On R4 Today yesterday there was an item on Virgin's launch of an Entrepreneur Prize. They had Branson talking about it / indulging in more self-promotion. Then they asked him about UK and Europe. He replied with something on the lines of:-
"Well, I won't be popular for saying this, but I think it would be a very bad for business for the UK to leave the EU. Because 50 years ago when I started in business and was trying to sell records to Europe [he probably meant France] the added a 38% import duty on the records made it impossible for me to export".
Leaving aside that I read somewhere 'allegedly' that RB was involved in a tax fraud, which involved pretending to export record albums, he has as you would expect got the economics exactly the wrong way round.
His business did not 'lose sales' by being unable to export to Europe low priced records. It was the citizens of Europe that lost out by being denied the opportunity by their governments from saving by buying at low prices.
Europe has about 350m people. The global population is about 8Bn. That leaves about 7.65Bn that Branson could still sell to.
The main lesson from this is that Branson might want private enterprise but he sure does not want free enterprise.
Thursday, 26 March 2015
What is it with the 'Rich'?
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3 comments:
They are all the same arguments that Branson and cohorts in the 'Britiain in Europe' group used in the 90s to push us to join the Euro...
Big multinationals who have the scale to lobby Europe for protectionist rules and standards that inhibit competition are natural fans of Brussels.
OTOH, while import duties and VAT and so on are bad taxes, a 385 tax on records is not going to make much difference.
Demand is relatively price insensitive.
If you are a big fan of XYZ, you are happy to pay £15 for their newest album. Other people will not buy it until it has dropped to £10 or £5, most people don't like XYZ and will never buy it, they wouldn't want it even if it were free.
While import duties and VAT and so on are bad taxes, a 38% tax on records is not going to make much difference.
Demand is relatively price insensitive.
If you are a big fan of XYZ, you are happy to pay £15 for their newest album. Other people will not buy it until it has dropped to £10 or £5, most people don't like XYZ and will never buy it, they wouldn't want it even if it were free.
So if the initial price went up to £20, then quantity sold would not fall by anywhere near one-third or one-quarter.
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