Ikea and capitalism

January 26, 2011 4:07 PM

If you buy a Billy, a wee bunch of crowns goes directly into the pocket of their boss which (that is, the metaphorical pocket) resides in Liechtenstein and pays no taxes. Single link to the news of the day in Swedish. [The TV programme "uppdrag granskning," love-hated revelation-platform of the Swedish TV, cooperated this time with a bunch of newspapers to get the capitalist truth about this family company to the people. Background in Swedish here]
posted by Namlit (27 comments total)

It's not just IKEA: The Tax Haven That's Saving Google Billions
posted by Blazecock Pileon at 4:25 PM on January 26, 2011

Why is anyone suprised that giant corporations are taking advantage of tax havens? Of course they are. Companies exist to make money.

They're not unlawfully dumping toxic waste. They're using lawful means to reduce their overheads (in this case, their tax burden) and increase profits - something that all businesses do.

If you want to be outraged, be outraged at the deeply flawed system that allows them to do it. This is a regulatory failure.
posted by His thoughts were red thoughts at 4:30 PM on January 26, 2011 [9 favorites]

Lagom är bäst, ja?
posted by theodolite at 4:37 PM on January 26, 2011 [1 favorite]

The Tax Research bloke has been banging on about what he calls secrecy jurisdictions (PDF) for some time now.
posted by Abiezer at 4:39 PM on January 26, 2011

His thoughts were red thoughts... and well-expressed, solid ones, at that.
posted by IAmBroom at 4:45 PM on January 26, 2011

I'm having a hard time putting this together. Is there a simple diagram of how this whole thing is constructed?
posted by orme at 4:48 PM on January 26, 2011 [3 favorites]

orme: "I'm having a hard time putting this together. Is there a simple diagram of how this whole thing is constructed?"

Chart here [Flickr]
posted by wcfields at 5:16 PM on January 26, 2011 [3 favorites]

Thanks for that, WC Fields. Very helpful.
posted by His thoughts were red thoughts at 5:27 PM on January 26, 2011

I'm surprised that IKEA has such a Lack of scruples.
posted by Flashman at 5:28 PM on January 26, 2011 [5 favorites]

Bloody Vikings!
posted by sneebler at 5:53 PM on January 26, 2011

But they do have plenty of Skrapas.
posted by daniel striped tiger at 5:54 PM on January 26, 2011

If you want to be outraged, be outraged at the deeply flawed system that allows them to do it. This is a regulatory failure.

Oh yes, its the governments fault, and not the corporation warping the government by the exercise of naked power (corrupting its members and mission), to the detriment of the people, nosiree!

Hahhahhhahhahhhahha.
posted by lalochezia at 5:56 PM on January 26, 2011

they call that cheap crap furniture and you wonder about their scruples?
posted by Redhush at 6:17 PM on January 26, 2011 [1 favorite]

lalochezia, the following quote is the first paragraph from your link.

In economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as an encouragement for large firms to produce negative externalities.

Before you get on your high horse, make sure that it has legs.

For clarity, I don't think that Ikea, or Google, or any other corporates using these tactics are acting ethically. They're not. But they are acting within the confines of the structure imposed by governments. If that structure allows them to act unethically, then the structure is flawed. Corporations don't have conciences. If you want them to act ethically, you generally have to force them to do so.

The tendency of governments or government regulatory agencies to be swayed by lobbying, or otherwise subject to capture, is a failure in government. Or do you not think that a person who accepts a bribe is as guilty as the person who offers one?
posted by His thoughts were red thoughts at 6:21 PM on January 26, 2011 [7 favorites]

I will also point out that we appear to be on the same side of this debate, arguing about semantics.
posted by His thoughts were red thoughts at 6:23 PM on January 26, 2011

Oh my god, he invented the franchise. EEEEVIL!

Oh wait.
posted by gjc at 6:47 PM on January 26, 2011

> I'm surprised that IKEA has such a Lack of scruples.

/golfclap
posted by Decimask at 6:47 PM on January 26, 2011

Why is anyone suprised that giant corporations are taking advantage of tax havens? Of course they are. Companies exist to make money.

They're not unlawfully dumping toxic waste. They're using lawful means to reduce their overheads (in this case, their tax burden) and increase profits - something that all businesses do.

If you want to be outraged, be outraged at the deeply flawed system that allows them to do it. This is a regulatory failure.

Nope, won't do it. Absolutely won't. A business doesn't have an obligation to do anything for a profit. Why do we adhere to this ridiculous premise? We have a lot of work and history in ethical studies and nobody says this except Ayn Rand.
posted by SomeOneElse at 7:10 PM on January 26, 2011 [2 favorites]

His thoughts were red thoughts: be outraged at the deeply flawed system that allows them to do it. This is a regulatory failure.

Yep. USA has tanks and bombers and submarines, Google has bupkiss. If Uncle Sam had the balls to insist on his due, he'd damned sure get it.

SomeOneElse: A business doesn't have an obligation to do anything for a profit. Why do we adhere to this ridiculous premise? We have a lot of work and history in ethical studies and nobody says this except Ayn Rand.

I also agree with this. Why do people who are already million- (and billion-) aires have to be such total dick holes about getting a little *more* money?
posted by paisley henosis at 7:25 PM on January 26, 2011 [1 favorite]

What i'm taking away from this is that Ikea have started selling bongs, or that billy means something else in this context.
posted by onya at 7:31 PM on January 26, 2011

I'm surprised that IKEA has such a Lack of scruples.

You're surprised? Last time I bought a Lack it was missing at least three scruples.
posted by TheWhiteSkull at 7:57 PM on January 26, 2011 [18 favorites]

Guys, this is all just a misunderstanding. What happened was that when they were putting the company together, they thought they were finished and then they found a spare wad of cash that the CIO had been sitting on. But they put their weight on the company and it seemed to work okay, so they just shrugged and put the cash into the old biscuit tin with the rest of their spare screws and pentagonal keys.

And that old biscuit tin... was Lichtenstein.
posted by No-sword at 8:48 PM on January 26, 2011 [5 favorites]

Hmmm. Maybe they simply weren't able to read the manual or had the wrong bag of screws for putting together the company. So it went all upside-backwardy with random bits screwed into Curacao and so on.

But seriously, our first reaction yesterday when we opened the paper to this quadruple-page "news" was: "uh, is anyone surprised?" as well. But, well, they always claimed that they were organized in another way, and so we can sit here among the trees being a tiny tad disappointed. That's Swedish news for you, blowing over, not minds.
posted by Namlit at 11:43 PM on January 26, 2011

Namlit: ""uh, is anyone surprised?""

Hopefully not. The Economist ran the story almost five years ago. I don't see how this is news by any definition.
posted by brokkr at 3:35 AM on January 27, 2011

The Economist ran the story almost five years ago

Excerpt from that article:
Yet, though control over IKEA is locked up, the money is not. Mr Kamprad left a trapdoor for getting funds out of the business, even if its ownership and control cannot change. The IKEA trademark and concept is owned by Inter IKEA Systems, another private Dutch company, but not part of the Ingka Holding group. Its parent company is Inter IKEA Holding, registered in Luxembourg. This, in turn, belongs to an identically named company in the Netherlands Antilles, run by a trust company in Curaçao. Although the beneficial owners remain hidden from view—IKEA refuses to identify them—they are almost certain to be members of the Kamprad family.

The difference is that the uppdrag granskning reporters say they have collected information to actually "identify them" and to be totally certain; it also seems like there is quite a huge trapdoor in operation there. That's the news [not that I'm very much invested in all this. Go on.].
posted by Namlit at 6:20 AM on January 27, 2011

I'm not very invested either, but I saw the hubub last night in my twitter flow, as people were watching the show and they were outraged and shocked and so on. I tuned in to uppdrag granskning on the web, and hear them talking about Ingka Holding in tax-havenland and was rather surprised that this is what caused the hubub.

Didn't everyone know that already? He made that move in 1980-something-or-other. I have this hazy memory of it being in the news back then. Or am I having some sort of funky deja-vu here?
posted by dabitch at 11:04 AM on January 27, 2011

Nope, won't do it. Absolutely won't. A business doesn't have an obligation to do anything for a profit. Why do we adhere to this ridiculous premise? We have a lot of work and history in ethical studies and nobody says this except Ayn Rand.

A corporation has a duty to do what its board of directors says.

A for-profit corporation should act to make profits. How is this ridiculous?
posted by gjc at 1:17 PM on January 27, 2011