Like the poor, the rich have always been with us. There is no point railing against the reality that there are some people who have a great deal of money and others who have nothing. There never has been and never will be a society in which inequality does not flourish. Soviet Russia and Communist China, to say nothing of almost the entirety of Africa, are textbook examples of the difference between rhetoric and reality.
Yet it is also true that wealth is not a unifying factor. Necessarily, it is divisive. When you have no money, you can do hardly anything except hope to survive. If you are rich, the world is your oyster.
I will not attempt to argue here that what Britain, and the world, needs, is fundamental change, in which the rich, whether through taxation or revolution, are separated from their wealth and the cash raised divided among the poor, including the homeless and the starving.
That way madness lies.
However, we cannot go on as we are today, with the one percent living like oligarchs, another ten per cent doing very nicely thank you, a third leading “normal” lives (meaning that they can pay their bills and go on holiday twice a year), and the rest – more than half the population – “just about managing,” of whom the bottom ten per cent or so struggle to pay their bills or even to keep a roof over their heads.
I have never understood why multi-millionaires and billionaires are so obsessed with further enriching themselves. Perhaps it is simply that it is what they do. But the truth today is that the super-rich are becoming wealthier by the minute while millions of their fellow citizens are left to wonder if their situation will ever materially improve.
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In the U.S. where I lived for 14 years until moving to rural France, there used to be a great deal of talk about the “trickle-down” effect. The more successful, and rich, an entrepreneur became, the greater the chance that his workers would be paid more and that their numbers would increase. Up to a point, this is true. Unemployment has certainly fallen in recent years as the American economy has roared back from the impact of the financial crisis. But wages have remained low while the cost of healthcare and college tuition has risen sharply. At the same time, U.S, employers – set to benefit massively from Trump’s latest tax reforms – are urgently looking at ways to further automate their businesses, so that less money goes out in wages and more to shareholders and top executives. Most new jobs created in recent years have been at the lower end of the scale, often paying no more than the minimum wage, sometimes not even that.
Even after the reforms introduced by Barack Obama, an estimated 36 million Americans cannot afford to go to the doctor or pay for surgery. If Trump and the Republican Party succeed in their mission to abolish the Affordable Care Act, that number is expected to reach 50 million. Millions more are deterred from attending college by the soaring cost of student loans. Homelessness is on the increase and, with mortgage rates starting to go up, more and more people are being priced out of the property market.
At the other end of the scale, there is only good news. In 2016, according to Forbes magazine, the United States was home to 540 billionaires, collectively worth $2.4 trillion – $24,000,000,000,000. This year, the number has risen to 563, with a total wealth of $2.8 trillion. The number of multi-millionaires – the sort of people Mark Thatcher’s one-time father-in-law described as “little old millionaires” – is well into seven figures. Together, the rich and the super-rich own and control the great bulk of America’s wealth, meaning that most ordinary citizens are either stagnating or living from pay cheque to pay cheque.
The same is rapidly becoming true of Britain. A total of 134 billionaires now live in the UK, most of whom, it should be said, are foreign, the majority of them Russian, Arab or Asian. Their combined wealth is estimated at £660 billion, up from £575bn in 2016. Most of this vast sum is held overseas or in family trusts, or else invested in property in London and the South East. The number of millionaires is even more impressive – some 821,000, with an aggregate wealth of £6.5 trillion – though most of these are members of the club mainly due to the post-2008 property boom.
You, as a reader of Reaction, may be in the latter category, with a house worth a million pounds or more. If so, the question is, does this make you feel rich, so that you might consider buying a yacht or spending the weekend at the George V in Paris? I think not. For a start, you are likely to have children who cannot afford to get on the property ladder themselves and are looking to you to downsize so that you can come up with the necessary deposit.
But let us agree that there are a lot of people in Britain who are either extremely well off or can at least contemplate a second home or a month in Tuscany without the risk of cardiac arrest.
So what about the others – all (let us say) 20 million of us. Iain Martin has written elsewhere in Reaction about the alarming growth in the number of homeless and hungry people. They are a familiar and disturbing part of our everyday lives, to whom for the most part we turn a blind eye, fearful lest their condition turns out to be contagious.
One level above these are those with jobs that pay them just enough to see them through from week to week, but who cannot afford to do anything rash. Above these again are are so-called middle classes, who traditionally regard themselves as “comfortable,” but not rich. These are the ones Theresa May was thinking about when she coined the phrase Just About Managing. If they own their own home, they will hoping to see property prices rise; if they don’t they are doomed in many cases to pay rent that takes up more than half of their monthly disposable income. If they have children, they will be worried about what happens to them when they complete their education and go out into the world. How will they repay their student loans? How, if they live in London, will they ever scrape together the £60,000 needed as the typical deposit on a two-bedroom flat?
What is to be done about this dreadful and worsening inequity? Part of the answer, I contend, is staring us in the face. The well-to-do middle classes should pay a little more tax – money they can well afford. The seriously rich should pay more again. If, at the upper end, this results in an entrepreneur or investor seeing his net worth fall from £250 million to £225 million over ten years, so be it. I don’t think he or his family would honestly notice the difference. As for those at the very top of the tree, a ten per cent drop in their net worth would be the best news for our economy – the real economy – in years. Ask Warren Buffet if you don’t believe me.
I am not saying we should soak the rich – and by rich I mean those with second homes and incomes of, say, five times the average industrial wage. Nor am I suggesting an increase in corporation tax (though it would be nice if big business could be obliged to raise the amount spent on research and development to European levels). Don’t listen to those who say that taking anything more from the wealthy must ultimately consign the rest of us to Queer Street. It is mainly the rich and their acolytes who say this. The logic behind the claim is bogus. It only makes sense if it is assumed that the wealthy will either leave the country en masse if taxes are raised, which seems highly unlikely, or else that they will use clever accountants to minimise their liability to levels that verge on evasion – in which case increased legal scrutiny and changes to the tax code are the obvious answer.
A recent report by the Daily Telegraph revealed that the tax burden on the rich in Britain had trebled since the 1970s. The richest 1 per cent paid twice as much tax as the poorest 50 per cent. What the Telegraph didn’t say was that the rich have continued to grow richer at an ever-accelerating pace. If anything, what the figures confirmed was that the rich own most of Britain’s wealth. Bizarrely, it could even be posited that the more they are taxed, the richer they become.
Money raised from increased taxes would be targeted at schools, training, apprenticeships and social housing. Within a generation, Britain would be a noticeably better place. The rich would not disappear. There would still be billionaires and multi-billionaires. Equally, there would still be the poor and the destitute – just fewer of them. But, overall, the UK could hold its head up and point to the beginnings of the better society that both Conservatives and Labour have been trumpeting for the last hundred years.
The UK would remain a capitalist country, just one with a social democratic face, like Germany, France or Sweden. Jeremy Corbyn, with his outdated 1970s agenda, would not suddenly ascend to the right hand of God. While we are about it, let us not forget, contented workers are productive workers. They work harder, as distinct from merely putting in the hours, when they feel they are getting a fair deal.
Would some of the Russians and Gulf Arab billionaires leave our shores for the Cayman Islands, Malta or Singapore? Probably. If so, good riddance to them. If that’s the sort of people they are, then, to borrow from Priti Patel, they can jolly well sod off.