Amazon is in the news this morning, for paying only £67 million in tax on £7 billion revenue over 20 years. That £67 million is less than Marks and Spencer paid in tax last year alone, besides a much lower revenue
If you look at Amazon’s effective UK tax rate last year, it works out at 0.05%. It does this by basically basing its main sales operations in countries with a low tax rate… it basically ‘sells’ products to it’s UK subsidiary for next to (or probably 0) profit which then ‘sells these on’ for no profit to actual UK customers, hence very low tax.
Amazon is basically scamming the global tax system.
All of the big four global tech companies are notorious for avoiding tax, but Amazon is by far the worst…In terms of tax paid as a proportion of sales and profits, Amazon is the worst offender of the ‘big four’ tech companies.
In fact, Google is the only company whose paid taxes you can actually see with the naked eye, when shown to scale against the sales of the three companies! (Link to Tableau doc here):
Amazon paid even less tax than Facebook last year £4.5m on annual UK sales of £8.7bn and pre-tax profits of £72 million.
Google has the best tax record – it paid £49.3m in UK taxes last year, on UK sales of £5.7bn, on pre-tax profits £ 202.4 million.
I’m not going to comment on Apple here, because I think its figures might be distorted by its paying historical taxes in the last tax year which it failed to pay in recent years, following a recent HMRC investigation.
Relevance to A-level sociology
This example goes to prove the power of Transnational Corporations compared to Nation States. Where money is concerned, large global companies can easily avoid national taxes. This form of economic globalisation seems to suggest the decline of the nation . state!
Combatting this would take global co-operation, but it would require the vast majority of companies to agree… all it takes is .a handful of ‘rouge tax havens’ and any co-operation falls apart! It’s one of the many challenges in a global age!
If the UK leaves the EU with ‘no deal’, it will fall back on World Trade Organisation Rules, but what does this mean?
The WTO and Free Trade
The WTO was founded in 1995 and sets the rule book by which global trade takes place.
One of the main things it has done over the past two decades is to reduce tariffs (basically taxes) levied by governments on imports and exports, and to promote a free-trade agenda.
In 1947, the average external tariff charged by GATT (the predecessor of the WTO) signatories was 22%, which was a massive disincentive to trade, by 1999 it was down to 5%, and today the weighted average tariff charged by the US and EU is 1.6%.
Over the same period, there has been a massive increase in world trade: In the 1950s international trade accounted for 8% of the world economy, today it accounts for 30% of a much bigger global economy.
The Limitations of the WTO
Recently, the WTO’s trade liberalisation has stalled, and most of the progress countries have made in reducing barriers to trade have been through regional and bilateral trade agreements. The European Union is a principle example of this: UK companies pay no tariffs on exports to Europe or imports from Europe, which makes trade easy.
If we were to fall back on WTO trade rules, there are some economic areas which still have very high tariffs – cars and car parts would face a 10% tariff every time they crossed a boarder (making BMWs a LOT more expensive! given international supply chains) and agricultural tariffs stand at 35%.
The latest Treasury forecast predicts that the UK economy would be 9.3% smaller in 15 years if we exited the EU under WTO rules.
Isn’t this just all part of ‘project fear’?
Of course Brexiteers argue that we could forge new bilateral and multilateral trade agreements once we leave the EU, but most estimates suggest that a no deal WTO fall-back Brexit would be detrimental to the UK economy.
However, what all of the above suggests is maybe that ‘globalisation’ isn’t so good for world trade anymore…. maybe it’s too difficult to sort out genuinely mutually beneficial trade agreements between all 160 odd member states of the WTO.
Instead it seems that regional agreements are much more important for economic growth – it makes sense that it’s easier to get a deal between a dozen local countries rather than ten times that number after all.
To my mind it seems unlikely that we’re going to be able to negotiate dozens of little deals with specific countries that outweigh the benefits of being part of a massive trading block like the EU!
Pre-script… I wrote this before the Russian elections, time-released it and then put it back so it ended up being published after the elections…which was maybe an effort on my part! Anyway, it is what it is, sort of a testament to postmodernity, sort of… Putin won of course!
Russian elections are coming up in March, and given that Russia is one of the BRIC nations, and thus relevant to the A-level sociology module on global development, I thought it worth doing a quick post…..
Technically Russia is a democracy, and has been since 1993, because presidential elections are held every 6 years, and there’s an elected parliament and an ‘independent’ judiciary.
However, in reality it’s more of a ‘managed democracy’: those in power rely heavily on the Oligarchs who control Russian business and the media to pre-determine election results. This happened initially with the first elected President, Boris Yeltsin, and even more so with his chosen successor, Vladimir Putin, who has been in power since the year 2000. If he wins this year’s presidential election, he’ll remain there until 2024.
Putin has been very successful in managing democracy – through media manipulation he remains very popular, with policies which are strong on cutting down on ‘gangsta capitalism’ and an aggressive foreign policy – however, he also uses ‘blatant corruption’ tactics to stay in power, as when he bused supporters to different polling stations to stuff ballot boxes in the 2011-12 elections, which led to protests, to which he responded by banning protests, unless you get a permit, which are often refused.
Is there any chance Putin will lose the next election in March?
His main opposition is from a guy called Alexi Navanly – a nationalist with an anti-immigration stance, his main problem being that less than half of Russians seem to know who he is due to Putin’s control of the mainstream media.
However, there is a possibility that Putin’s inability to allow any genuine alternatives in opposition could be his downfall as more and more young people turn to the online sources for their information about politics in Russia.
There were 29,168 recorded murders in Mexico in 2017, or 20 murders for every 100, 000 of the population, more than at the height of the country’s drug war in 2011. (Source: The Guardian).
This dismal new record is being blamed on intense drug-related violence and turf wars – owing in particular to the rise and spread of the Jalisco New Generation Cartel.
Analysts also believe the spike could be related to a number of autonomous groups emerging in the vacuum created by the capture of several major cartel bosses.
This is of obvious relevance to the Crime and Deviance aspect of A-level sociology – it demonstrates the continued power of organised (or dis-organised?) crime in countries through which drugs travel and the relative powerlessness of nation states to get this problem under control!
To put Mexico’s homicide rate in context, it’s more than 20* higher than the UKs, and yet smaller than Brazil’s and Colombia’s (27/ 100, 000) and El Salvador’s, which stands at 60.8 per hundred thousand.
Just a quick round up of some of the evidence/ news items I’ve stumbled across which suggest that globalisation is happening. It’s up to you to decide how valid, reliable and representative this evidence is.
NB – this is also my first experiment with a long-term time-release system for posting ‘shorter’ news-items – I’m going to schedule this just ahead of the time I teach globalisation in the college year)
According to The Week (July 2017) 7/10 British children have their first experience of foreign travel before the age of five, and by the age of eight, 1/10 of them own their own smart phone (which will connect them to global media flows).
By contrast, just 12% of over-50s had been abroad by the time they were five: on average, they were 14 when they first went abroad.
The Global Peace Index uses 23 qualitative and quantitative indicators to measure the state of peace using three thematic domains:
the level of Societal Safety and Security;
the extent of Ongoing Domestic and International Conflict;
the degree of Militarisation.
The data is collated by the Institute for Economics and Peace – a think tank which develops metrics to analyse peace and to quantify its economic value. It does this by developing global and national indices of ‘peacefulness’, analysing country level risk, and calculating the economic cost of violence, and the positive benefits of peace.
Some of they key findings from the latest 2020 report include:
The average level of global peacefulness fell 0.34 per cent on the 2020 GPI. This is the ninth time in the last 12 years that global peacefulness has fallen.
Trends are polarising – around 80 countries got less peaceful, but 80 countries got more peaceful.
The Middle East and North Africa (MENA) region remained the world’s least peaceful region.
Europe remains the most peaceful region in the world, although it recorded a slight deterioration in peacefulness. registering any change over the past year.
The Institute for Economics and Peace says its aim is to ‘create a paradigm shift in the way the world thinks about peace. We use data driven research to show that peace is a positive, tangible and achievable measure of human well-being and development.’
You can explore the Global Peace Index and download the full 2017 report for free on the Institute for Economics and Peace’s dedicated website – Vision of Humanity
Selected Key Findings of the 2017 Global Peace Index
Trends in peacefulness in 2020
There has been a divergence in peacefulness in the last decade – with the least peaceful countries getting less peaceful and the most peaceful countries getting more peaceful.
If you look at the breakdown by indicator, it is mainly refugees and internal conflicts driving the drift towards less peacefulness.
The economic costs of violence
The economic impact of violence on the global economy in 2020 was around $14 trillion in purchasing power parity (PPP),
This is equivalent to 12 per cent of the world’s economic activity (gross world product), or $2000 for every person.
NB – What’s above is just an overview – I strongly recommend you explore the data further at Vision of Humanity!
How Useful is the Global Peace Index in helping us to understand development?
Strengths
On the plus side, the data seems to be non-partisan, in the sense that there doesn’t seem to be undue influence in the data selection process from developed countries – there is a heavy peace-score penalty which some of the most developed countries pay for high levels of military expenditure – most notably the United States.
Also, if we can trust the data and the number-crunching, then there is a clear correlation between sustained peacefulness in a country and that country’s level of development, and so monitoring levels of peacefulness and violence seems to be one of the most important goals in global development.
The Global Peace Index covers a lot of indicators – and the reports break them down to look at individual indicators, so you get a certain level of insight into the levels of peacefulness and violence.
I do like the focus on ‘positive peace’ and the fact that the report recognizes high levels of military expenditure as retarding investment in more positive aspects of development.
Limitations
On the downside, I’m not convinced that all of the data is 100% valid – there has to be a lot of differences in the way data is recorded from country to country, especially in war-zones, so lots of missing conflict-deaths no doubt. This means making comparisons is difficult.
Also, I’m not sure they’ve included a broad enough range of indicators – the fact that Qatar creeps in at number 30 makes me suspicious, also – is violence against women included?
Also, I’m not clear about how the data is weighted – there’s lots of talk in the report about ‘multiplying factors’, and I don’t know enough about the maths behind the indices to evaluate how valid these calculations are.
Some useful links to good teaching resources for Globalisation and Global Development.
Good resources providing an overview of global trends and global inequalities:
Firstly, this 2016 video imagines the world as 100 people, and so illustrates what percentage of people live on less than $2 a day and so on (once you get through the ‘basic’ stuff on ethnicity/ religion etc…
A few stand-out facts are:
1% of the population own 50% of the world’s wealth
15% don’t have access to clean water
less than 50% have access to the internet
Secondly, Worldometers provides real time world statistics on population, the environment, food, health and media and society.
A few stand-out facts are…..
The total number of malnourished people in the world is decreasing!
The total number of people with no access to clean drinking water is also decreasing!
HOWEVER, we’re losing approximately 20 HA a minute to desertification and 10 HA a minute to deforestation, which could undermine both of the above in the future.
Good resources for researching individual countries
The United Nation’s Country Profiles are probably the most accessible place to start – each country’s page gives you basic development indicators which you can then click on to expand.
The World Bank’s Open Data is also useful – follow the link and you can either search or browse by country.
The CIA World Fact Book is a useful source for more qualitative information on a country by country by country basis, organised into various categories such as geography, population, economics, politics and so on…
Good Resources for tracking ‘Indicators of Development’
The United Nations Human Development Report – Data – click on the links to the left to access tables which rank countries according to the basic Human Development Index, the Gender Equality Index and more.
Seabrook (1) argues there are three principle responses to globalization:
Fatalism
A fatalistic response, which states that the world is simply powerless to resist globalization. Seabrook argues that most leaders of the developed world take the position that globalization is inevitable and irreversible. He suggests these leaders are experiencing an ‘impotence of convenience’ – their confessed powerlessness disguises the fact that the forces of globalization economically advantage their countries and their economic elites.
Reasserting Local Identity
Some cultures may attempt to resist globalization by reasserting local identity. This may involve deliberately highlighting and celebrating local folklore and languages. For example the French government have banned words such as ‘email’, ‘takeaway’ and now ‘hashtag’ and imposed a ‘culture tax’ on cinemas showing non-French films. Another aspect of this trend is ‘commodification’ in which local populations package and sell aspects of their local traditional cultures – for example members of the Masai tribe in Kenya perform for tourists, after carefully removing their trainers and watches to make the whole thing more authentic.
Violent Resistance
A final response is the emergence of violent resistance, mostly in the developing world, as some peoples interpret globalization as an assault on their identity. Seabrook argues that this is how we should understand terrorism – not as a response to poverty, but as a response to the ‘supposed miracle working, wealth-creating propensities of globalism’ as some religious and ethnic groups resist globalization because their interpret the West as having declared an ideological war on local cultures.
The Flip Flop Trail is a relatively recent (2014) anthropological study by Professor Caroline Knowles, in which she explores the day to day lives of the people involved with the manufacture, distribution, consumption and disposal of the humble ‘flip-flop’.
Professor Knowles has been following the flip-flop trail since at least 2006 (so that’s over ten years now!), and chose to study it because it’s the world’s most popular shoe: ‘everyone owns a pair of flip-flops’. I’d like to be smug and say I don’t at this point, but actually I do.
This has to be one of the best multi-layered resources available for introducing the basic idea of a ‘global commodity chain’ (1) a key aspect of economic globalisation, while simultaneously showing how deeply-complex such commodity chains are once we start trying to incorporated the study of the people actually involved with the process.
The web site (The Flip Flop Trail – I suggest you check it out!) offers a kind of ‘overview of insights’ into the many stages of the trail… from the manufacture of oil (‘globalisation is oil!’), to ‘plastic city’ in China where the flip flops are made, and then on to Ethiopia, the country with the largest demand for cheap footwear, where consumption and disposal are explored.
The web site doesn’t even touch on the UK, but as Professor Knowles, says, this is just one of many trails, and it’s pretty much inevitable that many of our flip flops have travelled parts of this same trail.
This is a useful resource to demonstrate the complexity of economic globalization, and to demonstrate the transformationalist view of globalization, as it shows the many and dynamic ways in which flip-flops are interwoven with local cultures.
However, students may like to consider whether this kind of analysis is really that useful…. it might be better to be more critical? To highlight the extent of inequality along certain parts of the trail, or maybe focus on developing a green-critique of the whole process, for example?
NB – I haven’t read the book, it’s only just stopped being prohibitively expensive, so it might be more critical than I’m expecting.
(1) I’m fairly sure, given her transformationalist leanings that Knowles uses the term ‘trail’ rather than ‘chain’ to denote her view that globalisation is precarious.
Where American culture and values erodes traditional local cultures gradually replacing them. A term associated with global pessimism, it isn’t usually regarded as something positive!
Communism
An economic system in which the means of production are owned in common and wealth distributed according to need.
Cosmopolitanism
where people or societies are tolerant of other people’s or societies’ ways of life and values; this is one of the positive consequences of globalisation as people increasingly come into contact with other ways of life and make an effort to enter into dialogue with diverse cultures and find ways to ‘live together’. Related concepts include reflexivity and detraditionalisation. The opposite of cosmopolitanism is fundamentalism.
Cultural Globalisation
The movement of ideas, attitudes, meanings, values and cultural products across national borders.
Cultural Hybridity
The emergence of a new cultural form out of two or more existing ones, leaving both forms changed without erasing the old.
Deregulation
Removing restrictions on businesses, for example reducing health and safety regulations.
De-traditionalisation
Where people have increasing choice about whether to stick to traditional ways of life; traditions become less stable as people increasingly question their traditional beliefs about religion, marriage, and gender roles and so on.
Economic Globalisation
The global expansion of international capitalism, free markets and the increase in international trade.
Fatalism
(Fatalistic Response to Globalisation) – the view that the world is powerless to resist globalisation.
Global Commodity Chains
Where networks of production, distribution and consumption of goods and services becomes increasingly stretched across the globe. The making of the physical products tends to be done in poorer countries, whereas the branding and marketing, tend to be done in the richer countries.
Global Risk Consciousness
where people in different countries are increasingly aware of and affected by international threats such as terrorism, nuclear war and global warming. There are two elements to risk consciousness (it pulls in two directions) – one is that we are more fearful and wish to ‘retreat’ from such problems and the other is that we are increasingly brought together in our attempts to overcome such threats.
Globalisation
The increasing interconnectedness and inter-dependency of the world’s nations and their people into a single global, economic, political and global system.
Glocalisation
Where people in developing countries select aspects of western culture and adapt them to their particular needs – associated with Transformationalism and critical of the pessimist theory that globalisation results in Americanisation.
Golden Straightjacket
Thomas Friedman’s term for the neoliberal policies countries must adopt if they are to experience economic growth and prosperity.
Ha-Joon Chang
Global pessimist who believes neoliberal policies primarily benefits wealthy countries and harm developing countries; referred to the WTO, World Bank and IMF as the ‘unholy trinity’.
Homogenisation
Things becoming increasingly the same; in global terms, the erosion of local cultures and the emergence of one global mono-culture.
Hybridised Global Identities
Where identities are increasingly a result of picking and mixing from different cultural traditions around the globe; implies more individual freedom to choose identity and greater diversity; associated with transformationalist theories of globalisation.
Hyper-Globalism
The belief that globalisation is happening and that local cultures are being eroded primarily because of the expansion of international capitalism and the emergence of a homogenous global culture; believe that globalisation is a positive process characterised by economic growth, increasing prosperity and the spread of democracy.
Imperialism
Where one dominant country takes over and controls another country or countries.
Jeremy Seabrook
A pessimist globalist who believes that globalisation is a ‘declaration of war’ upon local cultures as the expansion of western culture around the world destroys local cultures and reduces cultural diversity.
Mcdonalidisation
A form of rationalisation through which the principles of efficiency and predictability come to dominate more and more spheres of social life.
McWorld
Refers specifically to the spread of McDonalds’ restaurants throughout the world; and more generally to the process of Mcdonaldisation which underpins this – i.e. the increasing standardisation of corporate products and the emergence of a global, Americanised monoculture.
Neoliberalism
A set of right wing economic policies which reduce the power of governments and give more freedom to private enterprise – the three main neoliberal policies are deregulation, privatisation and lowering taxation.
Political Globalisation
The process where the sovereignty of nation states is reduced due to the increasing power of International Institutions, such as the United Nations.
Post Industrial Economy
An economy in which the service sector generates more wealth than the manufacturing of physical products. In such an economy more people will be employed in sectors such as leisure, education, business/ finance, and creative industries rather than in manufacturing.
Postmodernity
A globalised society with the following characteristics: a technologically advanced, mainly post-industrial service sector economy, high levels of consumption, lots of individual freedom to shape identities through consumption, and correspondingly high levels of cultural diversity; media-saturation and hyperreality; high levels of insecurity and uncertainty.
Privatisation
The transfer of publicly (state) owned enterprises to private sector companies.
Social Movements
Groups of people and/ or organisations who aim to help oppressed groups overcome oppression or change society in some way, believed to be beneficial. Global social movements involve co-operation of people across national borders, and their aims may sometimes clash with those of some national governments.
Thomas Freidman
An optimist globalist who believes that the world wide adoption of neoliberal policies by governments have resulted in economic globalisation, more trade between nations and increasing prosperity for all.
Time-Space Compression
Where the world ‘feels smaller’ as we are able to communicate with people in faraway places more instantaneously.
Transformationalism
A theory which holds that globalisation is a complex process involving a number of different two-way exchanges between global institutions and local cultures; it can be reversed and controlled.
United Nations
An international organization formed in 1945 to increase political and economic cooperation among member countries. The organization works on economic and social development programs, improving human rights and reducing global conflicts (source: Investovepida).
Weightless Economy
Refers to information based/ electronic products such as computer software, films and music, and information and financial services rather than actual tangible, physical goods such as food, clothing or cars. Such products can be produced, bought and sold much more rapidly than traditional, physical products, and thus trade in them is much more rapid, hence the term ‘weightless economy’.
Test yourself
Signposting and Related Posts
Globalisation is one of the most important key concepts within the A-level sociology specification (AQA), and is specified explicitly as a topic which students must be able to understand, explain and evaluate.
It is especially fundamental to the second year Global Development module but students also need to be able to apply the concept to all other areas of sociology – such as education, the family and crime.
NB most students do not study the Global Development module (Beliefs in Society is a much more popular choice), but it is only within Global Development that you are going to look at the concept in real depth, which is why I advise sociology teachers to offer this option over Beliefs.
For the Global Development option related posts include:
