An Ownership Revolution is required

We have been following the G20 ‘get those naughty multinationals in the tax tent’ debates raging for a few months now, with amusement we have to add; here at theMarketSoul and have the following short thought piece to contribute to the debate.

We know the ‘outrage’ really is all about the what the OECD calls the ‘general erosion of the tax base’, which in our opinion is just a distraction for proper structural reforms in the western democracies contributing to the G20 and OECD coffers.

English: The logo of the Organisation for Econ...
English: The logo of the Organisation for Economic Co-operation and Development (OECD). (Photo credit: Wikipedia)

The real issue is the power of civil society structures, such as multinational corporations, versus nation states. We constantly get an earful on how undemocratic corporations are from a liberal social leftist media and how dangerous unfettered corporate power is.

Yet, multinationals are far more democratic, in both structure and performance, than any sovereign government will ever be. If the corporate governance structure is correctly set up, then every corporate entity has an annual AGM at which point the corporate leaders have to resign, on a rotational basis, depending on individual Articles of Association or Memorandum ofIincorporation provisions (depending in which jurisdiction the corporate entity ‘resides’). How often does a sovereign leader stand down, in comparison and leave it to the popular vote to be re-elected? Certainly not on an annual basis, as is the case for most corporate leaders.

Civitas Foundation for Civil Society logo
Civitas Foundation for Civil Society logo (Photo credit: Wikipedia)

This leads us to the real thought piece of this article, namely the fact that corporate ownership and access to corporate ownership should really be extended to as wide a base as possible, rather than a few ‘monied’ or opportunist participants in the market.

Legislation around employee share ownership schemes are still very cumbersome and rules, rather than principles driven.

The real revolution we require is not around a new tax base or recapitalizing democratic bankrupt nation states; however we require a revolution of democratic corporate ownership to sweep the length and breadth of the land, in order to spread the risk, add additional wealth creation opportunities (and hence a widened wealth tax base) for smaller, leaner and meaner governments to address. This a cry from civil society to the inner ‘goodness’ of political society to sit up, take serious stock and work on longer-term solutions to the erosion of their tax bases, rather than the usual headline grabbing short-termist market distorting interventions the G20 governments are so infamous.

theMarketSoul ©2013

Behavioural Consequences – The UK Bond Market Rigging Scandal

Health Warning: The UK Bond Market rigging issue is all behaviourally driven. We express a personal opinion in this post and do not endorse or condone breaking any jurisdiction’s sovereign laws.

We would like to contribute a very short thought piece on this issue. Our premise basically goes like this and is grounded in behavioural theory:

2012 Behaviour Matrix copy
2012 Behaviour Matrix copy (Photo credit: Robin Hutton)

Take away any sensible incentive (by over regulating the market participants) and you create the disincentive for cheating behaviour to manifest. Simple.

It is a natural competitive behaviour to ‘cheat’ or try to cheat a system that becomes ‘badly’ designed, as in the case of the highly over regulated bond market and an environment of very low yields.

We find is amazing that the popular press only tend to focus on one side of the equation and distort the real issue and underlying drivers that lead tot cheating behaviour.

Illustration for Cheating Français : Illustrat...
Illustration for Cheating Français : Illustration d’une antisèche Español: Ilustración de una chuleta Deutsch: Illustration zum Schummeln (Photo credit: Wikipedia)

The rule of law should be the overriding guiding principle and helping to design markets and market participant behaviours based on properly incentivised interactions is part of any regulatory system. In the recent past, we have forgotten to bear this in mind…

…and then we act surprised when market actors (participants) misbehave?

theMarketSoul ©2013

Related articles

Transaction Cost Economics is ruining everything!!!

…or is it regulation and process not taking into consideration Transaction Cost Economics?

This post is really a little rant.

We just tried to contact a well known global financial services institution in London in order to enquire about the opening of a corporate bank account.

We have a few why questions and cannot figure out if it regulatory or process driven.

1. Why can’t we get the correct number to call off the web site?
2. When we get through to someone and identify the product/service we require, why are we given the incorrect follow up number to call?
3. Once we get through the automated call processing system, why can’t the customer services representative do a simple thing for us, by transferring us to a supervisor or competent person with authority to speak to?
4. Why are the customer services representatives so wedded to a pre-prepared script.
5. Why have the management consultants who designed these systems not taken into consideration the basics of Transaction Cost Economics(TCE)?

…we think the rant should end there; but more on TCE to follow in future posts.

theMarketSoul (c)2013

A cynical swipe at the ‘Consumer end’ of the money (value) chain

Today’s short opinion piece revolves around the recent rail fare increases announced in the UK.

It strikes us as a very cynical way of rewarding behaviour and policies implemented by previous governments and parliaments to now go and increase the ‘tax’ on rail commuters when the switching policy from road to rail has meant that more rail passenger miles are being racked up versus road miles and supposedly turning off the tax flows into the Treasury from fuel duties, because more rail journeys are being undertaken.

Yet again the pendulum has swung the other way and at the consumer end of the bargain, we are being sent a confusing message us to which behaviours the government wants to encourage us to take.

No wonder the general malaise of cynicism and anti democratic behaviours we have recently experienced has and will manifest itself again.

Less government, less interference, less confusion.  Let the (a well governed) market help efficiently incentivise people to do the right thing at the right time for the right price.

theMarketSoul  ©2011

For more information about the Economics of Taxation just click the link in this sentence

 

 

 

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