Sunday, 12 February 2017

Individual interests and corporate interests

It is fair to say that all countries want as many companies as possible to locate in their countries, as these companies will increase tax incomes, create more jobs, reduce unemployment rates, increase economic growth rates. As we can see that attracting more companies into the country can bring a lot of advantages and benefits for the country, is it fair to make corporate interests equal to individual interests? The answer is obviously negative. As we can see that in some countries, the population opposes against the policies that are in favour of companies, especially those benefiting large companies. Such phenomenon suggests that individual interests are very different from large companies' interests.
It is easy to understand that the benefits of individuals are the costs of companies; however, the consumption of individuals are the revenues of companies. We can see that the interests of individuals and companies are not totally opposite to each other, there is a possibility of the existence of an equilibrium that balances both sides' interests. However, it is easy for companies and individuals to make decisions based on their individual preferences; therefore, the outcomes are often socially undesirable. The outcomes are believed to be in favour of large companies by the general public. However, it is fair to say that it may be a public opinion rather than a fact. The general public are the majorities in this issue, the owners or the beneficiaries of the large companies are the minority group in the population. The politicians have to hear the majority group's opinion, though it is not necessary to be the truth. Moreover, although there is some evidence that wider wealth gap causes a decrease in productivity, we can see that the countries with narrower wealth gap are developed countries but have relatively lower economic growth and the exact causal relationship between the corporate tax level and the economic growth and other factors is unclear and complicated.
Therefore, increasing corporate tax I think is not necessary to improve the outcomes in terms of social benefits. 

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