Occasional reflections on Life, the World, and Mathematics

Posts tagged ‘business’


I passed this shop recently near the train station in Leamington Spa:

2016-04-04 17.48.26 HDR-2

Fireworks and upholstery foam. It sounds like a joke that would come up after insurance underwriters have been up drinking all night.

None dare call it “evasion”

Just another example of how the business elites have normalised their criminal activities:

So when politicians, journalists and the public ask rude questions about how Google can pay its chief executive more in one year than it hands over to the British tax authorities, the company should have a simple answer. You make the rules, we obey them – if you don’t like it make some new rules, otherwise go away and leave us alone.

The article suggests that Google is suffering from a sick compulsion to hold itself to a higher standard than is just obeying the rules.

Except, they don’t actually obey the rules. What they do (as I’ve discussed at greater length) is to create structures to exploit the ambiguity in such legal terms as “residence” and “business activity” and “profits”, ambiguity that is in the rules because the lobbyists would otherwise squeal about unreasonable constraints and irrational behaviour being forced upon them by more specific regulations. The law doesn’t actually permit you to pretend your business is actually transpiring at the shell address in the Cayman Islands, but it’s sufficiently hard to prove otherwise, and the elite civil servants are sufficiently unmotivated.

In fact, despite the billions of dollars they spend on tax lawyers in lieu of taxes, they’re not even particularly conscientious about keeping their plausible deniability plausible. Former London Google employee Barney Jones gave evidence to HMRC:

He had watched Matt Brittin, his former boss at Google, give evidence to MPs on the Public Accounts Committee with interest but also mounting disquiet. Mr Brittin emphasised to the PAC one reason Google paid so little tax in the UK was that it did so little business here. The bulk of its work was generated through its Dublin headquarters – where corporation tax was lower than in London.

Mr Jones, a father of four and a devout Christian, knew that wasn’t true. He had worked in the London office from 2002 to 2006 and had his own view of the large turnover of work that was really going on in the UK. He took the facts to PAC chair Margaret Hodge and then on to Her Majesty’s Revenue & Customs (HMRC), which took his evidence but wasn’t exactly overjoyed by it.

“They seemed quite defensive and seemed to be more interested in justifying their position.”

For that matter, it’s not even entirely true that they don’t make the laws. Unless you think the US Treasury just decided in a purely independent and disinterested way that the European Commission doesn’t really understand its own tax rules.

How to do it: Medical testing edition

I was commenting just recently on the cult of big ideas, where people whose life experiences have given them hierarchical power are suckers for “ideas” that are mostly blather, lots of words about the irrelevant bits of the problem, distracting attention from the real difficulties. And now Theranos is in the news. I read about this company, started by the obviously charismatic Elizabeth Holmes, in The New Yorker about a year ago. My immediate reaction was, this must be a joke. It was very much in the spirit of Monty Python’s How to do it.

Theranos, a Silicon Valley company[…], is working to upend the lucrative business of blood testing. Blood analysis is integral to medicine. When your physician wants to check some aspect of your health, such as your cholesterol or glucose levels, or look for indications of kidney or liver problems, a blood test is often required. This typically involves a long needle and several blood-filled vials, which are sent to a lab for analysis… [Theranos] has developed blood tests that can help detect dozens of medical conditions, from high cholesterol to cancer, based on a drop or two of blood drawn with a pinprick from your finger. Holmes told the audience that blood testing can be done more quickly, conveniently, and inexpensively, and that lives can be saved as a consequence.

Sounds wonderful. Quick. Convenient. Inexpensive. Saving lives. How is she going to do all that? Well, she wears “a black suit and a black cotton turtleneck, reminiscent of Steve Jobs”. She dropped out of Stanford. She has a board of directors full of highly influential aged former politicians, but no scientists, so far as I can tell. She “is in advanced discussions with the Cleveland Clinic. It has also opened centers in forty-one Walgreens pharmacies, with plans to open thousands more. If you show the pharmacist your I.D., your insurance card, and a doctor’s note, you can have your blood drawn right there…. A typical lab test for cholesterol can cost fifty dollars or more; the Theranos test at Walgreens costs two dollars and ninety-nine cents.” (more…)

Is Netanyahu auditioning for a bigger role?

Many people are wondering why Israel’s Prime Minister, Binyamin Netanyahu, has decided to wreck Israel’s relationship with its superpower patron, a relationship that has been almost absurdly favourable to Israel, uniquely bipartisan and almost unchallenged within the US political establishment. For years he has appeared to be going out of his way to break this bipartisan link, working to undermine US foreign policy, embarrass the president, and show himself and his government to be allied not with the United States, but with the Republican Party. Why? Is it psychopathology or an ingenious scheme? Or both?

Most people who try to explain it (including those who write articles with titles like The real reason Netanyahu is willing to risk Israel’s relationship with the U.S.) tend to posit that the reason has something to do with Israel: Either he is doing it either out of a genuine belief that Obama’s negotiations with Iran threaten Israel’s survival, so demand desperate measures; or that it is a cynical short-term political calculation, intended to shore up his position with the Israeli electorate, particularly now, two weeks ahead of an election. But what if it has nothing to do with Israel’s future, or Netanyahu’s position in Israel, but with Netanyahu’s position outside of Israel?

My thinking here is inspired by a very insightful comment on Greek politics by Matthew Yglesias:

Normally you would think that a national prime minister’s best option is to try to do the stuff that’s likely to get him re-elected. No matter how bleak the outlook, this is your dominant strategy. But in the era of globalization and EU-ification, I think the leaders of small countries are actually in a somewhat different situation. If you leave office held in high esteem by the Davos set, there are any number of European Commission or IMF or whatnot gigs that you might be eligible for even if you’re absolutely despised by your fellow countrymen. Indeed, in some ways being absolutely despised would be a plus. The ultimate demonstration of solidarity to the “international community” would be to do what the international community wants even in the face of massive resistance from your domestic political constituency.

One constant of Netanyahu’s career has been his (for an Israeli politician) exceptional venality. Of course, Netanyahu (or any Israeli leader) has no future in Europe, or major international bodies; but the US is another very big world, and making himself the pet anti-terrorist Jew of the Republican Party could be a highly remunerative post, far more valuable in Shekels than anything that his home country can offer. And if he ends up destroying Israel in the process, he’s all set up to blame left-wing anti-Semitism allied with Islamo-fascism. It will be brilliant for business.

“Touched a nerve”

Wall Street Journal reporter Yukari Iwatani Kane has written a book about Apple, Inc. since the death of Steve Jobs. A highly critical book, apparently. In an email to reporters Jobs’s successor Tim Cook has basically called the book bullshit. In response, you might have expected the author to find a more or less deft way to say “No, it’s not bullshit.” Instead, he turns to psychobabble:

For Tim Cook to have such strong feelings about the book, it must have touched a nerve. Even I was surprised by my conclusions, so I understand the sentiment. I’m happy to speak with him or anyone at Apple in public or private. My hope in writing this book was to be thought-provoking and to start a conversation which I’m glad it has.

Not very encouraging. “Touched a nerve” is the sort of thing people say because it sounds good, but when you think about it, it really isn’t. Or rather, it could be good or bad, depending on the fundamental issue to which no response has been given. If the book’s account is accurate, then the fact that it touched a nerve among Apple’s leadership suggests that it’s also important. But if it’s bullshit, then “touching a nerve” means that it’s really offensive bullshit. The same with thought-provoking. If the book provokes interesting and well-grounded thoughts about the nature of modern capitalism, that’s a good thing. On the other hand, if it provokes utterly specious thoughts based on misconceptions, or provokes thoughts about the irresponsibility of modern publishers, that’s probably not a good thing.

It reminds me of an interview I once read with Bob Dylan from the 1970s, where he complained about the people who come up to him after a concert and say “Lotta energy, man!”

What is it about pirates?

The Daily Telegraph quotes our mild-mannered PM, speaking at the Lord Mayor’s Banquet in the City, saying he wants Britain to show an “entrepreneurial buccaneering spirit”. Why are comparisons to pirates seen as favourable*? Indeed, if he had commented on the City’s “piratical spirit” they would have evicted him from the square mile. Even if you think that 17th century pirates set a remarkable example of untrammelled human spirit of liberty, or something, suppose you asked, what sectors of our society suffer from too much respect for propriety, social norms, and the law? Is there anyone (Mr Cameron excepted) who would spontaneously reply, “You must be talking about the finance industry”?
Do you want to know who showed an entrepreneurial buccaneering spirit that Blackbeard would have been proud of? The young people who plundered London shops in 2011 and set several of them ablaze. I don’t recall any expressions of admiration from Mr Cameron then.

* There are multiple traditions of the use of the word “piracy”. As I discussed here, Internet piracy, pirate radio, and European political pirate parties, all draw on an old tradition of  “pirate” as an opposition to overreaching restraints on free exchange of ideas. But “buccaneering” is clearly meant to refer to the real guys with ships and guns.

Tech executives still lying

Marissa Meyer, CEO of Houyhnhnm? [Correction, that’s “Yahoo!”] has faced charges that her company (and other tech companies) undermined democracy and betrayed their customers’ trust by secret collusion with US espionage. She attempts to win back this trust by telling big lies. In a recent interview she claimed that

Releasing classified information is treason and you are incarcerated.

Nine words, and two (or maybe three) false statements.

First, the easy one: Treason is clearly defined in the US constitution.

Treason against the United States shall consist only in levying war against them, or in adhering to their enemies, giving them aid and comfort.

She is confusing the United States government with the 18th Century British monarchy, that classed that any release of information not authorised by the state is treason.

What her company may or may not have been constrained by is called a National Security Letter (NSL), that typically comes with a gag order. (Whether this counts as “classified information” I am not sure. I’d take her word for it if she weren’t lying about everything else.) The constitutional scope of these gag orders has been challenged in court, but I don’t know what the current status is.

But is it true that if you disclose the receipt of an NSL “you are incarcerated”? In fact, the Department of Justice — not the American Society for Feelgood Antiauthoritarianism — writes in its fact sheet on the Patriot Act Reauthorization that this act

Discourages unauthorized disclosures by providing a criminal penalty for knowing and willful violation with intent to obstruct an investigation or judicial proceeding.

Until this reauthorisation, apparently there was no specific penalty legislated for disclosing NSLs. And afterward, it’s still not clear. It would clearly — and properly — be a punishable offence if Marissa Meyer found out that her college roommate was having her Houyhnhnm? account searched because she retweeted a suspicious number of posts from Sheikh Omar’s Twitter feed, and tipped her off. But to alert the public for reasons of improving democratic accountability most likely is not illegal at all, and is the sort of calculated risk that many journalistic organisations take on a daily basis. With far less money to back them up.

I don’t doubt that some investigator fed her that line about treason and incarceration. That’s what interrogators do, they help people out of their scruples. But presumably she could afford a lawyer to give her independent advice. She could even have looked up the US Constitution and the PATRIOT act, if she knows how to use a search engine.

And I don’t expect Marissa Meyer or Sergey Brin to blow the cover off government surveillance and flee to Russia. But they clearly have decided — unlike, say, the New York Times — that they are a merely commercial organisation, with no public responsibility, and that a legal struggle would hurt their profits. That is why their customers need to make sure to align their incentives, by boycotting or simply avoiding companies that don’t show sufficient civil courage on their own.

And telling lies is not a way to rebuild trust.

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