousands of Starbucks employees. Cohen's idea is that "many other chains and thousands of independent coffee shops" would pick up the slack, but this is not certain. Deprived of their preferred coffee shop, people might just drink less coffee. The pie could get smaller.

Cohen's problem is that he fails to distinguish between "the Exchequer" and "the British". People who choose Starbucks over Costa would not consider its departure "a matter of supreme indifference". Every Starbucks customer prefers the products they purchase to the money in their pocket. Starbucks makes each customer better off. Even if Starbucks paid no tax at all, it would be offering a valuable service.

If people are concerned about tax avoidance, they should campaign for a simpler tax system.

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