In the last two decades, a remarkable revolution has been occurring in Britain – a great surge in both the numbers of the very rich and in the level of their wealth.
Whether we take the company boardroom, the football pitch, the presenter’s couch or the modern deal-making entrepreneur, the story is the same – rewards have been escalating at unprecedented rates.
The number of those with incomes of over £1 million rose eightfold in the ten years to 2005. In the five years to 2002, the number of Britons with more than £5 million in “liquid assets” rose at the rate of 13 percent a year, despite the carnage of the 2000 stock market crash. Between 2002 and 2004, the number rose again by a staggering 50 percent.
The number of billionaires in Britain – a mix of aristocrats, entrepreneurs, businessmen and tax exiles – has more than tripled since 1990 while the number worth over £100 million has risen more than fivefold over the same period…
In today’s pro-rich climate, it is mostly seen as churlish and certainly old fashioned to question the rise of wealth at the top. To do so invites the risk of being accused of the “politics of envy”, not just from the right, as would be expected, but from much of the moderate left as well.
Today, the wealthy are seen as largely deserving of their escalating fortunes. The modern wealth revolution is viewed as a sign of a new entrepreneurial spirit in Britain, the awakening of a long-awaited enterprise culture.
The higher levels of personal enrichment are, it is claimed, being driven by rising levels of business skill, risk and leadership, which are benefiting us all.
Supporters of the wealth explosion also like to argue that today’s wealth tables are much more meritocratic than in the past. Today, it is suggested, opportunities have spread, individuals can increasingly determine their own rank and modern wealth is more likely to be the product of ambition, hard work and self-improvement than privilege.
According to this view, today’s higher levels of inequality are fair because those at the top are more likely to get there by merit and ordinary people are increasingly able to join their ranks if they choose to do so.
Rich Britain will challenge the modern conventional wisdom about the merits of escalating levels of personal enrichment. It will thus take the risk of criticism for peddling the politics of envy.
It will argue that the remarkably rapid increase in wealth concentration of recent times is not the product of more successful and effective risk taking and entrepreneurial dynamism…
A common argument for claiming that the growing wealth gap does not matter is that personal wealth accumulation is said not to hurt anyone else.
This is the essence of the argument used by Tony Blair, who has applauded the rise of a new wealthy super-class and has invited a good number of its members to tea at Number 10.
As David Goodhart, editor of Prospect magazine, has put it, “gap thinking is based on a defunct zero sum idea of wealth creation. In a 19th century mining village it was clear that the mine owner’s wealth in a sense caused the poverty of the miners.
“Other than the odd sweatshop, that is not the case today… Bill Gates has not amassed a fortune of $150 billion by exploiting the poor of Seattle.”
In fact, the arguments continue to rage about Gates, a man whose wealth is seven times Ghana’s gross domestic product. Is he a technological and business genius who deserves his place as the world’s richest man or an undeserving monopolist whose empire has been built through the ruthless destruction of his rivals?
Some of today’s personal fortunes are certainly the result of real wealth creation that harms nobody and benefits society as a whole.
But many of them are the product of a carefully manipulated transfer of existing wealth from one group in society to another. Many of today’s fortunes have been swollen still further by a burgeoning, lucrative and largely unchecked tax avoidance industry.
Indeed modern entrepreneurship and tax avoidance go largely hand in hand. Highly paid tax accountants and lawyers are, in effect, engineering a redistribution, and a pretty massive one, from other taxpayers as a group.
The continued wealth of the old landowning class, resulting from rising land and property prices and rents, has been borne in part by increased burdens on small tenant farmers and leaseholders.
Much of the finance industry is engaged in activities that involve the redistribution of existing wealth – towards themselves and their clients – rather than the creation of newwealth…
Twenty five years ago, Britain was one of the most equal societies in the developed world. While the US tops the rich nation inequality league, Britain is now amongst the most polarised. Britain is now back to levels of pre-tax income inequality last seen in the 1940s, possibly earlier.
Rich Britain by Stewart Lansley (£18.99, Politicos) is out on Monday of next week.