What Amazon, Google and Starbucks teach us about morality

It really wasn’t very surprising to see the levels of anger vented towards Amazon, Google and Starbucks earlier this week regarding the minuscule amounts of tax they each pay into the UK’s coffers compared to their revenues.  It’s not new news for anyone with a bit of understanding of the way multinationals operate, but when the levels of tax avoidance achieved came into the public arena through the Parliamentary Public Accounts Committee’s grilling of the three companies representatives on Monday it was hard not to get angry.  It wasn’t necessarily the way that they justified the perfectly legal way they get away with paying such small amounts of tax that was the most irritating aspect of the interrogation.  Instead what put my back up was the arrogant attitudes displayed along with the deliberately vague and empty answers given to some very valid questions.

You could sense the levels of frustration boiling over amongst the MPs on the panel as their attempts to extract information were continually batted away or met with resistance.  Andrew Cecil, director of public policy at Amazon put on a particularly wince-inducing performance that clearly incensed the panel.  It was entirely reasonable for Nick Smith MP to describe his failure to answer questions  as “pathetic”.  The Chair, Margaret Hodge hit the nail on the head when she told the unlucky trio: “We’re not accusing you of being illegal, we are accusing you of being immoral.”  She went on to claim the combined tax avoidance strategies of just Apple, eBay, Facebook, Google and Starbucks deprive the treasury of nearly £900 million.

There have been calls again this week from various places to boycott Starbucks, although less so for Amazon and Google.  To boycott a coffee shop is really not a big deal; you just go to the next one down the road, but boycotting Amazon takes a bit more commitment as the low prices and ease of use mean finding an equivalent requires some energy and effort.  Taking action against Google on the other hand by using Bing or Yahoo instead definitely doesn’t give the feeling that Google will sit up and pay attention to you actions.

Boycotting, unless it’s widespread and sustained, is not going to be the answer to getting these companies to pay more tax. What these calls do highlight is the level of annoyance amongst the public.  Other retailers have reasons to be angry too.  The managing director of John Lewis (who do pay their fair share of tax) said on Wednesday that  Amazon would “outinvest and ultimately out-trade” businesses paying full taxes in the UK, risking driving them out of business if the Government does not take action to force the online retailer to pay tax fairly in Britain.

To me what this demonstrates is that as humans we have an innate desire to see things being done in a just and fair way, especially when it affects us directly.  It goes against the evolutionary concept of the survival of the fittest.  Instead justice and fairness give our lives structure, stability and order.  We intrinsically feel aggrieved when we see others who are richer than us playing the system to their advantage and consequently contributing less to our society when if anything, they should be giving more.

So why do those running these big multinationals not give the impression that they feel need to play fairly, when those of us lower down the ladder generally think the opposite?  Have they become immoral or amoral?  The reason I believe is detachment.  Just as plenty of us are happy to buy cheap clothes that may have been produced in an Asian sweatshop, because we don’t see the people behind the product, so those running vastly large businesses across several countries will be focusing on the numbers that guarantee them the best returns.  They have separated themselves from the societies they trade in.  It’s only when I realise someone is being exploited in order to allow me to purchase a product at such a low price that I begin to consider whether there’s a more ethical alternative.  It comes down to relationship again.  I don’t want to rip off someone I know because I will feel guilty, but the guilt is massively reduced if it affects someone who is faceless and unknown to me.  These companies are acting in an immoral way because they function outside of community and have no reason to.  It’s not part of their ethos and it makes very little difference whether they take it into consideration.  For a local small business being part of a community is a big factor and it needs to act accordingly.

The best Biblical example I can think of that relates to this were the tax collectors at the time of Jesus.   They were Jews working for the Romans and as a result were set apart from their own people because they were hated for siding with the Romans.  They worked within the law collecting taxes and also taking an additional cut for themselves putting the taxpayer in a worse off situation than they should have been.  There was good reason not to like them.  Zacchaeus was probably the most famous of these tax collectors.  What turned him around was an encounter with Jesus.  Jesus broke down Zacchaeus’ separation and let him see that giving was far better than taking.  Once again it shows us the effect that having an encounter with Jesus has on someone.

It would be fabulous to see heads of these international companies experiencing something that made them want to invest in the countries they trade in rather than just seeing them as a source of income.  Certainly legislation has a role to play in ensuring companies can’t get out of contributing fairly to a national economy.  Transparency helps everyone to see who the ‘good guys’ and ‘bad guys’ are when it comes to how much tax is paid compared to revenues. It’s something that the Select Committee struggled to find out and needs addressing.  An international law that requires companies divide up tax paid to countries according to the profits made in each one would potentially be a viable solution if international consensus could be reached.

It feels like a carrot and stick approach is going to be the most effective way of turning this situation around, ensuring companies see the value of contributing their fair share to an economy.  Rather than just boycotting and shaming the worst offenders, why not celebrate and endorse those who give the most back to society through money, good treatment of their staff and engagement with communities?  Let’s see published lists of the best companies and hear them talked about in the media and by politicians.  Lets find out which companies give the most to charities as a proportion of their profits and reward them with recognition.  Few companies want to be unpopular whilst others gain the favour of the consumer.

Most of all we need to see companies that whilst being financially savvy, care more about people than profits, that understand the benefits of giving over receiving and who want to work within a system that is just and fair.  Unsurprisingly, that all sounds pretty biblical to me.

There’s something seriously wrong when the ‘moral’ companies such as John Lewis who are held up by government ministers as an exemplary business model believe they are in trouble long-term because they are unable to compete on a level playing field with their rather less moral competitors.  It’s time this was fixed and it all starts with placing a sound ethical framework at the heart of the way we want to see business done in our country.  There’s too much at stake to just let market forces dictate the game.  Leave things as they are and we all lose out.  Turn things around and ultimately we all win.  Seems like a no-brainer to me.

Categories: Economy, Morals & ethics, Parliament

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5 replies

  1. I share much of the sentiment expressed here whilst being tempted by walking past a branch of Starbucks every time I leave the tube station and head to my office. However, I’m also a little less than impressed by the public outrage displayed by the members of the Public Accounts Committee of the House of Commons who are surely in a better position than most of us to influence the tax regime in this country and its enforcement and over the years have often been involved in courting business operations such as these to locate in their areas in order to be seen to boost employment opportunities and even being willing to offer favourable tax environments to encourage this.

    Interestingly one of the themes in the early stages of the campaign supporting a Yes vote in the coming referendum on Scottish independence has been the benefit to Scotland of being able to levy lower rates of corporation tax thus luring business activity north of the border. Indeed, many companies based their operations prior to the banking crisis in the Republic of Ireland to take advantage of just such benefits. In the reality of our interconnected global marketplace I fear that it would prove well nigh impossible to achieve the level of international agreement necessary to stop such border hopping and international tax and investment competition between states where each government faces the inevitable internal pressure to deliver the best economic outturn for its own people. Tax harmonisation in Europe – the agreement of taxation rates and enforcement at a European level – has not exactly proved a stunningly attractive political offering in the UK.

    For the purpose of transparency, I should declare that I have an Amazon account, use Google most days and have a Starbucks loyalty card and am, therefore, fully corrupted by the these giants of our modern capitalist world. However, we should remember that these businesses retain their market share because we continue to use them and find, in the main, that they make our own lives easier and more pleasurable.

    In the end I like everyone everyone else will have to make the moral calculation of whether to continue to use them or choose alternative offerings from others who take a different approach to their business model and operation, are much more rooted in their communities and have a clear sense of civic responsibility and public duty as well as the need to have a healthy bottom line.

    For all of us its a choice between continuing with my easy convenient 21st century lifestyle helpfully assisted by corporations driven by the demands of short term shareholder returns or being a little more thoughtful about my lifestyle, my choices and the reality of their impact on others. Fortunately for me, near my office there are just loads of fantastic local shops offering excellent quality coffee (and it has to be said some just wonderful cakes!) and I can and should start there.

    But to be a truly ethical individual and consumer I must consider the impact of all my actions, interactions and purchases on all my neighbours throughout the world. As a struggling, imperfect disciple of Jesus, I would do well to remember his powerful words and imagery recorded in Matthew 25 in separating the sheep and the goats when he states that the Lord will say ‘whatever you did not do for one of the least of these, you did not do for me’ when I get a little weary in ‘doing good’ and opt for what makes my life easy.

    Oh, and this is about fairness not about paying taxes per se so let’s also remember to keep an eye on how well our taxes are spent and on what. Back to the Public Accounts Committee?

  2. Give me one biblical passage saying that we have to pay as much tax as possible. I’m not disputing that the bible clearly teaches that we should pay the tax that we legally owe, but I can’t see any passages demanding that we pay as much tax as we can possibly pay. If that was the case then we’d all be giving 100% of our income to the government because there’s nothing legally to stop us from paying more tax than we legally owe. Our wise overlords would definitely accept more of our hard-earned money if they could get their hands on it.

    This whole article has the overtones that businesses contribute nothing to society unless they give large portions of their money to bureaucrats in Westminster who will almost certainly waste it or steal it through fiddling their benefits or heading off to Australia for a month without asking.

    Google contributes to our society massively by enabling us to search for anything online in seconds, greatly increasing productivity. Amazon contributes to society by allowing consumers to purchase items cheaply from the comfort of their own homes, and always receiving their items earlier than expected in the post. Starbucks contributes to our society by allowing consumers to enjoy low-cost, high quality hot beverages and snacks. In the process, they all employ thousands of people who then PAY INCOME TAX!

    They all do this without any benevolent intentions but simply to earn profit. It’s the wonder of the market system that harnesses natural self-interest to promote the public benefit. Sure, it’s good if a business gives to charity. I would much prefer them to give to charity than to government! But the point is, under the free market that this author so evidently dislikes, even if they don’t behave ethically and give to charity, they still benefit society nonetheless.

    • I’ve been scaring myself by having some very conservative thoughts along these lines recently. I’ve always thought of myself as pretty left wing on social issues, but as the governments started doing things like closing down Catholic charities that don’t fit with government ethics while giving large amounts of money to charities that run ‘bigot of the year’ awards, I’ve been having second thoughts. It’s perfectly possible to be a Christian, care about the poor and not believe in giving large amounts of money to government, but keep as much back as possible to give to causes you think are going to better society. The problem with that idea is that it’s undemocratic. The people who make the money get to decide who the ‘deserving’ are instead of the government that the people have elected. So, what do we think? The Bible tells us to care for the poor, but does that Bible uphold the current democratic political system of redistribution of wealth to the causes the people have elected the government to uphold?

  3. Tax legislation is incredibly complex but it is created to raise revenue and affect behaviour. Examples of this are tax on alcohol and tobacco and tax relief for pension savings and charitable giving. If these companies gave more money to charity then they would pay even less tax. If companies are playing by the rules that the Government create how can that be immoral. Is it even possible for companies to act immoraly – companies can never be ‘saved’. The Government set the rules and if they do not like the outcome they should change the rules.

    Headline numbers of tax paid against revenue are irrelevant as you pay tax on profit, not revenue. If there are loss making companies are they even more immoral for not paying tax on non-existant profits? A lot of people are casting judgement on something they do not understand.

    • I don’t claim to be an expert at economics so if my thinking is woolly then it deserves to be criticised. Having said that I find it hard to understand how Starbucks for example is failing to make a decent profit in this country. Something still seems very wrong with this. The government should have a big think if it’s not happy with the status quo. You can’t totally blame the companies for playing the system, but if they know they are drawing profit from an economy without giving something back in return then it can be argued that they are acting in an immoral way.

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