The Rich Are Getting Richer, And It's Not Just Their Business – It's All Of Ours

"With the very rich almost exclusively in London and the south east, it’s logical that they wouldn’t have any interest in the impacts of austerity or the need for regional investment to rebalance the economy," writes Faiza Shaheen.

If your aim in life is to be filthy rich I’ve got some bad news for you. The thresholds for being in the top are moving ever upwards. New research from the Institute for Fiscal Studies (IFS) shows that while if you have a pre-tax income of a little over £50,000 you will be among the highest-income 10% of income tax payers, you need more than three times that to make it into the top 1%. And the top 0.1% enjoy pre-tax incomes in excess of £650,000 a year. And guess what? The increasingly rich elite are increasingly turning their back on the rest of us – moving into spatially more concentrated areas in London and the south east.

Turning green with envy? Well I wouldn’t blame you – after all, apparently more than three quarters of us are stressed about money. Household debt is at record highs and work simply no longer pays, with 70% of children in poverty living in a household where an adult works. It’s no wonder that people wish they had the money to buy a house outright and close the gates on a society increasingly troubled by knife crime, mental health problems and ever-larger class sizes. Who wouldn’t want to cocoon themselves into a life where the biggest dilemma is which private school to send your kids? I’m not being trite, I genuinely overheard this exact conversation between two Tory-supporting political commentators last year before they went on to talk about the impacts of public spending cuts.

Rather than turning green, maybe it would be better for us to be turning red with anger. People often defend the rich, assuming that they’ve earned their wealth and that they’ve created a lot of new products and jobs in the process. They’re wrong. Firstly the very rich tend to have always been rich. Ex-Tory grandee Michael Heseltine was once ridiculed for being a man who “bought his own furniture” rather than inherit it. His colleague who made the comment lived in an actual castle. Even the supposedly self-made nouveau riche like Donald Trump got a $400 million leg-up for his businesses.

Secondly, if you look at the Sunday Times Rich List there is a growing share who aren’t the innovators and job creators, rather they are people who own a lot of property. The 7th Duke of Westminster, for example, is worth at least £8 billion, largely because his ancestors acquired loads of valuable land in London.

Even where they are creating, they tend to have adopted a Mike Ashley Sports Direct model of “innovation”, i.e. finding new way to rip off the people creating your wealth – workers. It seems too many of our rich have failed to draw on the wisdom of one of the greatest industrialists of the past, Henry Ford, who adopted the logic that, “there is one rule for the industrialist and that is: make the best quality goods possible at the lowest cost possible, paying the highest wages possible”.

Then there are the broader costs to society of this type of inequality where we have a runaway rich. Countries with higher levels inequality have been found to have less growth, partly because we are not making the most of everyone’s potential. And countries that have greater equality also have better health and wellbeing. And rather than the very rich inspiring the rest of us, more unequal societies actually have less social mobility as wealth and opportunity is hoarded at the top and the rungs in the mobility ladder are pulled further apart. The wealth of the rich as not just a personal matter, but a societal one.

The psychological affects have also been studied - with research concluding that the very rich have less empathy for those less fortunate. This matters because the very rich have huge influence over politics and the media, sometimes through paid donations and lobbying, and of course sometimes are the actual politicians and media moguls themselves. If this group doesn’t have empathy for those less unfortunate you get cuts to benefits rather than the closure of tax havens. You get told to blame the Romanians, rather than the Etonians. With the very rich increasingly concentrating in neighbourhoods cut off from the rest of us and almost exclusively in London and the south east, it’s logical that they wouldn’t have any interest in the impacts of austerity or the need for regional investment to rebalance the economy.

Just look at our current cabinet, selected by our rich Etonian Prime Minister, Boris Johnson. Two thirds went to public school, we have a Chancellor who traded collateralised debt obligations, a complex financial product deemed to have played a role in the 2008 crisis and a Leader of the House of Commons who has profited from the Brexit vote. With these levels of conflict of interest, what hope is there that this government will tackle the gross inequality that is built in to our economic system? I’d say close to zero.

Don’t get me wrong - I’m not saying that we should aim for absolute equality. However, when the economy is only working for a small percentage of the richest and this in turn is concentrating power and influence skewing our media, politics and inevitably negatively shaping how we feel about each other, the 99% must do more than demand a greater share of the pie - we need to change the recipe.

Faiza Shaheen is a director for CLASS (Centre for Labour & Social Studies), a think tank dedicated to championing policy so that the political agenda works for everyday people.


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