Weekend reading links

1. Scott Galloway has a stunning stat

Amazon generated more ad revenue in 2021 ($31 bn) than the entire newspaper industry did globally ($30 bn)!

2. Martin Sandbu points to an interesting set of facts about investment in infrastructure in G-7 countries - it declined throughout the last two decades, despite the ultra-low interest rates. 

Between 1970 and 1989, the share of gross domestic product devoted to investment by six of the world’s seven biggest economies averaged from 22.6 per cent for the US to 24.8 per cent for Germany. The seventh, Japan, was an outlier with 35 per cent... France and the US have invested nearly two percentage points of GDP less this century than they did in the 1970s and 1980s; Germany and Italy about 4.5 points less; the UK and Japan 6 and 10 percentage points less respectively. These are enormous numbers. The G7 account for about $45tn in annual GDP. Restoring their investment ratios could fill nearly half the global shortfall to the $4tn the International Energy Agency calls for in annual clean technology investment if we are to meet net zero by 2050... In the US, net government investment (after accounting for depreciation of the existing public capital stock) fell by almost two-thirds in the decade to 2014, when it dropped to 0.5 per cent of GDP.

Public investment as a share of GDP fell to slightly more than 0.5% of GDP in US and less than 0.5% of GDP in Europe. 

3. This is not as clear as it appears, but AK Bhattacharya writes that India's corporate tax cuts have achieved the purpose of higher tax revenues realisation. This is a good summary of the trajectory of corporate tax reforms in India,

In 1991, the corporation tax rate was raised from 40 per cent to 45 per cent in Manmohan Singh’s first Budget because of revenue concerns; and in 1994, it was brought back to 40 per cent. The first big reduction came in 1997, when finance minister P Chidambaram brought it down to 35 per cent after abolishing the surcharge as well. But from 2000 onwards, surcharges were back, raising the total tax rate once again to almost 36-38 per cent for the next five years. It was Mr Chidambaram again, who reduced the corporation tax rate to 30 per cent in 2005, although along with the surcharge the actual rate was about 33 per cent... Arun Jaitley’s Budget in 2015-16 promised that the corporation tax rate would be reduced to 25 per cent in a period of four years along with a phase-out of exemptions. The following year, the rate was reduced to 29 per cent (excluding surcharge and cess) for companies with a turnover of less than Rs 5 crore. New manufacturing companies were allowed to pay a tax of only 25 per cent, provided they did not avail themselves of any exemptions.

A year later, Jaitley reduced the tax rate to 25 per cent (excluding surcharge and cess) for all companies with an annual turnover of up to Rs 50 crore, thereby covering almost 96 per cent of Indian companies. In February 2018, Jaitley went a step further by extending the benefit to all companies with an annual turnover of up to Rs 250 crore, covering 99 per cent of all Indian companies. Ms Sitharaman in her first Budget in July 2019 took the next step by extending the 25 per cent tax rate to cover all companies with an annual turnover of up to Rs 400 crore. With that step, almost 99.3 per cent of Indian companies were covered under the lower tax rate. And then followed the tax cut to 22 per cent (plus surcharge and cess) in September 2019.

Its outcomes 

Total corporation tax collections in 2019-20 did decline by about 16 per cent to Rs 5.57 trillion, compared to Rs 6.63 trillion in 2018-19. But the decline was just about Rs 1 trillion and not Rs 1.45 trillion. The tax collection figures for 2020-21 are not relevant because of the Covid impact. The latest provisional unaudited numbers with the Controller General of Accounts show that in 2021-22, corporation tax collections rose to Rs 7.12 trillion, surpassing by a good margin the collections made in 2018-19. In terms of their share in GDP, corporation tax collections in 2021-22 were still at 3 per cent, marginally lower than the 3.5 per cent seen in 2018-19. But it would not be unreasonable to expect corporation tax revenues to breach that ratio soon. The advance tax collections in the first quarter of 2021-22 have continued to show healthy growth. And the dispersion of tax liability spread over a larger number of companies in different income levels, seen in 2019-20, should continue to help overall collections buoyancy.

4. More on the elite capture of the economy. FT reports that BCG ran a summer internship program for the children of its senior executives.

Staff in Boston Consulting Group’s London office have complained about “nepotism” after the children of dozens of top partners flew in from across the world for an exclusive week-long work experience programme. The US-based consultancy ran the programme, consisting of days of workshops, this month for about 30 children of the firm’s managing directors and partners... “They received office tours, dinners and stuff that wouldn’t normally be given to [job] candidates. They basically made it a bit of a holiday for the partners’ kids who came over,” one current BCG employee told the Financial Times. The children were participating in BCG’s “Bruce Henderson Summer Programme”, named after the firm’s founder... Three BCG staff members worked for two months to prepare the programme, work that would cost external clients well more than £1mn, according to the BCG employee.

5. Fascinating book extract highlighting how motor vehicles had to fight with pedestrians to win the battle to have a greater right over road pavements. This was the case till 1920s,

City people saw the car not just as a menace to life and limb, but also as an aggressor upon their time-honored rights to city streets. “The pedestrian,” explained a Brooklyn man, “as an American citizen, naturally resents any intrusion upon his prior constitutional rights.”  ... Readers’ letters to the St. Louis Star express pedestrians’ indignation at motorists’ intrusion upon their rights. One letter, signed “Pedestrian,” complained that “the pedestrian is forced to submit to the tyranny of the automobilist.”  Other letter writers urged pedestrians to organize to defend their claim to the streets. “It might be necessary to organize an antiautomobile league,” wrote one. “The time is ripe for the common people and the pedestrian to organize,” wrote another. “We must all pull together,” wrote a third, and “insist on our rights to use the streets” until the “auto-hogs . . . wake up to the fact that they cannot do as they please and monopolize the streets.” 

Local police tended to blame motorists for pedestrian traffic casualties... Police and judicial authorities recognized pedestrians’ traditional rights to the streets. “The streets of Chicago belong to the city,” one judge explained, “not to the automobilists.”  Some even defended children’s right to the roadway. Instead of urging parents to keep their children out of the streets, a Philadelphia judge attacked motorists for usurping children’s rights to them. He lectured drivers in his courtroom... Juries tended to favor pedestrians as well... The leading city paper in Syracuse, New York, argued that the burden of safety lay properly with motorists... The New York Times claimed in 1920 that pedestrians’ rights to the streets were so extensive that “as a matter of both law and morals they are under no obligation” to exercise “all possible care.” The greater share of responsibility (moral and legal) lay with the motorist: “drivers justly are held to a greater care than pedestrians,” the paper contended.

It was only by 1930, through public debates, technology changes, and legal mandates that the superior right of the motor vehicle over the roads came to be recognised.