The Wealthy Need to be Helped to Part from Their Wealth
A report by Oxfam states that globally the richest 1% now has as much wealth as the rest of the world combined; and the richest 62 people had as much wealth as the poorest half of the global population. In the five years since 2010, it has increased by $542bn, to $1.76 trillion. This position has been reached even though the world has gone through a deep recession. It is a staggering indictment of governments which claim to be devoted to democracy, fairness and social justice. No one can ever accumulate such amounts of wealth just through hard work. The skewed distribution reflects the power of some elites to appropriate wealth generated by others with their blood, sweat, brain and brawn.
This financial elite may enjoy counting its wealth, but they can’t spend it all and they can’t take it with them to the next world either. So what can be done to make the best possible use of this vast wealth?
All over the world, governments have embraced austerity programmes, punishing normal workers and pensioners for an economic crisis that they did not cause. Why punish millions when the crisis can be dissolved by inconveniencing just 62 people? Suppose these individuals, who would no doubt all claim to be patriotic and caring, could be persuaded to give-up about one-third of their wealth. That would probably not make much difference to the quality of their life, but the $581 billion would make a lot of difference to the quality of life of many, especially in developing countries.
However, the rich will need to be helped by democratically elected governments. There should be a progressive wealth tax. There should be limits on the wealth that can be passed to the next generation. Let us be generous with that and say no one can inherit more than $10 million (or even $20 million) because inherited wealth always skews opportunity and power. It enables the wealthy to fund political parties, own newspapers, fund think-tanks and advance their economic interests, often at the expense of others. Those who inherit wealth have probably not really done anything to earn it. It is just that due to accident of birth they were born in what they would regard as the right family. The inheritors have received a windfall gain. It should be added to their income and taxed at the highest rate of income tax.
Large amounts of inherited wealth may well be tied up in business assets and is not readily available for distribution. That is fine. In that case, the assets can be placed in trust for employees and local communities to ensure that they too receive the benefit of windfall gains.
The above applies to the UK too. The UK’s richest 1,000 families control wealth of about £547 billion. This has more than doubled during the last decade. One-third or even one-quarter of their wealth would end the austerity programme championed by Chancellor George Osborne and provide plenty of resources to rebuild the economy. But a government devoted to transferring wealth upwards isn’t going to upset its paymasters. There would be no progressive wealth tax or limits on inheritance.
May be the UK government can offer new ways of entertaining the vanity of the rich and improve public finances at the same time. It can do annual auctions of titles, such as Lordships and Dames, without any power to be legislators, for a period of one year. It can erect their statutes in public places for a limited period, in return for a large sum. I am sure that there are many wealthy people out there with a social conscience and would like to emulate the likes of Quakers and Cadburys of the old and support their communities. They need no statutes. The rest should be persuaded by new laws.