Why We Can't Afford the Rich: Cardiff launch

1913-1989 Top 1% income share – married couples and single adults1990-2011 Top 1% income share – adults

Top Income Shares in the UK 1914-2011

Source: Alvaredo, F., Anthony B. Atkinson, A.B., Piketty, T. and Saez, E. The world top incomes database, http://topincomes.g-mond.parisschoolofeconomics.eu/ , dd/mm/yyyy 16th April 2014

Wealth concentration at the top

Collective wealth of the UK’s 1000 richest people

1997 = £98 billion

2008 = £413 billion

2010 = £336 billion

2012 = £414 billion

2013 = £450 billion

2014 = £519 billionSource: Sunday Times Rich List

Cost of the NHS, 2014 = £127bnOffice of National Statistics:

http://www.ukpublicspending.co.uk/fed_spending_2014UKbn

Earned and Unearned Income

Earned: conditional on producing goods and services

Unearned and extracted - ‘because they can’: derived from ownership of assets wanted by others, rather than from contributions to the production and distribution of goods and services (asset-based)

Recovering a lost vocabulary: ‘rentiers’, ‘property without function’ (Tawney), ‘improperty’ (Hobson), ‘illth’ (Ruskin), ‘functionless investor’ (Keynes), ‘the class of parasites’ (Marx)

New Era v. Richard Benyon

John Stuart Mill on Rentiers

"Landlords grow rich in their sleep without working, risking or economising.”

“If some of us grow rich in our sleep, where do we think this wealth is coming from? It doesn't materialize out of thin air. It doesn't come without costing someone, another human being. It comes from the fruits of others' labours, which they don't receive.“

(1848) Principles of Political Economy, Bk.v, Ch. II

Photo: Wikipedia commons"John-stuart-mill 1". Licensed under Public domain via Wikimedia Commons.

‘Investment’

• As wealth creation – focus on what is invested in (e.g. infrastructure, equipment, training).

• As wealth extraction - focus on the financial gains from any kind of lending, saving, trading of financial assets or speculation – regardless of whether it contributes to any objective investment (wealth creation), or benefits others.

Billionaires’ Benefits Street:Bishops’ Row, London

Debt/usury

Source: Kennedy, M. (2012) Occupy money, New Society Publishers

Shares: a bizarre institution

• 97+% are bought in secondary market – money doesn’t go to firm

• Entitles owner to dividends and speculative gains – unearned income

• Why are absentee, uncommitted shareholders the prime stakeholders in firms?

• Why are workers/employees (present, committed and dependent), who produce the goods and services on which the firm depends, not stakeholders?

What about ‘the working rich’?

• Salary earning – but from rentier organizations (e.g. financial institutions, property firms) i.e. rentiers-at-one-remove

• Markets are not meritocracies . . .

• ‘Because they can’

• Disempowered labour, empowered management, shareholder value

The Jobs/Dyson* defence: truly innovative people deserve everything they get

• 1. how much would they have got, if they hadn’t owned (much of) their firms?

• Working/entrepreneurial capitalists: Owners take the profit (financial and symbolic) produced partly by unacknowledged others.

*Steve Jobs (Apple) $8.3billion;

James Dyson (Dyson vacuum cleaners) £1.45billion

The Rule of the Rich

but plutocracy is about more than toffs . . .

The rule of the rich

• Structural – control commanding heights• Lobbying, thinktanks, political donations,

consultancies/jobs for politicians, ‘researchers’, regulatory capture

• Tax havens• TTIP – Transatlantic Trade and Investment Partnership• Legal corruption - ‘When plunder becomes a way of life

for a group of men living in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it.’ (Bastiat)

• Symbolic - philanthropy

Ill-gotten and ill spent

Christian Aid Poster

A diabolical double crisis of economy and climate

Contraction and convergence

• Target C02 emissions per person =Capacity of earth to absorb C02, divided by world’s population

• Rich countries – rapid cuts in emissions to meet target

• Poor countries – rise in emissions permissible up to target

• Plus contraction and convergence within countries

Back to basics

• What’s an economy for?

• Fair, promoting well-being, sustainable

• What is wealth?

• The good news: the well-being threshold

• Different ways of life?

Suggestions . . .

• Contract and converge• Wealth taxes, land-value tax and other taxes on

unearned income• Controls on movements of capital• Reject TTIP• State funding of political parties• Nationalise energy companies. Green taxes.• Workers/employees and consumer reps as chief

stakeholders in organizations• Massive investment in low CO2 energy• And many more . . .

Diolch yn fawr

Andrew Sayer, Lancaster University http://asayer25.com

From the second, Citigroup Plutonomy Report Part 2‘Rising Tides Lifting Yachts’ Mar 5 2006

”Our whole plutonomy thesis is based on the idea that the rich will keep getting richer. This thesis is not without its risks. For example, a policy error leading to asset deflation, would likely damage plutonomy. Furthermore, the rising wealth gap between the rich and poor will probably at some point lead to a political backlash. Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfranchisement remains as was -- one person, one vote (in the plutonomies). At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. This could be felt through higher taxation on the rich (or indirectly through higher corporate taxes/regulation) or through trying to protect indigenous laborers, in a push-back on globalization -- either anti-immigration, or protectionism. We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments.”[emphasis in original]

http://www.correntewire.com/sites/default/files/Citibank_Plutonomy_2.pdf

UK Earnings and productivity

Source: Resolution Foundation (2012) Gaining from Growth: The Final Report of the Commission on Living Standards, p.24