It is often said that rich people are the source of all wealth, and, that anyone who objects to that orthodoxy is an underachieving layabout afflicted by envy. Furthermore, if we annoy the rich, they’ll go elsewhere and take their wealth, which tumbles from their pockets like a shower of gold, with them.
That is total bullshit.
Let me be clear. Rich people are not wealth creators, they are wealth extractors. That is why they are wealthy.
We are told that rich people are wealthy because they work harder and better than the rest of us.
While there are many folk who have achieved financial success through the application of attributes such as graft and innovation – the archetypical entrepreneur or ‘self-made’ businessperson – the vast majority of the very richest actually obtain their wealth through inheritance and maintain it through so-called investment – often through offshore hedge funds and other low-risk strategies – and the exploitation of those without the same advantages.
Think of those who possess true wealth – and I don’t mean your boss or footballers or even, for the most part, provincial politicians – but the folks who own companies of genuine scale, who run banks, who own vast tracts of the country. The Duke of Buccleuch, Rupert Murdoch, the Koch Brothers etc.
These people are the ultimate landlord to many of us. Rich individuals and families, who own the means of production, also tend to be landlords and landowners, not just of where we live but where we work and increasingly, (thanks to privatisation) the infrastructure we travel and rely on.
The idea that rich people become successful through graft, and that suggesting otherwise is mere envy, is a cunning mechanism to encourage the middle class to accept, rather than question, the source of the wealth of the truly rich and set them against the working class.
This is what Conservative MPs and even Labour ‘moderates’ are pushing whenever they talk about aspiration or envy. It’s basically a message from their sponsors, exhorting the middle classes (whatever that means this week) to align with the rich rather the the working class… or more emotively, those with even less, those on benefits, those seeking asylum etc.
It’s persuasive argument. After all, nobody likes paying more taxes and the debate about what tax is for is far drier and less emotive…
Even if we can agree that the rich largely became so because their ancestors were good at thieving and murdering, we still need to deal with the idea that wealth almost inevitably flows from rich to poor.
Of course, this is also bullshit and has been proven so time and time again, but never more than in the increasing levels of inequality in the developed world, even after the financial crisis in 2007 (you’d think we’d have learned a lesson there…)
The thing is, rich people don’t actually create wealth. It’s produced by the labour of normal people. The rich tend to lick the cream off the top, stuff the rest into storage and the wages of normnal people coming from a tiny fraction of the wealth they laboured to create. The more power the rich have, the more they stop wealth from dripping down to normal folk by keeping wages low and/or immediately grabbing it back by keeping rents high and so on.
Rich people have fewer recurring costs, too. They tend to own their homes outright, and have good quality things which don’t need replaced. Terry Pratchett captured this idea quite neatly in the book Men at Arms:
“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money… An affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles. But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes ‘Boots’ theory of socioeconomic unfairness.”
So, money given to rich people isn’t actually as useful in the economy as money given to poor people, because rich people don’t NEED to spend it (and remember, I’m talking about the really rich, not the aspirational show ponies like the Kardashians who serve as a distraction).
Money given to rich people vanishes into savings and investments, while money given to poor people is spent IMMEDIATELY on things like food, consumer goods, or services and as such creates demand in the economy, creating jobs, tax income and generally making the whole process work. Economists call this the marginal propensity to consume and it is also a really good argument for the Green Party’s long term aim of a Universal Basic Income.
The wealthy are not naturally superior, and we do not need to cater to their desire to become even more wealthy lest they take their golden shower of beneficence overseas. This is both inaccurate and damaging to our country’s economic and social structures.
The tax proposals in the current Scottish Green Party manifesto seek to fairly tax the wealthy not just in terms of income but in terms of their property holdings to help fund public services and the just transition of our economy without adding a tax burden onto those already worst hit by a decade of cuts.
Allied to our policies on rent controls, land reform and giving local authorities more power to raise funds to be spent on public services, we are the only party with a realistic and progressive policy platform designed to combat the gross inequalities of wealth we see in our society.
This drives other parties to distraction and I’ve seen more than a few normal folks on social media exhibit a degree of Stockholm Syndrome as well, saying things like ‘all taxation is theft’ which is a very right wing (albeit libertarian, rather than neoliberal or classically conservative point of view) point of view for a normal person who was educated in a state school, receives treatment on the NHS etc. to hold.
To them, I give the words of US Senator, Elizabeth Warren…
“There is nobody in this country who got rich on their own. Nobody. You built a factory out there – good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory… Now look. You built a factory and it turned into something terrific or a great idea – God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”
That is the crux of the matter – the social contract. The rich, who would expound their favoured neoliberal and trickle-down economic theories, seem to want to opt out of that. As Ms Warren suggests, killing or weakening the social contract is not even in their interests, far less anyone elses but then, maybe rich people just don’t care any more.