‘Inequality is threatening Capitalism itself,’ is unequivocally proposed in this interesting and revealing documentary The Super-Rich and Us for BBC television. Jacques Peretti heads off to interview economists and billionaires in an attempt to try and find out if the Super-Rich are net contributors or not.
Recent OECD figures suggest that Britain’s economy would have grown by twenty per cent had the rich paid their fair share of tax and wealth was spread more evenly.
Early on Nick Hanauer, a Seattle-based billionaire is interviewed by Peretti, and says ‘Capitalism which is the greatest social technology ever created for creating wealth in human society’ does need some inequality; however, he cautions, too much inequality ends up drowning the middle-class, which will eventually hurt Capitalism. In his earnest way, Hanauer points out that those with too much wealth can’t spend it fast enough to stimulate the wider economy. The ‘trickle-down’ arguments doggedly pursued by British governments in the last thirty years on both sides of the divide have failed to deliver. This is, to put it simply, because the wealthy can only have so many haircuts, so many manicures, drive so many cars or live in so many houses. Britain, as a result, has become a ‘tax haven’ for the super-rich.
Thatcher’s first act in power in 1979 was to cut taxation for the highest earners, from eighty-two per cent down to sixty-two per cent. Concentrating wealth on the assumption that trickle-down economics would take care of the rest of us.
Professor Tomas Piketty, a leading world economist, argues in the program that as the middle class shrinks so too will our economy. Thatcher was supposed to make the middle-class better off through trickle-down economics but — three decades and various political administrations later — there is absolutely no evidence that this has in fact occurred.
The program looks at property prices to demonstrate this failure in the UK. The middle-class, and most recently the working class, used to buy houses to invest their earnings, and in this way wealth was distributed in the UK more evenly. However, these days, neither can, priced out of the market as foreign investors, speculating on the London property market, snap up seventy per cent of London’s housing stock. The impressive towers built along the banks of the Thames are marketed incidentally on the offering of modern-day living utopianism, but more assuredly, on the promise of steep profit margins (in the last year alone property prices have risen on average by twenty-five per cent). In the words of former city Head of Planning Development, Peter Rees, who is introduced as having changed London’s skyline more than anyone else, these properties are ‘piles of safety deposit boxes’ with better returns than gold ingots in the vaults of banks.
Mothers in Newham are shown fighting to stay in their homes, as property developers move in. When the women approach the local council they are told there’s nothing anyone can do for them. However, after a public outcry, forty out of 432 homes were later reprieved.
As the program winds down some conclusions are drawn, the reality is that by 2032, the majority of people in Britain will be renters. A property fair at London’s Olympia has Britain’s strapped-for-cash councils selling off land to foreign investors. The investors plan to convert the land sold off to them into rentable properties.
Next up, buy-to-let baron Kevin Green, a UK self-proclaimed property entrepreneur, with a portfolio of seven hundred flats. His canny trick is outmanoeuvring first-time buyers with less money than him, and then boasting about this at seminars, where those keen to emulate his success story, are charmed by endearing motivators such as, ‘Every morning I like to be a little bit different and use self-belief phrases like, “If I wasn’t me, I would so want to be me.”’ Green has no difficulty admitting that the turning point where first-time buyers can afford to get on the property ladder has already elapsed. What is becoming clear by now is that property in Britain is a gold mine for the super-rich as they syphon off from a once prosperous middle-class their wealth through Britain’s housing stock. It’s a brilliant turn-around, Britain’s liberal laws and democracy, which allowed its people to have a stake in its economy, has been turned into a cash bonanza for the super-rich.
At Mahiki a club favoured by Prince Harry, Vashi Dominguez, a celebrity jeweller, holds a bash for the super-rich. Things are going well as foreign investor, Stephanie, who is presented as the wife of a Russian millionaire, spends upwards of fifty thousand pounds on a pair of diamond earrings.
Diamonds aside, the trickle-down notion has turned out to be more like trickle-up into that giant reservoir of wealth, which now threatens to destabilise Capitalism itself. Another economist, Dr Ha Joon-Chang from Cambridge University, believes that British people have been ‘duped’. He argues that in the 1970s when Thatcher came to power, the top one per cent of people in Britain and the USA had access to ten per cent of income, but from 2008, this figure had risen to twenty-three per cent.
So how do we come up with the changes necessary to deal with economic elitism? According to Tomas Piketty, the author of Capital in the 21st Century, it’s time to tax the super-rich with an annual wealth tax. In his view, this is not a matter of politics, but a matter of common sense.
Even the super-rich are beginning to see sense. Recent OECD figures suggest that Britain’s economy would have grown by twenty per cent had the rich paid their fair share of tax. Millionaire Nick Hanauer reminds us that if wealth was spread more evenly, thus avoiding the kind of society portrayed in the Hunger Games, in which the poor compete savagely to gain a foothold in gated communities, everyone would be far happier.
But change is not straightforward, as actually, we are set on a course to attract even more wealthy investors to syphon off our national and private wealth. Economist, Matt Whittaker from the Resolution Foundation, says the super-rich help governments by massaging GDP figures. This is because the receipts they help generate make it look as if Britain’s economic prosperity it is in fact much better than it really is. Money – lots of it – passes through the books, but not very much, if any, has any effect on the lives of average British people, including the middle-class.
It’s a wonderful thesis that the only direct beneficiaries of our lack of accountability are government chancellors presiding over economic stagnation. They present the till receipts left by the rich as evidence that lost productivity due to an under-performing economy is unaffected by a lack of manufacturing productivity. A nation of shop keepers we’ve truly become.