December 2nd, 2015
Last week I posted a TdJ on the ‘takeover’ of Pfizer, the US pharmaceutical giant, by Dublin-based Allergan, a move that allows Pfizer to move its company headquarters to Ireland. British economist John Kay (born 1948) has since published a column explaining that the planned merger is legal tax avoidance rather than illegal tax evasion.
Allergan (formerly known as Actavis and before that as Watson) describes itself as pioneering a new model in the drug sector. This model appears to be that of an investment company trading pharmaceuticals businesses.
Dublin-based Allergan is as authentically Irish as an empty bar on a Saturday night; its operational headquarters are in New Jersey.
The planned merger is a tax inversion, a device that enables a US company with accumulated profits overseas to use them more freely without incurring US tax liability.
John Kay, “The fine line between tax evasion and avoidance“, Financial Times, 2 December 2015 (metered paywall).
There is much more in the full column. In a few days it will be possible to download a free, ungated version of the column from Mr Kay’s home page.
December 1st, 2015
[P]olitical correctness goes too far in the USA by quashing free speech. FT columnist ED Luce explains.
Princeton students this month occupied the university president’s office demanding the name Woodrow Wilson — America’s 28th president and former head of Princeton — be scrubbed from campus. ….
Read the rest of this entry »
November 27th, 2015
Why did Pfizer, the huge US pharmaceutical company, merge with Allergan, a company registered in Ireland? The answer is simple. The merged company, now domiciled in low-tax Ireland, becomes more profitable at the expense of US taxpayers. There is no other reason for the two companies to merge.
At the request of a loyal TdJ reader, here is information that I gleaned from an editorial published yesterday in the Financial Times. Why do companies do such things? Because they can get away with it. Why do they get away with it? Good question. I suspect it is because they have a lot of money, and politicians need money to finance their expensive campaigns for election.
America’s pharmaceutical companies sometimes seem to be on a one-sector mission to alienate the entire US public. After a summer during which groups such as Gilead and Valeant regularly hit the headlines for charging eye-poppingly high drug prices, attention has now turned to the neuralgic practice of tax avoidance.
It follows the announcement this week by Pfizer of a $160bn merger with Allergan, an Irish-registered pharmaceuticals company. The deal, while vast in scale, has but limited industrial logic. Its principal purpose is to allow the US giant to cut its tax bill by re-domiciling overseas.
So-called “inversions” have long been a dirty word in the US. …. Drug companies are among the biggest practitioners of inversions. ….
Drug companies’ enthusiasm for tax arbitrage sits uncomfortably with the sector’s dependence on official support. This goes beyond the US legal framework and the protection it offers for intellectual property. Pharma companies benefit from taxpayer-funded research through such bodies as the National Institutes of Health and the National Science Foundation. Drugs purchases worth billions of dollars each year are funnelled through federally funded buyers such as Medicare and Medicaid.
“Obama should close Pfizer’s tax loophole“, Financial Times editorial, 25 November 2015 (metered paywall).
November 26th, 2015
Fear of immigrants is growing in the United States. FT columnist Jurek Martin, writing from Washington, DC, is very concerned.
I have lived in the US for most of the past 52 years. Never in that time have I seen a country so brave and dauntless in war and so generous in peace become so fearful and mean-spirited as it is today. ….
We have seen hysteria prevailing when Ebola patients were brought from Africa for treatment …. We are told by a presidential candidate to fear immigrants, especially those coming in illegally from Mexico as “murderers, rapists and criminals”, not as builders, chefs and gardeners. ….
[C]ontenders for the Republican presidential nomination are preaching prejudice against Muslims in particular but against anything seen as “the other” in general. They range, in order of popularity among Republican voters, from the unscrupulous (Donald Trump), the ignorant (Ben Carson) the opportunist (Marco Rubio and Ted Cruz) and the ineffectual (Jeb Bush). A large majority of Republican governors in the heartland have said they will not allow Syrian refugees to settle in their states
Democrats can be just as bad, however. Almost a third of the party’s contingent in the House voted to make it more difficult to implement an expanded Syrian refugee programme proposed by President Barack Obama. ….
The standard defence is that the prime responsibility of elected officials, from the president down though governors to the county sheriff, is to keep Americans safe, but, one may ask, from what? FDR had the answer in the depths of the Great Recession “The only thing we have to fear is fear itself.” Dead right. But then even he feared to let in Jewish would-be immigrants fleeing Hitler.
Jurek Martin, “Refugees, the US and the propagation of fear“, Financial Times, 26 November 2015 (metered paywall).
Mr Martin (born 1942) is a British journalist, educated at the Royal Grammar School Worcester and Hertford College Oxford.
November 25th, 2015
FT columnist David Gardner explains.
The Isis enemy identified by the UN Security Council as a global threat is … mutating. As the attacks in Paris, Beirut and the Sinai show, Isis is going global, using networks of cells abroad to help defend its home base. ….
Isis is a Sunni supremacist hybrid formed from al-Qaeda in Iraq and Ba’athist officers from Saddam Hussein’s army, disbanded by the US after the 2003 invasion. One of its main goals is a Sunni restoration in an Iraq and Syria now dominated by Iran-backed Shia or Alawite forces.
It has cleverly exploited the vacuum of mainstream Sunni leadership to present itself as the Sunni sword against Shia Iran’s imperialism.
It retains that advantage while its opponents cannot agree on whether the Assads have any role in Syria’s future, and which non-Isis rebels can be part of the transition.
David Gardner, “Talk of a grand coalition against Isis is heroically optimistic“, Financial Times, 25 November 2015 (metered paywall).
November 25th, 2015
FT reader Amir Ahmad responds to Saudi journalist Jamal Khashoggi’s op-ed on the war against Isis.
Saudi Arabia needs to own up to its significant role in creating the current crisis as the cradle of the most vicious Muslim sect, the Wahhabis, which is essentially the official religion of the Kingdom.
Not only is it a religious view that tolerates very little other than itself but it is hell bent on exporting it. Furthermore, funding from within Saudi Arabia in years past has made it possible to export this religious view. It is now the basis of what underpins and is the inspiration for Isis and many other similar organisations.
…. Change the education curriculum and introduce new books so that another generation of Saudis do not grow up to hijack planes in order to destroy towers far away from the Kingdom. Learn to have a discourse and agree to disagree without resorting to violence.
Amir Ahmad, “Eradicate Wahhabi view of Islam from the world“, letter to the editor, Financial Times, 25 November 2015 (metered paywall).
November 24th, 2015
Saudi journalist Jamal Khashoggi writes that “our real enemy is not Isis; it is the state of chaos and breakdown” that gave rise to it. Read the rest of this entry »
November 24th, 2015
FT reader Michael Godrey thanks Simon Kuper for articulating, in his weekend column (21 November), the error of our current response to Isis.
Sir, Simon Kuper’s article … recalls a prior case, that of the American anti-communist reaction in the late 1940s. At that time George Kennan wrote a similar piece, which appeared in the New York Times of May 7 1951.
The key passage in that article is: “Something may occur in our own minds and souls which will make us no longer like the persons by whose efforts this republic was founded and held together, but rather like representatives of that very power we are trying to combat: intolerant, secretive, suspicious, cruel, and terrified of internal dissension because we have lost our own belief in ourselves and the power of our ideals.”
It is a great service that Mr Kuper has made clear the error then and now.
Michael D Godfrey, “Danger of becoming what we are trying to combat“, letter to the editor, Financial Times, 24 November 2015 (metered paywall).
November 23rd, 2015
FT Shanghai correspondent Patti Waldmeir has written yet another, superb column on social policy in mainland China.
Authoritarian governments can achieve many things by decree, but making babies is not one of them. It seems China has a shortage of that essential biological ingredient to power the next phase of the mainland economic miracle: sperm to fertilise the embryos of future workers.
There is a sex shortage, too: one recent survey showed that Chinese white collar workers slave so long in the office that half said they had intercourse less than once a month. Or maybe it has something to do with the fact that a large proportion of 20-somethings still live with their mother (and for that matter, their grandmothers) in cramped urban flats. Surely that’s better than the best contraceptive. ….
Good quality sperm are in such short supply that one Shanghai hospital recently ran an advertisement on social media offering enough money to buy the latest iPhone in exchange for 17ml of the stuff …. “It’s no longer popular to sell your kidney for an iPhone, but now you can easily get one without selling your kidney,” said an ad posted on the official WeChat account of the Shanghai Renji Hospital Sperm Bank ….
Patti Waldmeir, “Wanted: more people to make babies in China“, Financial Times, 24 November 2015 (metered paywall).
November 23rd, 2015
US citizens terrified at the thought of welcoming Muslim refugees from Syria should look at annual figures compiled by sociologist Charles Kurzman at the University of North Carolina.
In 2014, the United States suffered 136 murders in 30 mass shootings (defined as four or more victims), compared to 7 murders in 4 terrorist-related attacks (of any kind) by Muslim-Americans.
In the 13 years following 9/11 the US suffered more than 200,000 murders, of which Muslim-American terrorists were responsible for 50.
Twenty Muslim-Americans have carried out attacks on targets in the United States since 9/11 …. [F]our terrorism-related incidents involving Muslim-Americans … killed seven people in 2014, bringing the total number of fatalities in the United States from terrorism by Muslim-Americans since 9/11 to 50.
Meanwhile, the United States suffered … more than 200,000 murders since 9/11. …. In 2014 [alone], there were 30 mass shootings with four or more fatalities in the United States, killing 136 people ….
Charles Kurzman, “Terrorism Cases Involving Muslim-Americans, 2014“, UNC Triangle Center on Terrorism and Homeland Security, 6th annual report, 9 February 2015, pp. 2-3.
Charles Kurzman (born 1963) is author of The Missing Martyrs: Why There Are So Few Muslim Terrorists (Oxford University Press, 2011).
HT Simon Kuper.