How to Save Capitalism From Capitalists

Globalisation has multiplied the opportunities for tax avoidance, and tax competition between states has diluted the political will to uphold competition in the marketplace. Timid national politicians are reluctant to take on the global behemoths and their armies of well-heeled lobbyists. Yes, they would like these companies to pay a little more tax, but not so much so that they threaten to take investments and jobs elsewhere. Consumers and less privileged taxpayers are the losers. So is the market economy. Step forward the European Commission. Margrethe Vestager , the commission’s competition chief, has been in the news lately after ordering Apple to pay €13bn in back taxes to the Irish government. If that seems like a whopping figure it should be measured against an estimated $215bn that Apple holds offshore beyond reach of tax authorities. There will always be business leaders true to the tradition of the old robber barons who think theirs is a superior calling and that democratic politics is, well, “crap”. They find support among libertarians and free-market literalists who believe that the only role of business is to maximise profits. Roosevelt was no socialist. His insight was that capitalism requires legitimacy. It would thrive over the long term only if it were seen to be on the side of the welfare of the nation’s citizens. This is as true now as it was then. It is too soon to pass Roosevelt’s mantle to Ms Vestager. But everyone who supports the liberal market economy that made possible the success of Apple, Google and the like should be applauding her courageous effort to reset the balance. (FT)