ESCP Europe - London in the Press

Companies don�t pay taxes � but employees, owners and customers do

Tue, 22 May 2012 13:44:00 +0200

Prof. Anthony J. Evans continues his weekly column in City AM with a discussion on the launch of the Single Income Tax report by the 2020 Tax Commission.

Prof. Evans is a member of the commission, and he's convinced they've created "sensible, yet radical, reforms":

"A Single Income Tax would ensure that taxes were cut to 33 per cent of national income; no marginal tax rate would exceed 30 per cent; and taxes on labour and income would be abolished and replaced with a tax on distributed income. In addition, we suggest abolishing transaction, wealth and inheritance taxes, cutting transport taxes, and funding local authorities through local taxes. It is a massive step forward in terms of simplifying the tax code, and I hope it can change the public debate."

You can read the rest of the article by picking up your free copy of City AM in reception or by clicking here to view it online. All of Anthony's previous columns are archived on City AM's website.

Minimum booze prices miss benefits: Raising a glass can increase your pay

Thu, 17 May 2012 12:22:00 +0200

With minimum prices for alcohol promised for Scotland, England and Wales, Prof. Anthony J. Evans looks at the economic effects of such a move in this week's City AM column.

"The basic idea is that consuming beer, wine and spirits is bad, and that basic economics can help deter it. If a legally imposed minimum price is set above the current market rate then this should reduce the quantity of alcohol demanded. There are two points to make here.

"The first is that this logic is true for any market. For example, if you set a minimum price on labour you should expect the demand for labour to fall. Indeed this is the primary explanation for why minimum wages are counter-productive and thus economically illiterate. It would be nice if policy makers could see this contradiction.

"The second point is to challenge whether drinking is bad. Most people accept the health and social costs of excessive drinking, but just because an activity has costs does not mean it should be discouraged...."

You can read the rest of the article by clicking here. All of Anthony's previous columns are archived on City AM's website.

Raise our low interest rates now or this ticking time bomb will explode

Wed, 09 May 2012 13:19:00 +0200

In his weekly City AM column, Prof. Anthony J. Evans this time considers the issue of interest rate increase.

"Earlier this year I advocated keeping rates on hold, on the grounds that the euro was on the brink of collapse. I felt that, until we saw whether Greece was able to restructure its debts before the 20 March deadline, it would be wrong to tighten monetary policy. But that has now passed. Yes, the Eurozone is still in a perilous predicament, but if you think the Bank should wait until it has been resolved, you are effectively committed to permanently low interest rates."

You can read the rest of this article by clicking here. All of Anthony's previous columns are archived on City AM's website.

Double-dip alarm is premature and politically driven

Tue, 01 May 2012 11:34:00 +0200

It was announced this week that the UK was officially experiencing the dreaded double-dip recession - but is this announcement all it's cracked up to be?

Prof. Anthony J. Evans doesn't think so. In his weekly column for City AM, Prof. Evans says that the numbers just don't add up, and that crying double-dip is more politically motivated than economically.

"...when the Office for National Statistics (ONS) releases its GDP figures they are technically an estimate based on incomplete survey data. We are given a figure that is definitely wrong (but based on hard data), rather than one that is almost right (but based on judgement). The reason we all focus on the ONS one is not because it's better, but because it is official.

"When more data becomes available, GDP estimates are revised � often upwards. It is quite possible that in a year's time we will realise that the first quarter of 2012 was not negative growth after all, and there wasn't a double dip recession. Many economists were surprised by the negative number, because it contradicted a lot of other (and more reliable) indicators of economic activity."

You can read the full article by visiting City AM online, or by picking up your free copy of today's City AM in reception.

All of Anthony's columns are archived here.

Financial markets aren't like casinos � but they aspire to their condition

Fri, 27 Apr 2012 13:47:00 +0200

In this week's City AM column, Prof. Anthony J. Evans explains how hard it is to convert uncertainty into risk, using his own recent experience in Las Vegas to illustrate his point.

"Casinos are a triumph of human achievement � a beacon of what financial markets hope to accomplish. No, I'm not being facetious. Consider the distinction the economist Frank Knight made between risk and uncertainty. Risk is calculable because the range of possible outcomes is known. In roulette, for example, a ball is released into a spinning wheel that contains 38 slots. The probability of correctly guessing is 1/38, and casinos will pay out odds of 35 to 1 (the difference constitutes the house advantage). Uncertainty is everything else. It is the range of possible outcomes that cannot be reduced to calculable risk. For roulette, if an Elvis impersonator jumped onto the table and stole the ball this might constitute an uncertain event. By definition it cannot be included in the payoffs, because there is no known distribution.

"Both Austrian and Keynesian economists share this risk/uncertainty distinction, and while some cynical commentators like to suggest similarities between casinos and financial markets, this provides a neat way to understand the real difference between the two � casinos are temples to precisely-calculated and managed risk; financial markets exist to convert uncertainty into risk.

"Casinos can also provide insight into just how hard that is..."

You can read the rest of this article by visiting City AM online. All of Anthony's columns are archived here.

Supersize Charity Shops Feed Rising Demand

Wed, 25 Apr 2012 14:08:00 +0200

According to a report by Local Data Company, 14 high street stores are closing in the UK every day. But despite this, there is success to be found in the unlikely form of the humble charity shop.

Their secret? Charity shops are embracing a new kind of model: the superstore.

No longer so humble, these branches of familiar donation-run stores are upscaling and creating what Sky News called "department store" style enterprises. Their success is more than evident, with sales reaching �200 million and 17,000 jobs helping our struggling employment level.

Sky News spoke to London campus professor Jeremy Baker about why this development is appealing to UK consumers. You can watch the video by clicking here.

What the sinking of the Titanic can teach us about financial regulations

Tue, 17 Apr 2012 17:40:00 +0200

In the week following the 100th anniversary of the sinking of the Titanic, Prof. Anthony J. Evans draws a parallel in his latest City AM column between the safety regulations put in place afterwards and Basel II, which forces banks to hold 'safer' investments.

"The SS Eastland was a Chicago-based passenger ship that sunk in 1915, with over 800 people drowning. It was a popular tour boat that was known to be top-heavy, and following the Titanic was required by Federal law to increase the number of lifeboats carried. Unfortunately, this additional weight compounded the problem and on 24 July it rolled over soon after boarding. Those who had already gone below deck were either trapped or crushed and despite being close to shore it resulted in one of America's worst nautical disasters.

"I'm obviously not suggesting that government regulations alone caused the boat to sink, but it is a reminder that everything has costs. There is little use having more lifeboats if by doing so you increase the chance of needing them. A lesson that financial regulators would do well to heed."

You can read the rest of the article by picking up today's edition of City AM (available in reception as always), or by viewing anytime on the paper's website.

All of Anthony's City AM colunms are archived here.

Why Britain's income tax system is already astonishingly progressive

Wed, 11 Apr 2012 16:10:00 +0200

In this week's City AM column, Anthony J. Evans, Associate Professor of Economics at ESCP Europe's London campus, claims that the UK system of taxation is surprisingly progressive. Anyone who claims otherwise, says Evans, simply does not understand the fundamentals of the current system.

"The top 10 per cent of UK earners contributes 58 per cent of all UK income tax revenues. I hear many claims lately that the 1 per cent doesn't pay its fair share, but then many people I ask are also surprised at how high the 1 per cent's contribution already is (28 per cent of UK income tax receipts). In the US, the figure is even higher � the top 1 per cent of US earners contributes 37 per cent of income tax receipts. By contrast, the poorest 50 per cent of the UK population supplies 10 per cent of income tax revenues. And the same figure for the US is just 2 per cent.

"You may say that the rich should pay even more and the poor even less. But it strikes me that such proclamations should be built on an awareness of the status quo. That my students � and I daresay many readers � are surprised at just how progressive the existing tax system must surely be food for thought."

You can read the full article by clicking here. All of Anthony's City AM colunms are archived here.

Petrol shortages show that, for once, fuel prices were too low last week

Tue, 03 Apr 2012 14:06:00 +0200

Last week it emerged that UK tanker drivers were considering strike action. Any such walk-out would naturally lead to a shortage in petrol, as it did in the late nineties. However, the crucial detail was that no strike had been confirmed; indeed, talks had not even begun. Despite this, Cabinet Office minister Francis Maude advised the public to store petrol in jerry cans just in case, advice which led to panic buying, empty filling stations, and a woman in Yorkshire with severe burns.

In the wake of this mess, Anthony J. Evans, Associate Professor of Economics at ESCP Europe's London campus, spent this week's City AM column discussing his theory for the cause of the chaos: a maintaining of the price per litre.

"Basic economics tells us that when there's an increase in demand (due to panic buying), or a reduction in supply (due to a strike by hauliers), prices will rise. This signals a shortage and encourages two important responses. Firstly, it causes consumers to be more economical in their use, and look for suitable alternatives. Secondly, it rewards companies that are able to supply the market either by diverting resources from other locations or by increasing capacity.

"The public often sees this reward and considers it unfair. Profiteering isn't popular and 'price gouging' is in many cases illegal. This is perhaps why petrol stations didn't raise their prices. But it's counterproductive. There's no point keeping prices down if there's nothing left to sell..."

You can read the rest of the article by clicking here. All of Anthony's City AM colunms are archived here.

How Jose Mourinho became football's most marketable manager

Mon, 02 Apr 2012 11:22:00 +0200

It was recently announced that Jos� Mourinho, Real Madrid's head coach, is the highest paid manager in the football industry. Earning a impressive �10 million as a coach alone, Mourinho adds another �4.8 million to his salary via endorsements.

So how does he do it? London's Prof. Chris Halliburton spoke to goal.com on the importance of personal branding and the impact it has had on Mourinho's pay packet:

"Unquestionably, he has high personal brand value coming from a quirky mix of footballing success, looks, moodiness, ego and by being both articulate and very different - something other football coaches, or sports people generally, are not," explains Professor Halliburton.

"My view is that brand value can be measured in any of three different ways, and he scores highly on all three.

"First, there's high awareness and strong brand image - people know him, he has high visibility (even in countries he left some time ago) and he triggers strong brand associations.

"Secondly, the consumer response to this strong brand image - do more people show up when he is there? Does he reinforce loyalty to the club?

"And finally, financial brand value - Mourinho is strong across a number of possible measures - bums on seats, TV ratings, international competitions, sponsorship deals, celebrity marketing - you name it!

"Jose Mourinho shows a similar brand strength, albeit in a very different way, to David Beckham. But there is no denying his appeal and his publicity potential."

You can read the full article by visiting goal.com.