The Prime Minister caused a kerfuffle this week by saying on a call with MPs that the reason we have successful vaccines is because of capitalism and greed. He quickly withdrew the remarks after the call.
Oliver Stone and Stanley Weiser are partly to blame for this trope. According to Gordon Gekko in Wall Street: “The point is, ladies and gentlemen, that greed, for lack of a better word, is good.”
Gekko was wrong. We do have a better word: self-interest.
Dr Eamonn Butler explains the distinction well: “Greed is acting on one’s own interests, accumulating things regardless of one’s needs, without a care for the interests of others, and with contempt for social conventions, even laws. Self-interest, by contrast, is a natural human characteristic, without which none of us would survive. It prompts us to act in ways that fulfil our needs; but more often than not, that rational, long-term self-interest requires us to collaborate with and help others.”
Enlightened self-interest can also encompass the desire we have to make others happy and do good, or you can define that separately as altruism or charity if you prefer. But the point is that in market-based economies governed by the rule of law, our commercial interests are directed towards the public good.
As Johnson’s comments were made in relation to vaccines, let’s just consider Dr Ugur Sahin and Dr Özlem Türeci, the couple who founded BioNTech. In a New York Times article Dr Sahin is quoted as saying: “It felt not like an opportunity, but a duty to do it, because I realised we could be among the first coming up with a vaccine,” and “trust and personal relationship is so important in such business, because everything is going so fast.”
What is true of pharma entrepreneurs is true for all. Sure, we are all to a greater or lesser extent greedy, but it doesn’t do much to explain how the vaccines got made, nor the motivations of entrepreneurs in general. Profit and loss is just a useful way of getting more of what we want and to this end an argument can be made – and Tom Chivers does exactly this for Unherd – that pharma should have been able to make more profit.
Out of the crooked timber of humanity, entrepreneurship can make the world a better place for everyone.
METR reading
The Tax Foundation has produced a report on the marginal effective tax rates (METR) of the recent Budget. It’s analysis chimes with our immediate response.
On the positive side, it concludes that the 130% super-deduction will encourage additional investment in plant and equipment; however, its expiration alongside the planned hike in corporation tax in 2023 will cause the METR on plant and equipment to increase in the long run.
The pending tax hike will also reduce the incentive to invest in other assets such as IP and structures, and firms will have an incentive to delay IP investment because the effective tax burden will be higher in 2021 and 2022 than in 2023. The report argues that if the Government had provided full expensing with an increased corporate tax rate, investment would have been increased in both the short run and the long run.
All is not lost. The Chancellor has time to announce that full expensing – that is a 100% deduction – will come in 2023, and he could always pull back on the 25% hike if the public finances look better.
Brains trained
There’s a new edition of the Brain Business Jobs Index, which looks at the number of highly knowledge-intensive enterprises across 31 countries and 284 regions. We launched a previous version of this paper a few years ago.
The United Kingdom has two of the top 10 European knowledge regions: Berkshire, Buckinghamshire and Oxfordshire, and London. These are lauded for having a higher concentration of knowledge-intensive occupations as a share of the working-age population.
Between 2012 and 2019 the United Kingdom added 600,300 so-called brain business jobs. However, in 2020 we lost 30,200, with the concentration of the population employed in knowledge-intensive occupations decreasing slightly from 8.2 percent in 2019 to 8.1 in 2020.
The report argues that there is a link between business brain jobs and low unemployment – with the Slovakian capital region of Bratislava, the region with the highest concentration of brain business jobs, having an unemployment rate of just 2.4%.
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