Fund Your Utopia Without Me.™

11 December 2012

Economic Micawberism The Left Expects Businesses To Place Progressive Ideals Above Economic Survival.

“Why is it unethical to comply with the law? That is precisely what anyone who claims a company is immoral if it legally minimizes its tax is saying.”

By Charles CW Cooke

‘Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness,” declared Wilkins Micawber in Dickens’s David Copperfield. “Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” This simple adage was one that the character had come to understand well, for, having hoped fruitlessly that “something will turn up,” he was sent to prison for defaulting on his debts. Experientia docet, and all that.

Micawber’s words are as true now as they were in 1850. But they are not, perhaps, quite as popular. In our age we are more likely to find those who would, like Thomas Paine, assert that we can change the world simply by willing it to be different. Question is, which man’s view is correct? This, it seems, is rather an important inquiry, especially as we continue to hurtle into uncharted indebtedness. 

For a group that enjoys assuring the gnostics and rubes on the political right that it is a “reality-based community,” America’s progressives sure as hell tend to side with Paine. They are exceedingly vexed by American businesses’ making it known that there are consequences to the passage of new laws. To take at face value the assortment of counter-complaints would be to conclude both that complying with the Obamacare legislation is voluntary and that balance sheets are subject for their integrity to the spirit of good intentions and not to the logic of mathematics.

This, for instance, is how ThinkProgress reacted to one among the slew of announcements that rained down after Barack Obama’s reelection: “Darden Restaurants, Inc. — owner of Red Lobster and Olive Garden — is battling back negative press attention in light of its October announcement that the company will use Obamacare as a reason to shift to part-time employees.”

Note the language: Darden “will use Obamacare as a reason to shift to part-time employees.” Hold up one moment. Darden will use Obamacare? How so? Obamacare is not a voluntary system or an optional extra, but a law with which the businesses of these United States must comply, on pain of fines or worse. Is it not a touch fairer to say that Obamacare will use Darden?

In using Darden, Obamacare will impose upon that company an opportunity cost that will almost certainly be paid by its employees — in the currency of their prospects for full-time employment. It is spectacularly irrelevant if businesses such as Darden are receiving “negative press attention” for reacting to the new economic conditions. Reality cares not what voters think of it; you can’t shame a company into rejecting the laws of economics, and if you shame and coerce it into acting against its own survival, then it will die.

However, this inconvenient truth doesn’t tally well with the modern way of things, by which one’s intentions are all that are deemed to matter. Don’t ask Joe Biden how much he gives to charity; instead, ask him what he believes the world should look like. Don’t think about how many times you’ve given your weekend to the local soup kitchen; in lieu, look at how many people have clicked “Like” on its Facebook page. How many retweets does a sentiment receive? Three million? It must be true, then.

Why is Darden even concerned, ThinkProgress’s Annie-Rose Strasser asks? Instead it, and other restaurant chains such as Papa John’s, Denny’s, and Applebee’s, should be thrilled. “Obamacare will, over time, decrease health care costs,” she explains. “It will also likely lead to more satisfied workers, competitive hiring, and higher rate of employee retention.” You can’t make an omelet without breaking eggs, Strasser suggests.

No, America’s businesses might retort. But you can stop making omelets.

Meanwhile across the pond, prostrating himself in front of a baying public last week, Starbucks’s UK boss, Kris Engskov, announced some “changes that will result in Starbucks paying higher corporation tax in the UK — above what is currently required by law. Specifically, in 2013 and 2014 Starbucks will not claim tax deductions for royalties or payments related to our intercompany charges. In addition, we are making a commitment that we will propose to pay a significant amount of corporation tax during 2013 and 2014 regardless of whether our company is profitable during these years.” (Emphasis added.)

Thus, Starbucks promises that it will voluntarily increase the amount of tax that it pays to the British treasury, even if the company is running at a loss. Why? Because Starbucks has “learned it is vital to listen closely to our customers,” and Starbucks’s customers are among the huge swaths of the British public that, having bought lazily into the notion that corporations do not pay “enough” in income tax, never stop to think what that actually means. As David Giampaolo and Geoffrey Wood asked in the Guardian last week, “Why is it unethical to comply with the law? That is precisely what anyone who claims a company is immoral if it legally minimizes its tax is saying.”

It’s certainly not unethical to comply with British tax law. But that doesn’t really matter, providing that the usual suspects have a chance to put together a good protest and get it all out of their system. What matters is that Starbucks has fallen for the ruse. Engskov might well be “surprised” at the hullabaloo, but, by indulging such follies, he has ensured that there will be an awful lot more surprises in the company’s future — something of which its employees, shareholders, and customers might want to take note.

The City of London did. This “is the first time I have seen public opinion make a company change its mind,” said Chris Morgan of the financial-services giant KPMG. Perhaps so. But not, one suspects, the last time. After all, who needs Parliament when you can just allow the mob to pass its “moral” judgment and then wait for everyone to cave in under its threats? Who needs economics, either? How dare you oppose President Obama’s health-care plan? Just shut up — and then cough up, or we’ll picket your joint and give you bad reviews.

“The world of reality,” wrote Rousseau, “has its limits; the world of imagination is boundless.” Sadly for the architects of our current public policy, the two are not interchangeable. Try as we might to bully businesses and governments into painlessly providing what they cannot afford, it seems likely that Mr. Micawber will have the last laugh after all. Progressives had better hope that something turns up.

Charles C. W. Cooke is an editorial associate at National Review.

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