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Amazon’s 0.05% U.K. Tax Rate

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 tax.png

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!

Sources

The Guardian – Facebook’s UK tax bill rises to £15.8m – but it is still just 1% of sales

The Guardian – Amazon halved corporation tax bill despite UK profits tripling

BBC – Google’s tax bill rises to £50m

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Would would falling back on WTO rules mean for Britain?

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!

Sources:

The Week, 26 January.

 

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The Mafia’s increasing involvement in the food business…

Mafia syndicates in Italy have an estimated annual turnover of £150 billion, making it much larger than Italy’s largest holding company (which includes Ferrari).

Increasingly, it is not drugs or people trafficking which bring in the money for the Mafia, but there involvement in agriculture, or basic food production.

Today, the Mafia are invested in Italy’s food industry from ‘Field to Fork’…. their agricultural interests extend to extortion, illegal breeding, backstreet butchering and the burial of toxic waste on farmland.

In 2018 the estimated value of the ‘agromafia business’ stands at £22bn, equivalent to 15% of Mafia revenue. This may seem mundane, but think about it: everyone has to eat, and most people like to eat everyday, so it should be no surprise that this is a growth area… it’s simply where the demand is!

There are all sorts of ways the Mafia can make money out of the food business – the most obvious is counterfeiting, and it is estimated that up to 50% of all olive oil sold in Italy is cut with poorer quality oil. To do this, the Mafia makes use of its global criminal ties… cutting it with lower quality oil from Africa.

The Mafia also rebrand low quality wine as higher quality: they simply change the label.

One of the more unfortunate costs of this whole business is the thousands of workers who are currently being exploited working for Mafia controlled agribusiness. The figures are quite significant:

It’s also estimated that up to 5000 restaurants are controlled by the Mafia, which is useful for money laundering.

Up until quite recently the Mafia also used to lease huge swathes of public land and make a fortune by claiming back EU subsidies on this land, making a 2000% profit in the process: they basically used their white collar connections in local governments to make sure no one else got involved with the bidding process.

However, this final practice has been clamped down on.

Relevance to A-level sociology 

This is a useful update to the globalisation and crime, and especially to Glenny’s work on the McMafia: it shows how the Mafia are ‘evolving’ in their global criminal activities.

Sources:

Agromafia: how the mafia got to our food

Agromafia exploits hundreds of thousands of workers.

 

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The cost of organised crime is now greater than the cost of terrorism, according to the National Crime Agency, according to this BCC News report.

Organised crime involves international gangs who traffic people and drugs and engage in cyber crime. The annual cost to the UK economy is estimated to be around £34 billion a year.

While this might surprise non sociologists, this should be of no surprise to sociology students: while terror attacks are very dramatic, this also makes them very news-worthy, and they do tend to be reported whenever they happen. However, these attacks are relatively rare.

In comparison, the kinds of crimes which organised crime gangs are involved in are more hidden, more low-key, and, frankly, more day to day. This is because these gangs may be organised on an international (or possibly regional?) level, but they have networked into various local neighborhoods in Britain’s towns and cities, linking the small scale local drug deal to the large international drug-cartel.

Having said that, the National Crime Agency deals with A LOT of different types of crime: as outlined below…

Thus IMO it’s not really fair to compare the cost of ALL of these to the costs of just terrorism.

HOWEVER, if we forget (the rather silly) comparison mentioned in the news what the NCA’s 2018 strategic assessment document (I can’t link to it because, ironically, my PC thinks the NCA’s web site is insecure!?!) shows us is the truly global nature of seriously organised crime.

For any student wishing to understand more about the scope of global crime, and why it’s so difficult to police, you should check out the work of Misha Glenny.

 

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America’s New Space Force

Despite being a third world country, as  judged many and varied social indicators of development, America is set to spend $8 billion on a new ‘space force‘ over the next 5 years.

China and Russia are currently competitors for military advantage in space, and it seems this has got America worried. In 2007 China successfully shot down one of its old weather satellites, orbiting 500 miles above the planet. In 2015, Russia launched a successful test of an anti-satellite missile.

Approximately 1800 active satellites currently orbit earth, half of them sent up by America, are vital to many of our day to day activities. We rely on satellites for the following:

  • Anything using GPS positioning for navigation – which includes various civil and military organisations
  • Financial markets depend on them for super-sensitive time-synchronisation
  • Weather forecasting
  • Traffic lights
  • Various mobile phone applications.
  • Some television and video conferencing.

It would seem that satellites have somehow become the ‘foundation’ of our daily postmodern, globally networked lives.

What might space war look like…

Besides firing missiles into space, there are other options: lasers could be used to blind or dazzle satellites in order to disrupt their functionality, or cyber attacks could be ‘launched’ to hack into them.

As with most things warfare, it seems that the USA is already years ahead of its competitors. The USA first launched a successful strike against an obsolete satellite in the mid 1980s, and they are already ‘hardening’ existing satellites against attack – by positioning redundant satellites to act as back ups, for example, and they are looking into giving them their own defensive capabilities.

What are the possible consequences of Space War?

If there was an all-out space war, it could create a debris-cloud which would render space unusable for future generations, however, if global relations deteriorated to this point, we’d probably be more worried about the radiation sickness from the previously deployed nukes!

Relevance of this to A-level sociology…

Quite a useful example of the continued power of the Nation State in a global age…. seriously, how many nations have the power to shoot down satellites…. really just a handful, and no other body besides them!

Sources/ Find out More

The Week, 25 August 2018.

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Contemporary Sociology: The poisoning of Sergei and Yulia Skripal by the Russian State

The recent poisoning of Sergei and Yulia Skripal, allegedly by the Russian State, is relevant to many areas of the A-level sociology specification.

Details of the poisoning 

On 4th March 2018 Sergei Skripal, 66, and his daughter Yulia, 33 were poisoned by a nerve agent called Novichok. The pair were found collapsed on a bench in Salisbury in the late afternoon, following what seems to have been a pretty ordinary ‘afternoon of leisure’ involving a trip to a pub and lunch in Zizzi’s. Four weeks later, they remain in a critical condition. 

Sergie Skripal.png
Sergie and Yulia Skripal

Much of the news has focused on just how deadly the nerve agent ‘Novichok’ is – basically a tiny, practically invisible amount was sufficient to render two people seriously ill, and even the police officer who first attended Sergei and Yulia Skripal was taken seriously ill just from secondary contact with what must have been trace elements of the nerve agent.

Pretty much everywhere the pair had visited that afternoon was shut down, and any vehicles that they had been in contact with were quarantined while they were cleared of any trace of the nerve agent and total of 250 counter-terrorism officers are at work investigating the case.

Theresa May has accused the Russian State as being complicit in this attempted murder, which seems plausible as Colonel Sergie Skripal is a retired Russian military intelligence officer who was convicted of passing the identities of Russian intelligence agents working undercover in Europe to the UK’s Secret Intelligence Service, MI6. He was jailed for 13 years by Russia in 2006. In July 2010, he was one of four prisoners released by Moscow in exchange for 10 Russian spies arrested by the FBI. He was later flown to the UK. It seems that the poisoning is the Russian State passing its ‘final sentence’ on this poor guy.

HOWEVER, Russia strongly denies these allegations, so this might just be a hypothetical state-crime!

The international reaction to the poisoning has also been dramatic: to date 26 countries have expelled Russian diplomats, and Russia, which of course denies any involvement in the poisoning, has done the same as a counter-response.

Links to the A-level sociology specification

sociological perspectives russia.png

Probably the most obvious link to the A-level sociology specification is that this is a primary example of a state crime – it seems extremely likely that the poisoning was carried out by an agent of the Russian state – The UK condemned Russia at the United Nations Human Rights Council as being in breach of international law and the UK’s national sovereignty.

Secondly, this case study reminds of us that nation states are still among the most powerful actors in the world – nation states are the only institutions which can ‘legitimately’ manufacture chemical weapons such as Novichock.

Thirdly, you could use this as an example of how ‘consensus’ and ‘conflict’ exist side by side. he existence of global values allows various nations to show ‘solidarity’ against Russia and express ‘value consensus’ but it also reminds us that there are conflicting interests in the world.

Fourthly, media coverage aside, it’s hardly a post-modern event is it! Having said that, we don’t know for certain who did the poisoning, so all of this could be a good example of ‘hypperreality’.

There’s lots of other links you could make across various modules – for example, the way the media has dealt with the event (it’s very news worthy!) and the ‘panic’ surrounding it, it fits with our ‘risk conscious society’ very nicely!

Sources 

Spy poisoning: Highest amount of nerve agent was on door (BBC News)

UK slam Russia over spy poisoning (Washington Post)

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International Development – Glossary of Key Concepts

Enrolment Ratio 

The percentage  of children enrolled in school in a country

Globalisation  

The increasing connectedness between societies across the globe.

Gross National Product 

The total economic value of goods and services produced BY a country, both at home and abroad in the course of a year and available for consumption in the market place.

Patriarchy 

A system of male domination and control.

Colonialism 

Where a more powerful country expands into other, less powerful territories and exerts political and economic control over those territories.

Neoliberalism  

An economic theory which believes governments should remove restrictions to free trade (deregulation), privatize public services, and keep taxes low.

Modern World System (according to Wallerstein)

The theory that global capitalism is structured into three zones of production – core, periphery and semi-periphery

Official Development  Aid 

Loans and grants from public or official sources such as national governments or international agencies of development.

Fair Trade 

A certification system which guarantees that products are produced in a way in which workers get a fair price and aren’t exploited.

Non-Governmental Organizations  

Non-political and non-profit organisations. NGOs typically have charity status and raise funds through a combination of voluntary donations from the public.

Industrialisation

Where a country moves from an economy dominated by agricultural output and employment to one dominated by manufacturing.

Urbanisation

Where a population moves from rural to urban areas – the migration of people from the country to towns and cities.

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Global Gender Inequalities – An Overview

Gender Inequalities in Employment –

  • For every dollar earnt by men, women earn 70-90 cents.
  • Women are less likely to work than men – Globally in 2015 about three quarters of men and half of women participate in the labour force. Women’s labour force participation rates are the lowest in Northern Africa, Western Asia and Southern Asia (at 30 per cent or lower).
  • When women are employed, they are typically paid less and have less financial and social security than men. Women are more likely than men to be in vulnerable jobs — characterized by inadequate earnings, low productivity and substandard working conditions — especially in Western Asia and Northern Africa. In Western Asia, Southern Asia and Northern Africa, women hold less than 10 per cent of top-level positions.
  • When all work – paid and unpaid – is considered, women work longer hours than men. Women in developing countries spend 7 hours and 9 minutes per day on paid and unpaid work, while men spend 6 hours and 16 minutes per day. In developed countries, women spend 6 hours 45 minutes per day on paid and unpaid work while men spend 6 hours and 12 minutes per day.

Gender Inequalities in Education –

The past two decades have witnessed remarkable progress in participation in education. Enrolment of children in primary education is at present nearly universal. The gender gap has narrowed, and in some regions girls tend to perform better in school than boys and progress in a more timely manner.

However, the following gender disparities in education remain:

  • 31 million of an estimated 58 million children of primary school age are girls (more than 50% girls)
  • 87 per cent of young women compared to 92 per cent of young men have basic reading and writing skills. However, at older age, the gender gap in literacy shows marked disparities against women, two thirds of the world’s illiterate adults are women.
  • The proportion of women graduating in the fields of science (1 in 14, compared to 1 in 9 men graduates) and engineering (1 in 20, compared to 1 in 5 men graduates) remain low in poor and rich countries alike. Women are more likely to graduate in the fields related to education (1 in 6, compared to 1 in 10 men graduates), health and welfare (1 in 7, compared to 1 in 15 men graduates), and humanities and the arts (1 in 9, compared to 1 in 13 men graduates).
  • There is unequal access to universities especially in sub-Saharan Africa and Southern Asia. In these regions, only 67 and 76 girls per 100 boys, respectively, are enrolled in tertiary education. Completion rates also tend to be lower among women than men. Poverty is the main cause of unequal access to education, particularly for girls of secondary-school age.

Gender Inequalities in Health

Women in developing countries suffer from….

Poor Maternal Health (support during pregnancy) – As we saw in the topic on health and education, maternity services are often very underfunded, leading to hundreds of thousands of unnecessary female deaths as a result of pregnancy and child birth every year.

Lack of reproductive rights – Women also lack reproductive rights. They often do not have the power to decide whether to have children, when to have them and how many they should have. They are often prevented from making rational decisions about contraception and abortion. Men often make all of these decisions and women are strongly encouraged to see their status as being bound up with being a mother.

Gender Inequalities in the Experience of Overt Violence – Around the world, women are

  • Victims of Violence and Rape – Globally 1/3 women have experience domestic violence, only 53 countries have laws against marital rape.

 

  • Missing: More than 100 million women are missing from the world’s population – a result of discrimination against women and girls, including female infanticide.
  • At risk from FGM – An estimated 3 million girls are estimated to be at risk of female genital mutilation/cutting each year.
  • Girls are more likely to be forced into marriage: More than 60 million girls worldwide are forced into marriage before the age of 18. Almost half of women aged 20 to 24 in Southern Asia and two fifths in sub-Saharan Africa were married before age 18. The reason this matters is because in sub‐Saharan Africa, only 46 per cent of married women earned any cash labour income in the past 12 months, compared to 75 per cent of married men

Gender Inequalities in Politics

Between 1995 and 2014, the share of women in parliament, on a global level, increased from 11 per cent to 22 per cent — a gain of 73 per cent, but far short of gender parity.

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Glencore – The World’s Worst Transnational Corporation?

Glencore is one of the world’s largest commodities companies – it operates in 150 countries extracting natural resources such as iron and copper, but also has interests in  coal and oil, as well as numerous agricultural products.

Swiss commodities trader Glencore's logo is seen in front of its headquarters in Baar

Glencore – key facts and stats

  • It is registered in Switzerland
  • Has £128 billion in assets (2015)
  • Had a revenue in 2016 of $150 billion
  • Employs 150 000 people globally
  • The CEO is Ivan Glassenberg, who has a total net worth of around $5 billion.
Glencore revenue
Glencore’s total revenue over the last decade  = around $1.6 trillion

Criticisms of Glencore

Below are some arguments and evidence that Glencore is an example of a Transnational Company which is not really interested in promoting development in poor countries, but really just interested in extracting as much as it can for as cheaply as possible. 

Glencore commodities
Glencore – extracting commodities from 6 continents

Glencore has been widely criticized because it has made staggering profits by extracting huge volumes of natural resources out of poor countries. To put the size of Glencore in perspective, the annual revenue of the company is 10 times greater than the GDP of Zambia.

The 2013 video below documents how the company struck a deal with Zambia to mine its copper in which it extracts around $1 billion of copper per year but pays only 8% tax to the government, and gets free electricity for its mines into the bargain (paid for by the government).

This report from War on Want estimates that a combination of poor trade deals and tax avoidance costs the Zambian government $3 billion/ year, or 10% of its GPP. The report isn’t limited to just Glencore, it focuses on other mining companies such as Vedanta, none of these companies comes off as effectively promoting development in poor countries.

Glencore has also come under heavy criticisms for poor health and safety conditions in many of its mines, its record on environmental pollution and benefitting from child labour in the DRC.

Further Sources

Students might like to use these sources to assess the role of the TNC Glencore in promoting economic and social development in poor countries.

Glencore Wikipedia entry (useful for basic history/ stats)

Glencore’s ‘Supporting Development’ page – have a look at Zambia and the DRC.

Glencore paid £30 000 to compensate for a pollution related death – Guardian article

Criticisms of Glencore in Zambia by Facing Finance 

Glencore denies benefitting from child labour in DRC – Guardian article

 

 

 

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Evidence of Increasing Globalisation

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.