If we found out that a corporate leader had amassed his wealth not only by making a tidy profit on the goods or services he sold, but also by stealing the income and savings of innocent members of the public – people , who are not even affiliated with his company in any way – we would be outraged. There are demands for justice: compensation for the victims and prison for the perpetrators.
But what if something similar happened in our economy every day, across different companies and industries? What if some of the largest and richest companies and institutions secretly made significant profits by keeping their revenues to themselves – while passing on the costs of doing business to the public?
Take universities, which were in the headlines after the government’s Migration Advisory Committee (MAC) reported on graduate visas, which allow foreign students to live and work in the UK for at least two years after completing their studies. Although the essay question the government asked the MAC was written with the aim of obtaining a positive response – and highlighting the importance of the arbitrary target of attracting 600,000 new foreign students to the UK every year – the details of the said Report everything.
It found that 27 percent of graduate visa holders were not working at all. 41 percent earned less than £15,000. The largest groups by nationality were Indians, Nigerians, Chinese and Pakistanis, and graduates from these groups earned significantly less than everyone else: the average Pakistani, for example, earned just £14,402. As Neil O’Brien, the immigration-sceptic Tory MP, points out: “Given that full-time minimum wage work gives a c. £24,000 – that’s not a thesis.”
This comes as no surprise to anyone familiar with student migration. The vast majority of the increase in graduate visas reflects the increase in student visas: 66 percent of all graduate visas come from students pursuing postgraduate courses at non-Russell Group universities. As Prof. Alan Manning, the former MAC chairman, explains: “Universities sell not only education, but sometimes also work permits.”
We should be clear about what that means. Last year, 69 percent of people applying for graduate visas had studied in this country for one year or less. And 63 percent of those whose graduate visas had expired switched to another visa route. In other words, a one-year master’s degree – regardless of discipline, regardless of university – automatically entailed three additional years of living and working in the UK, and then, without much difficulty, a whole life.
The benefits to universities and those who work for them, from the lavishly paid vice-chancellors to the armies of lobbyists and public relations consultants hired to defend their particular interests, are clear. But for society, the benefits are doubtful and the costs are clear. Few college graduates who take minimum wage jobs become net contributors to the federal budget over their lifetime, and the increase in immigration caused by the graduate visa route is depressing our capital stock. The profits belong to the higher education sector, the costs are borne by the general public.
This type of hidden subsidy also applies to other sectors. Many customers marvel at the logistical brilliance of fast food delivery services, taxi apps and of course the ubiquitous Amazon. The extent of corporation tax that Amazon has avoided in the UK is well known, but what is less controversial is the way many of these companies keep their income for themselves and leave the costs to the rest of society.
Three years ago, after a lengthy legal battle, the Supreme Court ruled that Uber drivers are not independent contractors – as the company had previously treated them – but rather employees, which meant they were entitled to various labor market rights. The additional costs resulting from this ruling, as well as the associated decision to require Uber to charge VAT on rides, have reduced the company’s price competitiveness and thus demonstrated how much its business model relies on passing on its costs and responsibilities to others.
According to an investigation by Transport for London, Uber was responsible for 14,000 fraudulent rides 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 withdraw Uber’s license to operate in London, which has since been reinstated, but the practice continues at various other companies.
Companies such as Amazon, Deliveroo, Uber Eats and Just Eat all have “backup clauses” that allow couriers to share their profiles with others. With these clauses, in Amazon’s words, it is the original courier’s responsibility to “pay your representative… in any case you agree to them” and “you must ensure that any representative… has the right to do so in the UK to work”. .
Not surprisingly, this can be a recipe for exploitation and immigration crime. Investigations have uncovered a trade involving couriers who lent and sold their delivery accounts online. More than 100,000 people were found in Facebook groups where these identities are swapped, but no one knows how many substitutes work because few questions are asked and no records are kept. Insurance companies say many unauthorized couriers are involved in fraudulent motor vehicle and personal injury claims.
It is hard to deny that many companies privatize profits and socialize the costs arising from their business models, many of which rely on illegal immigration and illegal work – often by those on student visas – in the underground economy.
And whether we’re talking about the private equity funds that have siphoned huge sums from water utilities while avoiding the costs of their pollution, or the mistreatment of workers in warehouses or the fashion supply chain, or tax evaders in the Channel Islands, or any number of other examples In the modern economy, it is too easy to leave the negative externalities caused by your business model to the general public.
The strange thing is that our technocratic classes – so quick to recognize and stress the externalities of everything from driving a car to flying – do not realize what lies before them. They may be bound to the status quo by instinct and ideology, but we must reject it. Too many benefit in the long term at the expense of all of us. We can no longer allow them to make fools of us.