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Wednesday, 14 June 2017

The 'Value' of Reputation

Christiano Ronaldo is the world's best-paid, and probably the world's best, footballer. He is currently in the headlines as a consequence of a pursuit by the taxman, who is challenging the amount that the footballer's accountants have declared to be his taxable income from sale of his 'image rights': the use of his name and his photographic [or sculptured] image. No doubt there will be an eventual settlement. The media are interested because their viewers and readers are almost all fascinated by the massive amount of money that is attracted to people with a huge 'image'.

In my book, advertised on this page, I stress that the utter failure of Economists to account for intellectual property [ik] - of which image is just one category - is one of the most significant demonstrations of the utter failure of their subject to explain the real world in which humans live. So long as the received wisdom of the Econocracy dominates the advice that governments receive on economic issues, questions like the appropriate taxation of image rights will be more contentious than they need be; and disputes about the eligibility of different streams of income for taxation will enrich accountants and lawyers, and benefit journalists.

Footballers, film stars and inventors keep the residue of their incomes that the taxmen leave for them: that taxation makes them a little less obscenely wealthy than they otherwise would be; and some of them dissipate their fortunes due to bad character or bad advice, but the resultant distribution of wealth is generally thought to be 'fair' once the due tax has been paid. A megastar like like Sir Paul McCartney is honoured because he has remained tax resident in the UK throughout his career.

Politicians who became prominent have the opportunity to make significant fortunes after their careers have ended in failure [as all political careers do, with relative degrees of failure]. Tony Blair is notorious for the wealth that he has acquired since leaving office. The loathed George Osborne has been offered lucrative contracts, and David Cameron and Barrack Obama are both 'working' on their memoirs, for which they have been paid massive advances. Gordon Brown, unusually, has stuck to his Presbyterian principles, allocating most of his post-premier earnings to charitable causes and deserves credit for this. Even Theresa May, who is currently dissipating what little political 'capital' she has ever had, will make a nice little pile of pennies when her career is terminated.

How long that career will last is currently being determined; and the outcome of the current discussions will ultimately define the reputation on which her inevitable failure will be judged. She is risking chaos in Northern Ireland by her proposed political alliance with the DUP, and strife within her own party as a result of having sided with Liam Fox, Boris Johnson and other apparent economic illiterates in planning to leave the European Economic Area. The division of the population in the 2016 Referendum was broadly one-third to stay, one-third to leave, and one-third with no answer: a sensible prime minister would take this as a guide to seek the best and broadest possible consensus - which is very clearly for a 'soft Brexit'. Mrs May seems to be ignoring those signs, just at present.

Perhaps she is reckoning that her memoirs will be worth more, the more spectacular is her coming failure and the damage that it does to the nation? Perish the thought!

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