Sunday, 16 October 2011

Protests

Today there are protests in many countries although the message isn't 100% clear. The two main issues seem to be corporate greed and government spending cuts. The mainstream media and the vocal majority seem to think that this is where the problems lie although they don't seem to have any reasonable solutions or understanding of the subtleties of the situation.

Firstly corporate greed - the vocal majority would prefer to live in a world where corporate profits are distributed to the poor and needy. Whilst this might seem fair it goes against capitalism as well common sense. Companies must seek to be profitable otherwise they won't attract investors and won't exist. Companies must act in the interests of their shareholders.

So what about Governments? Our Governments are given te responsibility of managing the public interest and therefore raise money through taxation and spend this money for our benefit. They, at least in theory, have the ability to improve the current economic situation. However many seem to miss the subtleties of their actions. For example most are calling for heavy taxes or company profits and high earners to raise money and prevent the austerity measures. However companies and individuals can often move countries to lower their tax burden - as noted in a previous post where Wolseley's move to Switzerland cost the UK over £20m in tax revenue. The Government's job is very difficult and the only long term solution is to try to encourage growth and job creation in the private sector. Public sector jobs are important but shouldn't be created just for the sake of the employment figures as it is public money paying those salaries.

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