Manufacturers are paying their workers more in a tentative sign that wage growth – a missing piece of the UK’s recovery – is starting to pick up in some parts of the economy.

The average annual pay settlement in the sector was 2.6 per cent in the six months to July, up from 2.4 per cent a year ago, according to a survey of 331 companies by manufacturers’ organisation EEF. The proportion of respondents using pay freezes fell to 6.4 per cent from 14.6 per cent a year ago.

Lee Hopley, the EEF’s chief economist, said manufacturing pay growth was ahead of the wider economy, “with signs that the pressure on household budgets, at least for employees in the industry, is starting to unwind”.
Data from Adzuna, an online job search engine, showed a similar trend. Average advertised salaries for manufacturing jobs were at a two-year high on the site in July. The company also reported the first annual increase in the average advertised salary since the recession in 2008-09.

Most people who look at Syria can’t help but see the tragedy -- the hundreds of thousands of deaths and billions of dollars of damage, including the flattening of the old city of Homs and eastern Aleppo. But some are starting to treat Syria as something else entirely: an investment opportunity. That might sound illogical, but it isn’t entirely without reason. The Syrian economy, having suffered years of ruin, offers early investors the chance to reap significant rewards in the long term.

The Syrian economy is in exceedingly dire straits. The majority of the country’s oil fields, once the economy’s lifeblood (along with agriculture), are under the control of the extremist group Islamic State in Iraq and al-Sham (ISIS), also known as Islamic State (IS), depriving the country of about $2 million a day. Meanwhile, the World Bank has estimated that the cost of rebuilding what has already been destroyed in Syria will be upward of $200 billion. The organization’s 2014 Doing Business report ranks the country last in the category of “dealing with construction permits,” which measures the procedural and financial barriers toward building a basic warehouse. In other words, turning a quick profit may seem like the last thing on Syria watchers’ minds.

But the motivations of Syria’s foreign investors -- consisting mostly of governments and companies from countries that are allied with Syrian President Bashar al-Assad -- are primarily political. They seem to have calculated that investments in Syria now will give them significant leverage in how the country is governed later, even if the investments don’t pay off in a strictly financial sense in the short term. In that, their plans bear a distorted resemblance to the Marshall Plan loans offered by the United States to Europe after World War II.

A more recent (and more local) example of this strategy is Iran’s investment in Lebanon after the Shia political party and militant group Hezbollah’s war with Israel in 2006. The London-based pan-Arab daily Asharq Al-Awsat reported that one day after the ceasefire, Hezbollah established a body to supervise the process of removing iron and cement from the rubble in order to “remelt” it. Companies under Iranian supervision took care of the process and succeeded in extracting scrap materials worth millions of dollars. To highlight Tehran’s leading role in reconstructing Hezbollah-controlled areas, “Iran’s Park” was built in Maroun al-Ras, a village in south Lebanon that overlooks Israel. According to a BBC report, the park is adorned with posters of Iranian leaders, including Husam Khos Navis, the late director of the Iranian reconstruction commission. In political terms, these investments paid off for the Islamic Republic. Media outlets, including the Lebanese newspaper Daily Star, quoted the head of Iran’s elite al-Quds military force, General Qassem Suleimani, declaring (in a 2012 conference on youth and the “Islamic Awakening” in Tehran) that, as a result of such economic interventions, “in south Lebanon and Iraq, the people are under the effect of the Islamic Republic’s way of practice and thinking.” In a speech delivered two years after the war, Hezbollah’s Secretary General Hassan Nasrallah affirmed that he is “proud to be a member in the party of velayat-e faqih [guardianship of the jurist],” a Shia religious system that currently commands deference to Ayatollah Ali Khamenei.

We also need to be far more effective in preventing British and other foreigners from getting out there…We need to make it crystal clear that you will be arrested if you go out to Syria or Iraq without a good reason. At present the police are finding it very difficult to stop people from simply flying out via Germany, crossing the border, doing their ghastly jihadi tourism, and coming back. The police can and do interview the returnees, but it is hard to press charges without evidence. The law needs a swift and minor change so that there is a “rebuttable presumption” that all those visiting war areas without notifying the authorities have done so for a terrorist purpose.

Who pays corporate income taxes? Just one thing’s for sure: it’s not corporations.

This is because, as Mitt Romney famously put it, “corporations are people, my friend.” They also sell to people, buy from people, and are owned by people. Yes, sometimes you have to dig through layers of other corporations, pension funds, foundations, and the like to get to these people. But they’re there somewhere, trying to avoid getting smacked by corporate taxes.

In econospeak, where the burden lands is called tax incidence. “The cardinal rule of incidence analysis,” UC Berkeley economist Alan Auerbach once said, “is you do not talk about incidence analysis.”  Actually, no, he didn’t say that — although this does seem to be the rule that most journalists, politicians, corporate executives, and even economists writing for mainstream audiences follow. What Auerbach did write in 2005 was that “the cardinal rule of incidence analysis” is “that only individuals can bear the burden of taxation and that all tax burdens should be traced back to individuals.”

In the case of the corporate income tax, as the Harvard Business School’s Mihir Desai put it in an interview I recently did with him and his HBS colleague Bill George, “that tax is going to be borne by shareholders, workers, or customers.”

For a long time it was thought the owners paid the tax. That belief can be traced largely to a classic 1962 theoretical analysis by economist Arnold Harberger, who concluded that owners of capital — not just a corporation’s shareholders but anybody who owned some bonds, a house, whatever — bore almost all the burden of corporate income taxes in the U.S.

Harberger saw this as a bad thing. By taking money away from capital owners, the corporate income tax was depressing investment and distorting the economy. But for those more concerned with the distributional effects of taxation, Harberger’s model at least showed the burden landing on people who were wealthier than average.

His theoretical model, however, assumed a closed economy, one in which capital couldn’t flee to other countries and consumers couldn’t buy foreign products. As the world’s economies became more intertwined in recent decades, economists — Harberger among them — began constructing open-economy models that showed workers bearing a larger share of the burden.

This makes intuitive sense. If a country allows free capital flows and free trade and has a corporate tax rate much higher than that of its neighbors, investors can choose to buy shares in companies elsewhere that face a lower tax, and corporate management can choose to move operations abroad. Consumers, meanwhile, can buy from foreign suppliers. By comparison, workers are pretty immobile. It’s hard for them to switch employers, let alone countries. So the tax lands on them, in the form of lower wages and/or skimpier benefits. And as those at the top of today’s corporate hierarchies seem to have done a pretty great job of keeping their paychecks from being adversely affected, the impact is presumably greatest on those farther down in the organization.

That’s the theory, at least. These models are, as Jennifer Gravelle of the Congressional Budget Office pointed out in a 2010 summary of recent theoretical work, extremely sensitive to how open an economy is and how sensitive people are to incentives. Tweak the assumptions just a little, and you can get a very different result.

So in the past few years there’s been a determined attempt to answer the question empirically, with a flurry of new regression studies that dig through data across countries, states, or even 13,000 German communities to suss out where businesses’ tax burden lands. Gravelle has a 2011 summary of this work, and her chief conclusions are that the results are all over the place and the most dramatic ones just aren’t credible. But most of these studies do show some significant chunk of the corporate tax burden landing on workers, which is perhaps not yet conclusive but is really interesting.

Most public discussions of corporate taxes in the U.S., however, still ignore the possibility that workers might actually be the ones bearing the burden. Perhaps this is because other public figures really want to avoid sounding like Mitt Romney. Perhaps tax incidence is just too difficult a concept for non-economists to get their heads around (although I’m not an economist and it seems pretty straightforward to me). Perhaps it’s that the evidence is still so mixed (although that hasn’t stopped economic arguments with far less empirical and theoretical backup from gaining currency in the political arena). Perhaps it’s that the corporate executives who lobby for lower tax rates don’t quite have the chutzpah to argue that this could result in higher wages. Or perhaps it’s just that, if corporations pay lower taxes, individuals have to pick up the slack. And even if you understand tax incidence perfectly well, a direct tax is still more noticeable than an indirect one.