Should we steal the Romans' ideas?

Seems like an OK idea, but who subsidises the rent?

Posted about 1 year ago by babybat

Well… we all do, through tax I suppose.

But consider that Starbucks et al pay some local taxes. If it helps that we say we’ll hypothecate some of that tax, or indeed increase them, to pay for the scheme then would that might make it more palatable?

Posted about 1 year ago by esotericbadger

How do new independents get into the market? Why should anyone get a leg up from the taxpayer just because they happen to be the progeny of the local butcher?

It’s just a distortion of the market, handing an arbitrary advantage to some people at the expense of others, and relieving them from the need to compete at the same level. It sounds like an invitation to corruption, too, and horrifically complicated to administer (suddenly you’ve got a whole new local government department dedicated to tracking the family ownership of every retailer on their patch).

What about the tax implications? Small traders often set up as a company because of the tax advantages, but then they don’t own the business or the land, the company does. Does that count? If so, how much of the company do they have to own? What if their spouse comes into the business and owns half the shares- their parents didn’t own the shop, so the ancestral benefits wouldn’t apply, presumably. What if you;re a tenant? Do the advantages go with the business or the land?

Posted about 1 year ago by part-timer

All markets have inherent arbitrary advantages for some at the expense of others, unless you believe that perfect competition actually exists, in which case I have a bridge you might be interested in buying.

Posted about 1 year ago by cutta

What about an old, established shop, let’s say a shirtmaker, generally acknowledged as one of the best in the world, which is sold, let’s say to the owner of a large department store. It keeps on trading and producing the same shirts as it did before, but, presumably, would no longer be entitled to the tax break?

Posted about 1 year ago by SuckMonster

Cutta: that may be the case, but if so we should be trying to minmise those advantages as far as we reasonably can, not creating more, as vast fuss and expense.

Posted about 1 year ago by part-timer

To minimise those advantages would also entail cutting down economies of scale and monopsony buying power at, for instance, Tesco.

So we could mandate a maximum size of a shop (say no bigger than the average Tesco Metro), and we could also set prices for raw materials by government decree so that neither small shops and large chains would have a competitive advantage when it comes to purchasing.

You all in favour of that part-timer? See it’s simple enough to proclaim you’re being entirely even-handed, but in reality any economic choice involves a decision between competing interests.

Posted about 1 year ago by comradem

Tesco’s economic advantages derive from its success in its own trade. Another example would be a trader securing a site with high footfall, or buying better stock, or negotiatiung better rates with suppliers. All these things give the trader an advantage, but these advantages are inherent to the characteristyics of the business. They’re entirely different from local government choosing certain categories of business, based on arbitrary selection criteria such as whether your dad owned the business before you, and singling them out for special support from the taxpayer.

To put it another way: penalising Tesco for its success would just be another intrusive and market-distorting way of giving a leg up to small businesses. It’s not an alternatvie to tax breaks for family business- it’s the same thing, you;re just coming at it from a different angle. We should be minimising regulation and letting people get on with it, not meddling in markets to advantage certain categories of tradesman who happen to be fashionable this month.

Posted about 1 year ago by part-timer

They’re only different in the way you’re looking at them.

Let me put it another way: Tesco distorts markets. Their size means they can pay less for goods, and absorb large losses when establishing dominating positions in new markets (anything from shampoo to car insurance).

You’re prepared to accept that particular distortion, while rejecting government interference. This is a common and some would say dominant neoclassical Friedmanesque view. But certainly not the only one which can be defended.

Posted about 1 year ago by comradem

part-timer: Well, obviously having a large parent company with the marketing and economics of scale that implies gives the large chains an advantage. Something tells me you’re not advocating the breakup of all multinational corporations in order to level the playing field though? Thought not.

Yes, it is a distortion of the market. I’m of the school that says markets are a human construct, not an immutable force of nature. The one I work in certainly is. If we tinker with a market, then in purely economic terms, the world suffers – I don’t argue with that. But if a greater societal good comes about as a result, it’s worth it. You may have noticed that we even create markets now purely for the benefits they bring – viz. carbon trading.

What I was looking for was a way to fiddle at the margins of this particular market to give independents a more level playing field with the big boys. This scheme appeared to add to Rome as a city, so it seemed a decent starting point. I’m sure they worked out all the details before its introduction there, probably with some fearsomely clever and no doubt expensive lawyers.

As an aside, Sportacus himself (Magnus Scheving) got started with a bit of help from the Icelandic government, so you clearly don’t object to all govenment interference!

Posted about 1 year ago by esotericbadger

They are not only different in the way I am looking at them: there is a clear qualitative difference. One is inherent in the market, and one is imposed from outside.

Tesco does not distort the market, or, if it does, any participant in the market does too, and the word becomes meaningless. Tesco is part of the market; it’s buying power is one of the conditions of the market. Arbitrary rules imposed from outside, however, to give particular traders a leg-up at the expense of others, are a distortion.

Posted about 1 year ago by part-timer

But don’t you see that one person’s ‘rule imposed from the outside’ is another person’s ‘minimisation of unfair advantages’, which was the original point?

And yes, strictly speaking (breaking out my econ intro book) any deviation from perfect competition is a distorted market which will tend towards monopoly or oligopoly, etc.

Just acknowledge that you are coming from a particular and contentious conservative economic viewpoint and we’ll all be happy.

Posted about 1 year ago by comradem

part-timer: not that I accept your argument necessarily, but to stay on your terms, then why don’t we alter the market? What is inherently wrong with a little distortion at the margins?

As I mentioned before, yes, economic growth may suffer. I suspect that the majority of people would trade this for quality of life gains. Dammit, even the Tories have got hold of that particular idea. Markets are constructs and tools. We don’t simply have to slavishly follow the particular form of market set up now.

Moreover, you seem to object to the Roman scheme, as although it appears to work in practice it does not work in your theory. If your theory says a 747 can’t fly, but it does, what’s wrong? Your theory, or the 747?

Posted about 1 year ago by esotericbadger

Doesn’t the Roman system hinder if not preclude new shops setting up business, Badger? Let’s take the example of a shoe maker. How can a young shoe maker hope to attract customers if his shoes are significantly more expensive than his established neighbours’, even if they’re the same high quality, because he has to absord comparatively higher rents into the cost of them, which can be a lot if he’s located on the likes of Jermyn Street?

Posted about 1 year ago by SuckMonster

You might guess by my name that I am Italian, although born in London. Accident of birth and all that. I know Italy well though and should like to say that the situation in Italy is completely different from England, so strict economic comparisons just cannot be drawn. Firstly, Italy has the immense advantage of still having small shops and retailers. There are a few bigger ones here, but certainly nothing like Tesco/Walmart etc. in England (and the USA, of course). The advantage of so many independent retailers is, of course, choice. It also brings a lot of local employment as well as keeping the whole spirit of a community alive and well. The result is every town and city having a unique flavour – a particular aroma, if you like.

The fact that the older retailers are being encouraged is merely a continuance of the policy, which is highly popular in Italy, of helping Italy stay as Italy. No bad thing after wandering down a typical High Street in England and forgetting which town you are actually in.

So, quality of life scores highly over political expediency and the mighty dollar. Bravi.

Posted about 1 year ago by NARDINI

However, market economics aside, if the tax payer were to fund the protection of small businesses, would the tax revenue they (the businesses) do pay outweigh the substantial taxes that large corporations avoid through a myriad of clever and sneaky methods?

Also, what happens when the small business becomes big? Is there a threshold at which the protection stops? In which case any sensible business person will find a way of keeping their business just under that level, and then setting up a new company to continue the expansion.

I generally agree with increasing regulation on big business, both retail and financial services etc., but can anyone with more economics knowledge than I solve the old argument that increased regulation on big business means they’ll fuck off elsewhere and take what tax they do pay, along with their employment figures, with them.

Posted about 1 year ago by ELWisty

Perhaps I should add that, despite the undoubted willingness of multi-national companies such as Tesco to pay all of their taxes, it is a fact – a sad fact – that the doyen of Italian right-wing political figures, Silvio Berlusconi, doesn’t like paying taxes. In fact, he doesn’t like to pay ANY taxes at all. He has more companies to help him achieve that objective that the rest of Europe combined. Almost.

So, yes, Italy ses more tax revenue from smaller retailers and businesses than from the “richest man in Italy” – or his friends in Sicily and Roma.

Posted about 1 year ago by NARDINI

SM: It’s a good point. I have no answer for it, other than new companies probably also getting some sort of help, or the shoes being that much better (difficult to see, considering he’d be competing with Lobb). Bit unsatisfactory, as the cheque-book’s flinging out cash in all directions.

Crap. As Nardini also points out, it seeks to maintain the status quo maybe at the expense of entrepreneurs. Unintended consequences not necessarily desirable then.

Posted about 1 year ago by esotericbadger

ComradeM: your point was that regulating the market to minimise Tesco’s buying powere was more or less the same as avoiding regulating it to give family stores an advantage. And these are quite clearly distinct things: one is more regulation, and the other is less regulation. This is not a product of my perception. Advantages derived by a business from its inherent qualities (location, quality of product and service, buying power) are part of the market. Advantages derived by a business from government interference (such as reduced rent for family stores) are externally imposed distortions of the market. That goes to answer esotericbadger too: your postulated enforced break-up of large companies is an external market distortion, just the same as reduced rates to family stores, so I am being entirely consistent in rejecting both.

Several people have also demonstrated, in their different ways, a classic misconception, along the lines of “I’d be happy to trade economic groth for improved quality of life”. However, this is predicated on the assumption that quality of life and economic growth are somehow in conflict. Actually, they are entirely in harmony: we improve our quality of life by means of economic growth. It is not a coincidence that quality of life tends to be highest in countries where the economy is strongest. The market is the single most effective method we know of by which people can have their needs fulfilled at the lowest cost. Effective markets are esstential to wealth, to jobs, and to all the things that come from wealth and jobs- all the good stuff that our taxes fund. To ensure that we maintain and improve our quality of life, we must continue to grow our economy; one surefire way of reducing economic success is to interfere with the market. So while it may seem a small thing to interfere just here and there with the market, we do so at our peril. (It does indeed appear that the Tories have swallowed this particular brand of economic illteracy; I hope they grow out of it.)

Also, esotericbadger, markets are not “constructs and tools”. Obviously, we regulate markets to an extent, but even if we did not, they would arise naturally- as soon as the baker and the butcher swap a loaf for a chop, you have a market, even though no-one has sat down and written the rules. Artificial markets, by the way, don’t work: carbon trading is a case in point. Because the resources, being the carbon allowances, were created artificially, they weren’t properly priced. The Germans (sensible fellows) gave their industries huge allowances; Blair, no doubt with an eye on his legacy, gave British industries small ones. The result has been that British companies have to buy allowances from German ones. We might as well have written Germany a cheque for half a billion pounds and missed out the middle man. And you’ll note that nothing in this reduces carbon emissions.

Oh, and estotericbadger: I strongly suspect that the systems doesn’t work in Italy. Not a lot there does. My guess is that it’s prey to corruption, as you suggested in your initial post, and that- just as I suspect- it reduces growth and stops innovation and new entrants to the market.

Posted about 1 year ago by part-timer

I hate to mention this, but isn’t this supposed to be about London? It seems to have shot off down the road of foreign policy and Conservative party politics.

Or has this turned into a political forum now?

Posted about 1 year ago by NARDINI