Newsletter No 7

Date: 29 November 2024

 

The festive season is on its way in many countries (Christmas trees are already on sale in London!), so here’s a gift-wrapped hamper of ideas for curbing the power of multinational corporations.

 

Oxfam thinks big about taming corporate power

In a just world, what would the multinational corporation look like? Oxfam offered an ambitious answer in its “Inequality Inc” report earlier this year.

It’s unusual to see an NGO report with so many far-reaching recommendations: breaking up corporate monopolies over markets and information, restricting shareholder payouts unless companies have met wage and climate goals, sharply raising taxes on profits and curbing for-profit investment in healthcare and education, among others.

Critical Takes talked to Alex Maitland of Oxfam (audio) about the thinking behind these recommendations and their attempt to balance ambition and pragmatism.

 

Moving ahead with a UN tax convention 

A cheering story for campaigners is the progress of negotiations on a UN tax convention, which could more fairly distribute among countries the power to shape global norms for taxing corporate profits and for other taxes as well. A majority of countries at the UN have voted to adopt terms of reference for a convention: only nine countries voted against, mostly wealthy member states of the OECD.

Maria Ron Balsera of the Centre for Economic and Social Rights talked to Critical Takes (audio) about the UN process and what a “rights-based economy” might look like.

Negotiations on the substance of the convention are due to start in February. Here’s CESR’s handy timeline for the process between now and September 2027.

 

Taking Uber to court and winning

James Farrar of Worker Info Exchange talked to Critical Takes about his part in a landmark UK legal case which compelled Uber, the giant taxi firm, to acknowledge that its drivers are workers, with the accompanying rights. This audio interview is rich with insights into the problem of data-driven exploitation of workers by platform companies and how to respond to it.

 

Big Sugar, big profits

Human rights activist Kelvin Chirwa offers this on-the-ground account of the power imbalance between farmers and Illovo Sugar Malawi, which is controlled by the UK’s Associated British Foods.

The article describes how Illovo’s size, wealth and political influence interact with Malawi’s rural poverty to create a situation in which small farmers feel they have to give over their land to growing sugar cane for its mills. You can also read what Illovo says in response: the company sees itself as a contributor to rural livelihoods and community development in a very poor part of the world.

As Kelvin notes, there are economic benefits to Malawi from Illovo's investment in the form of jobs and tax revenues.

But it also has to be said that this sugar business is very profitable. I looked at the accounts of Illovo Sugar Malawi over the last decade and calculated that the average operating profit margin for that period has been a hefty 20 per cent. Most of the sugar was sold within Malawi.

Twenty per cent is a very big profit margin for turning plant matter into food: the same profit margin for ABF globally over that period was 7.5 per cent, while big supermarkets in the UK, report profit margins of 2-3 per cent.

Such a big profit margin makes it reasonable to ask: is the company exploiting its market dominance to charge steep prices for a basic foodstuff in a very poor country?

 

Interesting takes in other places

Talking of high prices, the ideas of economist Isabella M. Weber about how to deter corporations from jacking up their prices for basic goods at times of crisis are getting a lot of attention at the moment.

These ideas include windfall profit taxes, laws against price-gouging and states building up buffer stocks of key commodities to protect their citizens from price spikes. You can read a summary on this thread by Weber on X/Twitter, which is fast becoming the GreySky of social media.

Weber’s ideas are worth a close look by campaigners because these policies are not novel and many countries have experience of applying one or more of them. If adopted, they could have direct and positive effects on people’s cost of living in times of crisis.

Some more good tax justice news: Australia has finally passed its country-by-country reporting law which was stalled last year by lobbying, including from the OECD. This form of reporting is a vital tool for detecting profit-shifting and campaigners will be hoping that the decision in Australia will encourage other countries to adopt stronger rules.

For context, here’s Tax Justice Network’s latest State of Tax Justice report which finds that profit-shifting into tax havens actually increased between 2016 and 2021. These findings point to the limitations of the OECD’s BEPS reforms which came into effect during that period. It’s those limitations which underlie the push for a UN tax convention.

And here’s a report from a UN Special Rapporteur warning the UN General Assembly that corporations and rich people are abusing the judicial system to try and silence their critics. If you’ve ever done any investigative work for an NGO or a media outlet then you’ll know about this problem already. It’s good to see it getting attention at the UN.

 

Coming soon on Critical Takes: why concentrated ownership of knowledge makes inequality worse, and what to do about it.

The next newsletter won’t be till January. Till then, good luck with your work!

The Editor