Investor actions to drive value and fairness through the Rule of Law

Investors can preserve and enhance value – and also enhance fairness – by building considerations of the Rule of Law into their investment approaches. If they act to reinforce the Rule of Law, there’s scope for them to bolster returns. If they don’t, they risk a significant loss of value over time.

Economies work better when the Rule of Law is in place. More commerce happens because businesses can trust each other, with the legal regime as something to fall back on if need be. Business occurs in the formal sector rather than informally, bolstering tax revenues and the overall robustness of the system. Investors can invest more because they have greater certainty that they will be able to retrieve their investments as well as make a fair return upon them.

The Rule of Law is fairness. By requiring that all, even the most powerful, are subject to the legal system, it ensures that governments and officialdom need to act fairly between parties and not in an arbitrary way. It is the basis on which commerce can happen without weaker parties fearing that they will be exploited by stronger ones in an excessively unfair way. It underpins capitalism by allowing us to believe it is worthwhile to agree contracts and to trust that they will be fairly enforced, and to believe that our property rights will be protected. The counterfactual of an absence of the Rule of Law makes for riskier business and riskier investments, and simply fewer investment opportunities because economic activity shrinks without these protections being in place.

Investors thus need to work to reinforce and bolster the Rule of Law so that their investments can prosper and flourish:

“This paper attempts to draw out the interdependence between economic prosperity, long- term investment and ESG, and the Rule of Law. It offers investors insights into the ways in which their ESG activities already interact with Rule of Law concepts and delivery. It seeks to develop ways in which this background issue can be brought more into the foreground of investor and company ESG activities.”

This quote is from my recently-published discussion paper for the excellent Bingham Centre for the Rule of Law. The paper also sets out concrete actions that investors can take to deliver on bolstering the Rule of Law. Among the tools available within the paper are a set of questions that investors might ask as part of these efforts. Reflecting the different roles in the investment chain, these questions come in different sections. Most notable are questions from asset owners to their fund managers, and questions from fund managers to their investee companies and other assets.

Among the questions for asset owners to ask their fund managers are:

  • Which countries, if any, would you avoid investing in because of Rule of Law concerns? If none, why not? Why do you believe that you have sufficient protection for your investments in the absence of confidence in the Rule of Law?
  • We note your increased exposure over the period to investments in [country XXX]. What due diligence have you done to be confident that the Rule of Law is sufficiently in place in that country for you to be assured of the returns you hope for from those investments?
  • How do you integrate Rule of Law considerations into your stewardship activities, either in terms of activities to deliver against Principle 4 of the UK Stewardship Code 2020 or in your dialogues with investee companies?
  • What are you doing to help ensure a fair playing field for companies that are seeking to maintain high ESG standards across their activities and supply chains, so that they are not undercut by less scrupulous competitors? How do you avoid investing in those less scrupulous competitors?

The questions that asset managers might ask their investee companies include:

  • Which countries, if any, would you avoid investing in or working with suppliers from because of Rule of Law concerns? If none, why not? Why do you believe that you have sufficient protection for your investments and stakeholders in the absence of confidence in the Rule of Law?
  • Which countries do you operate in where you are most concerned about your ability to rely on the legal system to enforce your rights?
  • Are you confident about your ability to repatriate cash from your operations in [country YYY]?
  • Where do you see legal and regulatory frameworks eroding that you believe may be a cause for concern in future years?
  • Which countries do you operate in where you are most concerned about the extent to which the law allows others to outcompete on the basis of treating stakeholders less well than you believe is appropriate for your business?

The Rule of Law is fairness. It underpins good business. Smart investors who want to have good businesses and strong economies to invest in therefore have a clear interest in reinforcing the Rule of Law. Asset owners need to include this in their oversight efforts.

See also: The Rule of Law is fairness; Dobbs isn’t

Board actions to drive value and fairness through the Rule of Law

The Rule of Law and investor approaches to ESG: Discussion paper, Paul Lee, Bingham Centre for the Rule of Law, September 2022

Board actions to protect value and boost fairness through Rule of Law

Board directors need to think about their company’s exposure to countries with a weak Rule of Law. If they don’t, they risk a significant loss of value to their business over time.

The risk to value from getting this wrong is substantial. One of the case studies in my recently-published discussion paper for the excellent Bingham Centre for the Rule of Law highlights a backdoor to cyber-attack that some companies opened up through operating in a country with weak Rule of Law. When the cyber-attack came it was one of the costliest in history. At least five major multinationals have each acknowledged losses of hundreds of millions of dollars from the attack; the total cost is estimated at $10 billion. The loss of confidence in affected businesses was on top of these high financial costs. Boards need to be giving this active consideration, or they risk substantial losses of value.

As well as value, the Rule of Law is fairness. By requiring that all, even the most powerful, are subject to the legal system, it ensures that governments and officialdom need to act fairly between parties and not in an arbitrary way. It is the basis on which commerce can happen without weaker parties fearing that they will be exploited by stronger ones in an excessively unfair way. It underpins capitalism by allowing us to believe it is worthwhile to agree contracts and to trust that they will be fairly enforced, and to believe that our property rights will be protected.

The Rule of Law is thus a basic foundation for companies to be confident in doing business in a country. Companies, and their boards, need to work to reinforce and bolster the Rule of Law so that their businesses can flourish. Some seek to sidestep local Rule of Law issues by contracting under the law of other jurisdictions (most usually either England or New York). But even when this is done risk exposures remain, and boards need to understand those risk exposures and to reassure themselves that those risks are understood and managed – and that efforts are in place to minimise them over time. Supply chains extend many companies’ risk exposures into markets where their direct control will be minimal.

My recent paper highlights all of this, and sets out concrete actions that boards can take to deliver on it. Among the tools available within the paper are a set of questions that board directors might ask executive management to gain reassurance and also to influence a greater effort to bolster the Rule of Law by their companies. These questions include:

  • Which countries do we operate in where it is most difficult to work according to the standards we aspire to? What can we do to address this and alleviate any risks that arise, reputational or otherwise?
  • What countries are we exposed to through our supply chains where the standards are lower than we might expect? What can we do to address this and alleviate any risks that arise, reputational or otherwise?
  • What frameworks can we choose to apply in those countries to ensure that we are living up to the standards that we believe are necessary? Who else should we work with to build such frameworks if they do not exist?
  • Are our pay and incentive structures right in markets where there is a high perception of corruption risk? How can we be confident that our staff will not be tempted to behave inappropriately?
  • Are there any particular cyber security issues that arise from our operations in individual countries? Could our protections be enhanced by better regulations or other standards, and heightened enforcement? What could we do to support such steps?

The Rule of Law is fairness. It underpins good business. Good businesses therefore have a clear interest in reinforcing the Rule of Law. Boards need to include this in their oversight efforts.

See also: The Rule of Law is fairness; Dobbs isn’t

Investor actions to drive value and fairness through the Rule of Law

The Rule of Law and investor approaches to ESG: Discussion paper, Paul Lee, Bingham Centre for the Rule of Law, September 2022

An index of fairness

One reason I favour the concept of fairness over discussions of inequality is because of its imprecision. Fairness is a sense, a feeling – unfairness generates a visceral discomfort, waking primaeval emotions bred into us by millennia of successful evolution. Inequality is dully a number, usually reduced to a single economic metric, most often the Gini coefficient. The unmeasurable is more powerful, I believe, than the measured.

So I was wary when the excellent Fairness Foundation announced plans for a Fairness Index. Would they be trying to reduce fairness to a similar single number, ignoring the power of it as a driving force for change? I should, of course, have had more confidence.

What the Fairness Foundation has done is much, much richer than trying to develop a single index metric. Rather, it has gathered three headline measures under each of its five fair necessities – Fair Essentials, Fair Opportunities, Fair Reward, Fair Exchange, Fair Treatment.

Here are two samples of these measures, first those under the banner of Fair Opportunities:

And second, the measures regarding Fair treatment:

But the Fairness Foundation recognises that even having 15 headline metrics doesn’t go far enough to capture the emotional richness that is the sense of fairness. Instead, it goes further, and proffers underlying statistics to enable us all to gain greater understanding of what drives the headline metrics and where the levers might be to start addressing the unfairnesses that they reveal.

It goes further still, though, by providing what it calls ‘Substance’, a collation of major studies and reports that capture deeper insights into the problems of fairness that we currently face. These are from groups such as the Child Poverty Action Group, the Joseph Rowntree Foundation, the Resolution Foundation, the High Pay Centre and many more. It also offers ‘Solutions’, under three headlines:

  • Making Jobs Better
  • Making the essentials affordable
  • Taxing wealth better

There are also a survey of public sentiment – which showed the following striking difference between sentiment of those questioned before seeing the Index measures and those surveyed after seeing them – and further perspectives and resources. It is a rich seam of materials.

The richness of this suite of data and insights means that the Index, rather than being a single number, provides real and fresh insights, and possible ways forward too.

Speaking at the launch webinar, Torsten Bell, CEO of the Resolution Foundation, noted the danger of headline numbers that normal indexes and averages can provide. Policymakers often miss trends and shifts by focusing on averages, he said, referencing as an example the home ownership crisis for younger people having been masked by headline numbers on ongoing rises in ownership overall. To avoid such failures to notice problems, he argued, policymakers need to look within averages rather than simply focus on the averages. Of the Fairness Index, he said: “This index does a good job of providing lots of different cuts of the data to try to discourage us from missing important trends hidden by averages.”

The Fairness Index isn’t an index. In many ways, the individual measures and their collation aren’t indices either. Rather they are indicia – a set of indicators – that collectively reveal something much more. They’re all the better for that, rather than trying to distil fairness to a single number which would remove meaning and risk masking trends. That richness of information gives us a good chance of understanding the sense of fairness and being moved to try to address current unfairness.

See also: What gets measured gets managed – unfortunately

Fairness Foundation

Fairness Index

Fairness Index launch webinar

Taxes to drive fair growth

Closing gaps in taxation is a necessary step to fairness. It can also boost growth, according to recent work from the IMF:

“Increasing the efficiency and equity of revenue collection is therefore crucial to help mitigate the negative distributional effects of the pandemic and higher commodity prices. A more efficient tax system would help boost revenue and fund social and infrastructure spending, which can spur growth and reduce inequality of opportunities.”

As it happens, the paper is focused on challenges in the Middle East and Central Asia, but it is clear that the arguments apply elsewhere too. We know generally that fairer tax systems are better for growth than those favouring the wealthy. And the prescriptions that the IMF staffers produce certainly seem to have application beyond the region:

  1. Reducing tax exemptions on personal and corporate taxation
  2. Removing inefficient corporate tax incentives and improving corporate tax design
  3. Increasing progressivity in personal income taxes
  4. Improving the design of value added taxes (VAT)
  5. Developing taxation of wealth

They also make a series of recommendations that effectively centre on bolstering the Rule of Law and increasing trust in institutions.

I won’t comment on all of these potential prescriptions. I’ve argued strongly before of the need to equalise capital gains taxation with income tax rates: the persistence of capital gains strongly suggests it is much more income-like in practice than its favourable tax treatment would imply. I’ve also argued that companies need to consider fairness in their approaches to taxation. I won’t repeat those arguments here. Instead I’ll look briefly at two further areas that may also be worthy of attention from policy-makers: progressivity in personal income taxes and closing VAT loopholes.

On both personal taxation and corporate taxation, the paper makes clear it is not so much the headline top rates of tax that matter, but the rates that individuals and companies in practice face. The existence of exemptions and incentives can distort effects, and it’s the overall structure of the tax is what matters. This chart, on personal income tax rates in what the IMF calls advanced economies, is particularly striking:

What the chart calls ‘redistributive capacity’ really means the extent to which redistribution is in practice delivered by the tax system – countries below the line are failing to deliver fully on their opportunity for more fairness through the tax system, while those above the line are delivering more fairly. There must be real value in exploring how those above the line are delivering greater efficiency in terms of the progressivity – fairness – of their personal tax systems. Others could follow.

To turn to VAT: sales taxes are usually deemed regressive, because they apply to sales whether they are to the poor or to the wealthy. However, a study by Rita de la Feria – recognised as one of the world’s leading experts on sales taxes – and Australian colleague Michael Walpole that considered European and Australian experiences with VAT and the ways in which the taxable base is manipulated argues convincingly that this is not true: “since consumption, even of essential items, is overwhelmingly by the highest income households, when there is a VAT reduction—assuming this reduction is passed-through—it is those households that primarily benefit from VAT decreases”. They note that this will be particularly true in developing economies with significant informal economic sectors (as in such situations, many transactions by poorer people will never be subject to sales taxes while the wealthier are much more likely to trade in the formal sector), but it is true more broadly.

Their conclusion on this is therefore:

“reduced rates of VAT…effectively subsidise the consumption of the households at the higher levels of the income distribution. This in turn means that, contrary to intuition, reduced rates of VAT, as with any other exclusions from the base, do not necessarily reduce the regressivity of the tax, but can, on the contrary, increase it.”

Clearly, the progressive impacts of sales tax increases (by removing distorting lower rates, including zero rates) will be bolstered if the increased revenues are used to enhance welfare payments or otherwise support poorer families. The study argues that this may be needed to overcome the likely arguments against reform, which will tend mistakenly to misuse fairness arguments. The study sets out a large range of ways in which sales tax systems around the world have embedded unfairnesses based on arbitrary distinctions between products that lead to significant differences in the taxable rate. This opens a significant opportunity.

The IMF team states: “Disruptions in lives and livelihoods as a result of the pandemic and, recently, the war in Ukraine have made revenue mobilization more pressing to fund critical infrastructure and social spending and support inclusion.” That’s true around the world. Rising to the challenge of tax fairness is a challenge for global governments, not just those in the Middle East, and it will help unlock growth.

See also: Taxing gains, closing loopholes

Talking with the taxman about fairness

Fair growth

Revenue Mobilization for a Resilient and Inclusive Recovery in the Middle East and Central Asia, Geneviève Verdier, Brett Rayner, et al, IMF Departmental Paper, July 6 2022

Middle East Needs Fairer Taxes to Aid Growth and Ease Inequality, Jihad Azour, Priscilla Muthoora , Geneviève Verdier, IMF blog, July 6 2022

The Impact of Public Perceptions on General Consumption Taxes, Rita de la Feria, Michael Walpole, December 2020, British Tax Review 67/5, 637-669

Fair growth

“It will trickle down”

Nope. They’ll build spaceships with it.

So reads a popular message on social media. We know that the wealthy live in a very different world from the majority, and experience things like inflation differently. It means that tax cuts for the wealthy may bring some growth – but it is likely to be a very different form of growth from that which would come from poorer members of society having more money (whether that might be through lower taxes, more social security benefits, or simply being paid higher salaries). Even those who believe that growth in GDP (a very narrow definition of human success) is a good and desirable thing need to be thinking about not just growth but fair growth.

In considering whether growth is fair, we also need to consider what actions may best deliver greater growth. And there is strong evidence that lowering taxes for the wealthy leads to much lower growth than more broadly-based tax reductions.

In a 2019 study Owen Zidar, now Professor of Economics and Public Affairs at Princeton University, used differences between the distribution of incomes in different US states to provide a series of natural experiments giving insight into what the impact of changes in tax rates at different parts of the pay scale are on growth.

Zidar’s conclusion is simple:

“If policy makers aim to increase economic activity in the short to medium run, … tax cuts for top-income earners will be less effective than tax cuts for lower-income earners.”

He also finds:

“the positive relationship between tax cuts and employment growth is largely driven by tax cuts for lower-income groups and the effect of tax cuts for the top 10 percent on employment growth is small.”

This shouldn’t be surprising – the growth sparked by lower income households having higher spending capacity is likely to be spent locally, rather than spent on more esoteric, often imported high status goods or international experiences (let alone spaceships!). Growth sparked by lower income households is also certain to be more geographically spread across a given country given the way the wealthy concentrate themselves in a limited number of places (a physical reflection of the metaphorical different world in which they live). Given the way we define GDP, shifting activity back into the economic zone from charitable activity – such as buying goods in supermarkets rather than reliance on foodbanks – will also be reflected in growth figures.

The world is worried about anaemic growth. In large part, this has arisen because of the persistent downward pressure on middle class pay levels. Addressing that directly may offer a better response to the challenge than any other. Fairer pay for these workers – whether or not sparked or supported by tax or social security changes – may provide the best route to fair growth.

See also: Inflation’s two separate worlds (at least)

The growth myth

The centre cannot hold

Tax Cuts for Whom? Heterogeneous Effects of Income Tax Changes on Growth and Employment, Owen Zidar, Journal of Political Economy, 2019, vol. 127, no. 3

Hopes for fair pensions

“low-paid workers continue to face a greater risk of receiving a pension that delivers an inadequate standard of living in retirement”

It’s the starkest of the conclusions of a new analysis of pension saving. This Resolution Foundation work reveals we are a long way away from having fair pensions.

If you talk to pensions specialists about making pensions fairer they tend to think immediately of GMP Equalisation – the arcane process of addressing historic gender inequalities in pensions. Though the issue has been known for some years, the complexities of addressing it mean it is far from finished working through the system. But huge though this unfairness is, there is a much greater issue out there: whether future pensions will be enough to avoid significant proportions of the population retiring into poverty. People may be being fooled into the current minimum savings requirements into thinking they will achieve the fair and comfortable retirement that people expect at the end of their working lives.

Unfortunately, the Resolution Foundation analysis on Living Pensions suggests that many will instead retire into destitution. The Living Pensions work is so-called because of its association with the Living Wage Foundation, which presses that pay should at least reach a minimum threshold that enables people to live a decent life. By analogy, the Living Pensions analysis seeks to identify levels of pension saving that should enable people to live a decent life in retirement – and it identifies how far away saving levels are currently from those needed to deliver that fair outcome.

The work on the Living Pension is based on the new world of pensions. I explain this new world briefly at the foot of this blog to avoid the details getting in the way of the message about fair pensions, and our current lack of them.

The Resolution Foundation’s work identifies minimum necessary savings levels of 11.2% for those saving for their whole working lives, or 16.1% for those starting to save later (in effect, some time in an individual’s 30s). In 2019, the minimum contribution level as a portion of salary that must be paid under auto-enrolment rose to 8%. Even though this 8% falls below the levels estimated necessary to achieve a Living Pension – it is notably half the rate estimated to be required for those who do not save for the whole of their working lives – it isn’t being achieved. “Given the influence the auto-enrolment scheme is having on workers’ contribution rates, it is not surprising that we find relatively few workers are saving at or above the [Living Pension] benchmarks,” says the Resolution Foundation. Statistics suggest saving levels for the poorest – where a fair pension threshold must matter most – may be as low as 3-5% on average.

Even with auto-enrolment, the Resolution Foundation analysis of ONS data shows that fully 35% of workers are still not saving into a pension at all. That number rises to 74% for those in the lowest fifth of earners – nearly half of whom do not earn enough to reach the threshold at which they must be auto-enrolled (£10,000; and contributions are only made on earnings above £6,240).

And that is before the cost of living crisis fully kicks in and makes more people study carefully every item of their expenditure, which may include paying into pensions. While every employee must be auto-enrolled into a DC scheme, everyone can choose to opt out and stop their contributions. Anecdotes suggest an increase in opting out has already begun.

The overall statistics show, positively, an increase in overall levels of pension saving (though this is before any impact from the cost of living crisis). But they also show just how far below the necessary levels of saving we are overall:

Retirement savings rates, Living Pensions, Resolution Foundation

No wonder that a number of pensions experts are very worried. Particularly striking was a recent LinkedIn post from Charlotte O’Leary, CEO of Pensions for Purpose, which began “I cried yesterday…”. Charlotte wonders if it will take a generation retiring into poverty before we as a nation begin to save more appropriately for our pensions.

Helpfully, the Living Pension calculations are not just based on percentages of salary but also offer absolute rates of saving necessary to build funds sufficient for a decent living standard in retirement. These are £2,100 a year for those saving for their whole working lives, and £3,000 for those who only start to save later. This has to make sense, and fits with the heritage of the Living Wage Foundation. Only real levels of cash can be lived off, not percentages of variable salaries over a working life. A Living Pension is only fair and can only amount to that baseline necessity if it provides an absolute threshold of cash that will keep people at a decent level of living.

Unfortunately, under 20% of us are reaching these thresholds for saving. The Resolution Foundation says: “82 per cent of workers (again, approximately 16 million) [in] 2018-20 were saving at or below the ‘whole career’ cash benchmark, and even more (89 per cent, or 18 million) were saving below the ‘all age’ cash benchmark.” Most of those saving at these levels are earning significantly more than the real living wage – almost all are in the top two-fifths of earners – so even those who are meeting the Living Pension cash thresholds risk finding their spending ability in retirement being much more constrained than they are used to. As with previous failures to deliver pension fairness, there is also a major gap between the sexes: 23% of men meet the ‘whole career’ cash benchmark, while only 15% of women do. We are storing up real problems for fairness in the future.

This point that calculating pensions merely as a percentage of salary may give the wrong answers and that we need to consider much more actively absolute numbers has a counterpoint at the upper end of the pay scale. Investors have pressed hard that executive directors should not receive pension benefits that go beyond those of the wider workforce – and now, some four years on from this being specifically referenced in the UK Corporate Governance Code and in investor expectations, this has largely been delivered (in the UK at least; elsewhere is another story) – at least in terms of the percentage of salary. But any fair assessment of whether the pension benefits go beyond those enjoyed by the broader workforce surely needs to go beyond just percentages: if percentages don’t tell the whole story regarding fair pensions at the bottom end of the pay scale, then perhaps we shouldn’t be so satisfied just with aligning percentages at the top end. Any company that is aspiring to be a fair wage employer needs also to consider being a fair pension one too, and that probably requires considerations of minimum cash payments into staff pension pots, not just percentage payments that may or may not match those enjoyed by the boss.

There is also a structural complexity to delivering fair pensions. My old pal and former colleague David Pitt-Watson made the point in questions at the launch event that the Living Pensions calculations entirely miss longevity risk – the pensions jargon for those who live longer than expected. Living longer is obviously a wonderful thing for the individual and their families in general terms – except that if their pension is based on a fixed pot of money, living longer risks individuals falling into destitution. Because they are based on average necessary pension pots, and based on a regulatory system that means every individual’s pension pot belongs to them alone, some of those with Living Pension average pots will die prior to their pension pot being used up and some will die after. Those who live longer risk having used up their pension pot before death and so having years where their pension isn’t fair, even if they have in fact reached the Living Pension threshold. The Living Pension in the context of the current defined contribution (DC) model may not turn out to deliver on the name even for half of those who achieve the threshold savings levels and fund value.

David has a long heritage in the world of pensions, and has helped lead work, not least at the RSA, on a new form of pension for the UK, Collective Defined Contribution (CDC). CDC pensions have just been given initial regulatory approval and we are likely to see the first launched shortly. CDC offers some opportunity to address this problem with the defined contribution world. The collective element of CDC allows pooling of longevity risk; it is only with such pooling that the unfairness of pots running out before an individual dies can be addressed.

In a personal conversation, David summarises the position simply: “It isn’t a pension if it’s just a cheque.” The work by industry body the Pensions and Lifetime Savings Association on its Retirement Living Standards re-emphasises this: its work on living standards in retirement is all about income not pension pots, and suggests a ‘minimum’ income in retirement needs to be £10,900, or £16,700 for a couple.

It seems that in a post-defined benefit world only within the context of CDC can fair pensions actually deliver on the promise of a Living Pension.

In brief: the new world of pensions

There are three aspects to the new world of pensions: the move from the historic Defined Benefit (DB) structure to a Defined Contribution (DC) approach; pension freedoms; and the requirement that all employers now offer all staff a workplace pension, through so-called auto-enrolment.

Defined Benefit pensions – sometimes called final salary schemes – were the promise from an employer that they would pay a fixed annual pension to former employees, based on their years of service and usually the final salary that they were paid. For example, many individuals built up promises worth a sixtieth of their salary for each year of service (though some schemes were based on fortieths or eightieths) – the benefit was the fixed element and employers promised to provide the funding necessary to support this. DB now feels like ancient history, partly because its implicit assumption of working for one employer for much of one’s career now seems an anachronism and partly because people lived a lot longer than expected, making the pensions promise much more expensive than planned. Companies have regretted their generosity and the balance sheet risks that such pensions brought and have largely withdrawn from offering defined benefits – though many are still funding those past promises. In large part, DB pensions are now only available in the public sector.

In the DC world the only thing that is fixed is, as the name suggests, the contribution – the amount of money put aside each month. This is used to buy investment products that hopefully will perform well enough to provide scope for pension payments after retirement. Individuals face much more risk in the DC world, especially investment risk over their lifetime of saving. While death, like taxes, is a certainty, its timing isn’t, and individuals in a DC world also take on the financial risk that a long life may bring, that even the largest pension pot may run out, with no sharing of risks and no backstop (other than state pension provisions).

Former chancellor George Osborne took the further step along this line of seeing pension saving just as the creation of a pot of money rather than a later-life income stream. In 2015 he announced what were billed as pensions freedoms – releasing the obligation to use pension pots to buy annuities (rights to income payments) and allowing people to unlock their pension pots for other purposes at the age of 55. Many have used this freedom wisely, but many have found it is a freedom to lose money through mistaken investments and fraud. Often it seems the wealthy have paid for valuable advice and the less well-off have been exploited by fraudsters. The full consequences of these freedoms are yet to be seen.

Automatic (usually auto-) enrolment is the requirement since 2012 that every employer should offer all staff paid more than a minimal level some form of pension provision. Minimum levels of saving are 8% of qualifying earnings (between £6,240 and £50,270), at least 3% from the employer and the remainder, up to 5%, from the employee (when first introduced the total auto-enrolment minimum was 2%, 1% from each party). This has helped drive much broader pension saving, and led to the creation of a number of specialist workplace pension providers, such as Nest and NOW Pensions. Nest in particular, the largest of the new providers, is now a substantial financial institution with £24 billion assets under management.

Full disclosure: I am a Nest customer and have provided some stewardship advice to NOW. I have also provided advice to a trustee of the likely first CDC pension provider.

Living Pensions: An assessment of whether workers’ pension saving meets a ‘living pension’ benchmark, Nye Cominetti, Felicia Odamtten, Resolution Foundation, July 2022

“I cried yesterday…”, Charlotte O’Leary, CEO, Pensions for Purpose, LinkedIn post, 3 August 2022

UK Corporate Governance Code 2018, Financial Reporting Council

Investors to Target Pension Perks and Poor Diversity in 2019 AGM Season, the Investment Association, 21 February 2019

On track for fair pensions launch event, 28 July 2022

Collective Defined Contribution Pensions Forum, RSA

A new third way for pension savers, Guy Opperman, Pensions Age, 1 August 2022

Retirement Living Standards, Pensions and Lifetime Savings Association

Should people be saving more for retirement?, Institute for Fiscal Studies podcast, 10 February 2022

The Rule of Law is fairness; Dobbs isn’t

“Unless there is the clearest provision to the contrary, Parliament must be presumed not to legislate contrary to the rule of law. And the rule of law enforces minimum standards of fairness, both substantive and procedural.”

So spoke Lord Steyn giving his judgement as part of the majority in the House of Lords in the Pierson case, rejecting a political intervention in the justice system. The Home Secretary (the often-grandstanding Michael Howard) was seeking to increase the sentence given to a young murderer – which had been set according to the standards then established by Howard’s predecessors. This rejection of a political intervention into a properly decided legal determination could not be a clearer example of the rule of law: even elected politicians must act within the frame set by the law. And, as Lord Steyn makes clear, that frame is in essence one of fairness. The rule of law is fairness.

The rule of law seems to many an abstruse concept – about the law sitting above all of our actions – but at its core it is simple: the activities of even the most powerful are subject to constraints. Without it, we might face arbitrary treatment by the government, through police actions say, or through administrative decisions that lack procedures where the views of impacted individuals are heard. Without it, the strong and the wealthy would be able to exploit their strength and wealth and squeeze the rights and powers of the weaker and poorer. Often, it will feel like many of these things happen anyway, but it could be worse – and in countries which lack full benefit of the rule of law, it is.

The rule of law underpins capitalism, allowing us to believe it is worthwhile to agree contracts and to trust that they will be enforced, and to believe that our property rights will be protected. These factors mean that having the rule of law in place was a foundation for the economic success of the last centuries. Sometimes it feels like courts too need to remember this – not least in the country proudest of its recent economic history. US courts, though, seem at risk of forgetting it.

Lord (Tom) Bingham, the pre-eminent judge of his generation, brought the rule of law from its abstruse level to more ready recognition in his seminal short book on the topic. He sets out eight principles of the Rule of Law:

i. The law must be accessible and so far as possible intelligible, clear and predictable.

ii. Questions of legal right and liability should ordinarily be resolved by application of the law and not the exercise of discretion.

iii. The laws of the land should apply equally to all, save to the extent that objective differences justify differentiation.

iv. Ministers and public officers at all levels must exercise the powers conferred on them in good faith, fairly, for the purpose for which the powers were conferred, without exceeding the limits of such powers and not unreasonably.

v. The law must afford adequate protection of fundamental human rights.

vi. Means must be provided for resolving, without prohibitive cost or inordinate delay, bona fide civil disputes which the parties themselves are unable to resolve.

vii. The adjudicative procedures provided by the state should be fair.

viii. The rule of law requires compliance by the state with its obligations in international law as in national law.

In short, the rule of law is fairness. A great organisation named for Bingham – the Bingham Centre for the Rule of Law – now tries to promote the concept, and its effective recognition in practice, in the UK and around the world. There are times when its work seems to be getting harder, but that makes the work of course still more important.

Fairly or not, the UK and the US are nations that proudly think of themselves as governed by the rule of law. As early as in the 1830s, Frenchman Alexis de Tocqueville in his tour of the developing US democracy noted the importance of the law in how its political system functioned. Both nations now have Supreme Courts (the UK one created when the function of the House of Lords as a judicial chamber was replaced to make more clear the separation of powers between legislature and judiciary). But the US Court now seems to have become more a political body than a legal one – in ways that do not serve the rule of law and fairness.

The series of cases recently decided certainly have a political flavour, and the splits on the Court now seem much more on ideological lines than was previously the case. Indeed, the most recent slew of decisions appear to display coherence more through political views than legal analysis. It is also becoming clear that this Court is willing to take decisions that it does not need to. The recent cases include among others: barring the Environmental Protection Agency from taking forward emissions caps under the Clean Air Act that were never pursued (West Virginia v EPA), freeing a sports coach to make religious observance on the sports field, encouraging broad participation (Kennedy v Bremerton School District), overturning the right to abortion (Dobbs v Jackson Women’s Health Organization), preventing recompense being due from a police officer to an innocent individual who was interrogated and threatened in clear breach of Miranda rights protections (Vega v Tekoh), banning a state law against the carrying of firearms (New York State Rifle & Pistol Association v Bruen), and barring a state law that rejects state funding for private religious schools (Carson v Makin).

The EPA judgment and that in a case on worker protections at a nuclear facility (US v Washington) need not have been as broad, and it is arguable that in their specific circumstances they need not to have been considered at all (the EPA rule was never enforced and the worker protections were rapidly rectified). But this Court, for all that it would claim not to be an activist one, goes to places it needs not. This tendency is most clear in Dobbs.

Unusually, there are five separate judgements in Dobbs; as well as the majority view (agreed by five judges, two of whom also filed concurring opinions) and the dissent (agreed by three), there is an opinion from Chief Justice Roberts which agrees only with the decision at hand, not with the overall majority opinion. While the majority opinion and the two concurring opinions appear to be mostly history, and the dissent mostly politics and rights, Roberts’ opinion seems to be largely law.

Throughout all the Dobbs opinions, the issue of stare decisis is a central consideration – the legal principle that an existing decision should stand, in all but the rarest circumstances. Considerations of this principle are clearly central to the ultimate court decision since it chose to overturn Roe v Wade, the 1973 decision granting constitutional protection to the abortion rights. We’ve seen that predictability and consistency of the law and court decision-making is central to the concept of the rule of law (both are explicit in at least the first two of Bingham’s principles). The majority largely argues that stare decisis doesn’t matter if the original decision was wrong – and for those who fear the rolling back of anti-racism laws the fact that the overturning of Plessy v Ferguson is lauded across the opinions is helpful (Plessy was the racist decision overturned in 1954’s Brown v Board of Education, the great and unanimous Supreme Court finding that enforced the desegregation of schools).

Roberts CJ is more nuanced and more clear. He urges that stare decisis means that the Court should not do more than it needs to. In the case in hand, he argues that there is no need to overturn Roe v Wade in its entirety. Rather, the Supreme Court should consider the case as it was when the Court agreed to consider the arguments – it was only when those arguments were made that the Court was urged to consider overturning Roe v Wade. Roberts starts his opinion by noting that when the court granted the right to plead the case before it, it was to decide the narrow question of whether all pre-viability bans on elective abortions were un- constitutional, and he believes that is the only question that the Court needed to have considered and should have considered. He concurs with the majority only to the extent that they, in his view, answer this question correctly.

The rule of law is fairness, but that does not mean that the courts are justified in all actions. Rather, like all arms of the state, they need to take their decisions within a framework of controls and constraints. It’s hard not to agree with Chief Justice Roberts that the Supreme Court has risked stepping beyond that framework. Fairness, and the rule of law, require a little more circumspection.

R v Secretary of State for the Home Department, Ex Parte Pierson (1997) 3 WLR 492

The Rule of Law, Tom Bingham, 2011, Penguin

Bingham Centre for the Rule of Law

De La Démocratie en Amérique [Democracy in America], Alexis de Tocqueville, 1835 & 1840

Opinions of the Supreme Court, October 2021-2022 term

Dobbs v Jackson Women’s Health Organization

Tax shouldn’t be a choice

“I understand and appreciate the British sense of fairness and I do not wish my tax status to be a distraction for my husband or to affect my family.”

It is welcome to hear anyone refer to the sense of fairness. But when that woman is a millionaire who happens to be married to a cabinet minister, the reference perhaps gains an added resonance. It’s a shame though, when it appears that the sense of fairness is only brought to bear to drive a change in behaviour following newspaper headlines, and both personal and political embarrassment.

I don’t wish to linger particularly over the personal choices of Akshata Murty, daughter of the founder of India’s tech giant Infosys and wife of British Chancellor of the Exchequer Rishi Sunak, to start paying UK tax on her worldwide income rather than just that remitted to the UK – though notably she is choosing to retain her non-domiciled status for inheritance tax purposes, likely to be a much more valuable decision. And I’m sure that I should at this stage note more generally that I make no comment on the tax position of Murty, or any other individual or corporation. Her comments serve simply as an introduction to general thoughts that are not intended to have any particular target.

Tax is, famously, one of only two certainties in life. For most of us, it is indeed a fixed certainty. Yet as Murty shows, for the wealthy – and for companies – tax is rather more a matter of choice. We need to assume that no one evades taxes (that is, after all, illegal – though this story from the FT just today suggests that we and the tax authorities simply don’t know) but by linguistic sleight of hand and legalistic structuring, some do avoid it.

Tax expert Dan Neidle, newly retired from Clifford Chance and now operating as Tax Policy Associates, explains several of the choices that are available to the wealthy to limit their tax bills – see for example his briskly entertaining ‘How to avoid UK tax if you’re an oligarch’. The wealthy can choose to take income in forms that aren’t income for tax purposes, or which are taxed at a lower threshold. They can decide to take the benefit of capital gains without ever crystallising them, they can use trusts and corporate structures to pass ownership through the generations without facing inheritance taxes.

Multinational companies have even more choices of ways to smooth their tax burdens and avoid (never evade) taxes. Just as ordinary folk don’t have the options that are available to the wealthy, domestic companies face many more constraints and have fewer choices available to them. This can mean that multinationals are handed a further advantage and can undercut their more heavily taxed local rivals.

There are of course multiple attempts by the tax authorities to limit the choices available to those who have them. The G7 tax deal from this time last year attempts to set a minimum tax level of 15% globally (though with many exceptions and caveats that reduce its effectiveness). In a similar way, individual countries, notably the US, set minimum tax levels for income taxes in an attempt to ensure individuals cannot use exemptions to bring their tax burden too far below the nation’s headline rate. It should be said, though, that the US’s Alternative Minimum Tax (of 26% or 28%) itself has several degrees of complexity, and as I have noted, the wealthy need not take all of their income (as broadly understood) as income in the narrower way that tax regimes understand it. Given that income levels can be so manipulated, it is not surprising that there are increasing calls for taxes based on wealth rather than on income.

The way the choices that companies make can play out is amply demonstrated by the ongoing work by the Fair Tax Foundation (now preparing for the rapidly-approaching 2022 Fair Tax Week) in looking at the tax gaps of the so-called Silicon Six – Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft and Netflix. The tax gap is the often large gap between cash tax paid and that provided for in accounts. The Foundation’s recent update on Amazon shows that its tax gap continues to grow:

Fair Tax Foundation

Amazon faced a shareholder proposal at its AGM this week, calling for the company to issue a tax transparency report. In its formal response to this proposal, the board did not argue against tax transparency, but did note that “we believe the prescriptive granularity of the GRI Tax Standard’s reporting would potentially force disclosure of competitively sensitive information about our operations and cost structures and would hamper our ability to make operational decisions”. It also suggested that the focus on income taxes is mistaken and that its property and payroll taxes (both of which are much harder to avoid) should also be taken into account.

Perhaps Amazon should take care with this argument: just as with individuals, if income taxation falls into disrepute it may be that there is a shift to other ways to calculate tax liabilities for companies, in ways that may be less easy to avoid. In any case, independent shareholders did not seem particularly persuaded by the company’s arguments, with around 21% of them voting for the proposal. This provides a sign that shareholders are more willing to press for tax transparency.

Let’s hope so. Investors need to have more conversations with companies about tax matters. In my experience, it was only the language of fairness that elicited useful discussions on tax with company boards. Companies have had detailed advice on their structures and – except in the most unusual circumstances – what they do is legal. But they need to consider whether the choices that they make are fair and just. My best conversations with board chairs always focused on whether there was some tax structure or approach that might cause the company embarrassment. The scale of tax gaps can be a sign that there is an issue, essentially where there is a sizeable gap between cash tax paid and the headline rate of the home jurisdiction. Where such a gap is big, there’s a danger that a fair approach has not been applied – and that profit margins may not be sustainable in the long-run as the tax rate actually paid becomes fairer. That is certainly something that should matter to all investors.

Tax should be a certainty. Tax is the entry fee to a civilised society, and while the wealthy may feel that they can pay privately for everything that society provides they are more dependent than they wish to admit. They may tend to take for granted the availability of staff and the general good running of the state, but these are things that all of us depend upon and which themselves depend upon a functional society that is able to fund itself, in part at least, through taxation. States need to be able reliably to raise the funds that they need, confident that the tax levied will be paid as due. Tax should be a certainty, not a choice.

For those who have such choices, I would naturally agree that the sense of fairness should be the main driver of deciding what are the appropriate choices they should make. But tax shouldn’t be a choice. Like death, it should be a certainty for us all. If the rules aren’t yet smart enough to make that so, then it is only fair that they should be toughened up.

See also: The maybe fair tax deal

Fair tax week

Akshata Murty Twitter thread April 9 2022 @anmurty

UK admits it has no idea how much tax is being evaded through offshore assets, Emma Agyemang, Financial Times, May 29 2022

How to avoid UK tax if you’re an oligarch, Dan Neidle, Tax Policy Associates, May 8 2022

Amazon’s tax gap grows to more than $6 billion as progressive investors push for transparency at their AGM, Fair Tax Foundation, May 23 2022

Fair Tax Week 2022, June 11-19

Amazon 2022 Proxy Statement

The politics of low pay disclosures

A version of my brief comments at the launch event for the latest High Pay Centre analysis of FTSE 350 pay ratios

This refreshed analysis is highly welcome and timely. We should remind selves that this is a political disclosure. For example, the fact that the disclosure is regarding the UK workforce means that its information value is purely local, and not about the businesses as a whole. Its information value for investors is limited because of that – and I’ll discuss ways of giving investors more insight into low pay issues – but its value as a political tool is clear.

Political disclosure and the politics matters. It’s a real problem for all in business that there’s an 11% deficit on the public’s view of whether business operates in a way that’s beneficial for society. This key outcome from the High Pay Centre’s public opinion survey carried out by Survation, showing fully 49% of people do not believe that businesses generally behave in a way that is beneficial to society, is a problem for all those interested in business, including all investors. That this is the balance of public opinion at the start of a cost of living crisis is actually potentially dangerous – one assumes that as life gets harder for so many of us, so opinions will harden in an unfavourable and increasingly problematic way.

That could be politically difficult. Unfairness fosters all sorts of problems, political and societal.

To use the political power of public naming, as last year, I think it is appropriate specifically to call out those companies that have not disclosed the pay data on their workforces as they should. According to the report, this year there are fewer than last year’s 11, but seven companies continue not to disclose what they should. Centrica, Electrocomponents, Ibstock, Pearson, Pets at Home, Rentokil and JD Wetherspoon could all do better.

It is clear again from the data that the biggest driver of these high pay ratios is low pay among the workforce, not so much high pay of the CEOs. The chart below comparing industries makes this plain, with the highest pay ratios coinciding generally with the lowest median pay among the workforce (it would be clearer if the scale for the pay levels was inverted, but the correlation is pretty clear anyway). Looked at in this way, there are some clear outliers – notably that even though median pay in the banking sector is high, the ratio is also high, contrasting with financial services more broadly (median pay appears similar at around £65,000, but ratio at financial services is about half that of banks, about 30:1 rather than over 60:1). At other end of the spectrum, it seems clear that the main driver of the high pay ratios in retail appears to be low pay. Yet the next worst-paying sector travel and leisure (which reports median pay maybe 50% higher but still under £30,000) has pay ratios under half the level of the retail sector. There’s a correlation but there are nevertheless clear variations in the approaches of different sectors.

As the biggest driver of these issues is low pay, we need greater disclosure of pay structures and approaches at this end of the pay spectrum. This would allow investors and other stakeholders to understand business models more clearly. As inflation adds pressure to increase pay, understanding these dynamics will gain added importance. In a previous blog, I’ve argued that companies should be required to disclose: (1) the number of full-time equivalent roles in their business and (2) the proportion of those roles that pay a living wage. I don’t diminish the challenge of calculating the latter for many countries, but there’s a lot of work gone into it so it is possible. Actually seeing which companies pay their people enough to live on and to bring up a family with dignity is surely a key metric. These two measures are also aggregable so can be considered across portfolios, something which matters to investment institutions, particularly asset owners. [This recommendation was kindly – and nearly accurately – picked up by Nils Pratley in The Guardian; “Good idea: a league table would get noticed and may cause more embarrassment,” he says].

A further way that the disclosures on low pay are deficient is, as the report notes, the exclusion of many of the lowest paid from the calculations. The exclusion of agency staff, including temps and cleaners and so on, clearly diminishes the insights the reporting gives, both for investors and for political purposes. Finding ways to capture the workforce more generally would be helpful.

The question of inflationary pressures on wages will be a key one for the next few years. It’s worth noting that inflation is experienced very differently at different income levels. Different groups buy different baskets of goods, meaning that 9/10% headline inflation is not what any one group actually experiences. Analysis by the New Economics Foundation suggests that the variation could be as much as between 20% for the poorest and perhaps 2% for the richest; one hopes that remuneration committees bear this in mind when considering both the pay of top executives – who are unlikely to need anything close to headline inflation-level pay increases to maintain their standards of living – and the pay of the general workforce – who may need pay increases well above headline inflation to maintain theirs.

The pay ratio is a political metric, but that doesn’t mean investors and companies can ignore it. On the contrary, the current political and economic environment requires that they respond actively to this agenda. It is not in any of our interests that more people doubt the benefits of business for society than think it is a positive – and that that is true at the start of the cost of living crisis is genuinely a dangerous position for us.

We all need to pay more attention, and simply, to pay more.

High Pay Centre analysis of FTSE 350 pay ratios, High Pay Centre, May 2022

Launch event, May 23 2022

THG boss should count the blessings of life as a listed company, Nils Pratley, The Guardian, May 23 2022

Losing the inflation race, New Economics Foundation, May 5 2022

Inflation’s two separate worlds (at least)

The shocking statistics released last week by the Trussell Trust – the UK’s main foodbank provider, with a network of 1400 – bring to the statistical surface the reality of the cost of living crisis in the country. It is unfairness writ large, and it reflects the different worlds in which our people live.

Some may be shocked simply at the number of foodbanks in the UK, which is at least in theory a wealthy nation (as well as the Trussell Trust ones, there are an estimated 1200 further banks). But the fact that the Trussell Trust distributed more than 2.1 million food parcels in the year to end-March 2022 is still more shocking. That’s up 14% compared to the pre-pandemic year 2019-2020 and up no less than 80% in five years. What’s worse is the notable acceleration. The 14% increase in the annual figures masks quarterly variations, with Q2 up 10% against the 2019-20 equivalent, Q3 up 17% and Q4 up 22%. The last month for which the Trust provides figures, February, saw demand for food parcels up 25% over February 2020 numbers.

It is clearly a mark of an unfair society that so many should be so dependent. The opening line of the Trust’s statistical paper is shaming:

“Destitution, which means that people cannot afford to buy the absolute essentials that we all need to eat, stay warm and dry, and keep clean, drives the need for food banks in the UK.”

But it is all too easy for the comfortable to under-estimate the cost of living crisis. The averaged measure of inflation – the consumer prices index – reached a level unheard of for 30 years in March 2022, at 6.2%. This headline rate is what drives monetary policy decisions, and those within corporate boardrooms too. Yet the averages used to produce that statistic mean that few will actually experience that number. Those with lower incomes and less discretionary spending are likely to face far higher levels of overall inflation given the recent increases in the staple spending categories of fuel and food. People at other income levels will experience very different levels of economic pain. The overall statistic masks added unfairness to those least able to bear the burden. By concentrating solely on the headline figures, policymakers and corporate decision-makers may risk missing the real scale of the impacts for some members of society – in ways that may exacerbate existing unfairnesses.

The mere facts of these different experiences of economic life may be well understood, but the scale of it is not. The New Economics Foundation has produced two charts that bring this impact very fully to life. The first demonstrates the scale of the differential between those at different income levels, and the way in which the cost of living squeeze is a painful bear hug at the lowest income levels, while being not much more than a cuddle for the wealthy:

Any company board thinking about pay rises for top executives based on headline inflation would do well to take note of this chart, and the extent to which the wealthy are feeling only the most limited of impacts; they should also consider the extent to which even inflation-level pay rises for their general workforce may not be sufficient to reflect the squeeze that they are facing.

Perhaps even more shocking are NEF’s calculations regarding the differential impacts of the squeeze on pre-existing social unfairnesses:

Two further vignettes illustrate how this differential experience of inflation works in practice. First is a brilliant recent working paper, Consumption Inequality in the Digital Age. We already knew that digitalisation was a driver of inequality by narrowing the group of economic winners and by reducing others’ economic opportunities. But this paper notes that technology products form a greater part of purchasing by wealthier individuals – as well as becoming a greater proportion of all purchasing over time. This much is not terribly surprising; what is is the overall impact of these effects. The researchers state: “we demonstrate that the price channel has sizeable wealth effects and explains 22.5% of the increase in consumption inequality”. Just this one portion of the purchased basket has an outsized effect on inequality and entrenching unfairness. And it is masked by the headline inflation number, which has been consistently deflated by the falling prices of technology.

The second study considers how unequal experiences of headline economics can be driven by the debt burden that individuals face. The paper Indebted Demand takes a macroeconomic perspective but it is built on the insight that the propensities for marginal spending are very different for those with significant debt burdens than for those free of such burdens. The indebted – most of us – are constrained by debt and so our spending activities are curtailed. The wealthy (the paper cuts this as the top 1%) have a wholly different experience of economic life. Nothing surprising in that – but the point the paper makes is that with so large a portion of the economic actors in most economies being constrained by debt their ability and willingness to consume is eroded significantly. In effect, there is a transfer from the indebted to savers, depressing demand overall. And so, demand in the economy overall is restricted, it is the title’s indebted demand. Only by breaking out of this debt trap will consumption and economic activity be reawakened.

The paper notes that productive debt – debt financing capital investment for use in the economy – can have positive impacts. But it notes that most debt, certainly most household debt, finances housing and so is largely unproductive. It also considers the ballooning levels of student debt and notes that while this does have some productive impacts (in the rather unpleasant economic jargon, it builds human capital) to the extent it reflects merely increases in the costs of education and not greater investment in skills it should be viewed as unproductive debt.

Overall, the paper argues that many western economies are mired in a debt trap, with inequality being a feature of this market failure. The authors argue that economies will struggle to emerge from their current doldrums without ‘unconventional policies’:

“For example, redistributive tax policies, such as wealth taxes, or structural policies that are geared towards reducing income inequality generate a sustainable increase in demand, persistently raising natural interest rates away from their effective lower bound. One-time debt forgiveness policies can also lift the economy out of the debt trap, but need to be combined with other policies, such as macroprudential ones, to prevent a return to the debt trap over time.”

It remains to be seen whether the headline numbers will distract attention from the terrible nature of the challenge faced by so many in society. If they do, unconventional policies will probably not gain traction. But clearly something needs to shift if we are to reawaken fairness.

See also: Poverty isn’t bashful

Money is not the answer

Trussell Trust data briefing on end-of-year statistics relating to use of food banks: April 2021-March 2022, Trussell Trust, April 27 2022

Losing the Inflation Race: Poorly targeted policy is failing to prevent an income crisis, Sam Tims, Dominic Caddick, New Economics Foundation, May 5 2022

Consumption Inequality in the Digital Age, Kai Arvai, Katja Mann, SSRN Working Paper, December 23 2021

Indebted Demand, Atif Mian, Ludwig Straub, Amir Sufi, Quarterly Journal of Economics, 136.4, November 2021