If we discovered that a business leader amassed their wealth not only by making good profits from the goods and services they sell, but also by stealing the wages and savings of innocent members of the public – people who are not even connected to their business in any way – we would be indignant. There would be demands for justice: compensation for the victims, prison for the criminal.
But what if something like this happened every day in our economy, in different companies and sectors? What if, hidden in plain sight, some of the largest and richest companies and institutions were making good profits, keeping the profits for themselves while passing their costs of doing business onto the public?
Take universities, which hit the news after the Government’s Migration Advisory Committee (MAC) announced postgraduate visas, which allow international students to live and work in Britain for at least two years after completing their studies. Although the essay question the government gave the MAC was written to elicit a positive response – emphasizing the importance of the arbitrary target of attracting 600,000 new international students to Britain each year – the details of the report said it all.
It found that 27 percent of postgraduate visa holders do not work at all. Forty-one percent earned less than £15,000. The largest nationality groups were Indians, Nigerians, Chinese and Pakistanis, and graduates from these groups earned significantly less than everyone else: for example, the average Pakistani earned just £14,402. As Neil O’Brien, the immigration-skeptic Tory MP, points out, “given that a full-time minimum wage job gives you c. £24k is not a thesis.’
For those familiar with student migration, this is no surprise. The vast majority of the growth in postgraduate visas reflects the growth in student visas, with 66 per cent of all postgraduate visas coming from students completing postgraduate studies at non-Russell Group universities. As Professor Alan Manning, former chair of the MAC, explains, “universities are not only selling education but also, in part, work permits”.
We must be clear about what this means. Last year, 69 percent of people who received a graduate visa studied in the country for one year or less. And 63 percent of those whose postgraduate visas expired switched to another visa route. In other words, a one-year master’s degree – regardless of the subject, regardless of the university – automatically brought three additional years of living and working in Britain, and without much difficulty, then a lifetime.
The benefit to universities and those who work for them, from lavishly paid vice-chancellors to the army of lobbyists and PR consultants hired to protect their special interests, is clear. But for society, the benefits are questionable, and the costs are obvious. Few graduates who get minimum wage jobs will become net tax payers over their lifetimes, and the increase in immigration caused by the graduate visa route is eroding our wealth. The profits belong to the university sector and the costs fall on the general public.
This kind of hidden subsidy is applied in other sectors as well. Many customers marvel at the logistical excellence of fast food delivery services, taxi apps and, of course, the ubiquitous Amazon. The scale of corporation tax that Amazon has avoided in Britain is well known, but less discussed are the ways in which many of these companies keep income for themselves while leaving the costs to the rest of society.
Three years ago, after a long legal process, the Supreme Court ruled that Uber drivers are not independent contractors, as the company used to be, but are employees, meaning they are entitled to different rights in the labor market. The costs added by this ruling, as well as the related decision that Uber must collect VAT on rides, have reduced its price competitiveness and thus shown how dependent its business model is on shifting its costs and responsibilities onto others.
According to an investigation by Transport for London, Uber was responsible for 14,000 fake journeys between late 2018 and early 2019 because the company allowed unauthorized drivers to upload their photos to other authorized Uber driver accounts. This led TfL to temporarily revoke Uber’s license to operate in London, which has now been reinstated, but the practice continues with various other firms.
The companies, including Amazon, Deliveroo, Uber Eats and Just Eat, all have “substitution clauses” that allow couriers to give their profiles to others. Under these clauses, according to Amazon, the original courier “undertakes to pay your replacement … at whatever rate you agree with them” and “you must ensure that any replacement … is authorized to operate in the UK” . .
Not surprisingly, this can be a recipe for exploitation and immigration crime. Investigations have exposed the trade of couriers who credit and sell their accounts for delivery online. One found more than 100,000 people in Facebook groups trading these identities, but no one knows how many substitutes are at work because few questions are asked and no records are kept. Insurance companies say many unauthorized couriers are caught in bogus personal injury claims.
It is hard to deny that many companies are privatizing profits and socializing the costs of their business models, many of which depend on illegal immigration and illegal labor – often by those on student visas – in the black economy.
And whether we’re talking about the private equity funds that extracted huge sums from water utilities while avoiding the costs of their pollution, or the mistreatment of workers in warehouses or the fashion supply chain, tax evasion in the Channel Islands or any number of other examples. , in today’s economy it is all too easy to leave the negative externalities caused by your business model to the general public.
The interesting thing is that our technocratic classes – so quick to see and tax the externalities of everything from driving to flying – fail to see what is right in front of them. They may, by instinct and ideology, be attached to the status quo, but we must reject it. Too much profit at the expense of all of us in the long run. We mustn’t let them think we’re fools anymore.