Margareta Pagano: You're not 'super rich' on £100,000, but the TUC has a point on tax
Unions are right to discuss the wealth gap, even if their solution is wrong
Sunday, 7 September 2008
What's this? A call by the TUC for a new super-tax on the rich? You might be forgiven for thinking we've gone back 30 years to the winter of discontent. But then, maybe we have. That's why the TUC is actually being rather smart with its call for a new minimum tax for people earning upwards of £100,000; politically rather than actually, of course. This move by the TUC's Brendan Barber looks to me like a dangerously and very carefully aimed missile shot across the bows of Gordon Brown, who looks weaker by the day. Mr Barber clearly knows this and his timing couldn't be better, coming as it does after the Prime Minister lost out in his battle with the energy companies to give the poorest seven million householders a £1bn tax rebate.
Reading between the lines, Mr Barber is preparing his 6.5 million union members for a winter of discontent. He knows that with soaring food and fuel prices, they will grow mutinous over pay rises. A call to hurt the "very rich" will play well with them, particularly as many in the public sector are likely to be among the first to lose their jobs with the inevitable public-spending cuts. He is also putting himself in a stronger position to negotiate if and when the time is ripe for a new Labour leader – the unions control about a third of the vote needed to elect one.
More pertinently, it looks as though Mr Barber is positioning himself as a figurehead for a much wider debate about the impact of the growing gulf between the rich and the working classes (in that I include the middle-classes who work and who have no capital). That's why the pamphlet Do the super rich matter?, published today by the TUC, is so inter-esting. It is a devastating critique of the past few decades in which the wealthiest few have come to own more than their equivalents in the Victorian era. This would not be so objectionable, says Mr Barber, if the increase came from the rise of talented risk-takers in a meritocratic economy. But it hasn't. As he says, much of it has come from "financialisation" – sub-prime and other exotic financial instruments. The growth of the super-rich, he adds, is socially divisive, morally dubious and deeply damaging to the rest of the economy. Or Robin Hood in reverse.
He is disingenuous on how all this wealth has been created; he can't blame just the City, as he is trying to do. I quote him: "And any would-be first-time buyers should know who to blame for first the house price bubble and now the difficulties in getting a mortgage." That's not on. There are just as many entertainment, sport, media and energy tycoons who have amassed huge fortunes and should be included in his criticism. He's also wrong about the new higher tax rate: this would act as a disincentive to work rather than a catalyst, and send professionals overseas. But he is right that the super-rich should pay a fair tax. Not those earning £100,000 to £200,000 but the mega-rich, like the 54 billionaires in Britain who in 2006 paid £14.7m tax on their combined incomes of £126bn, and who are so rich they can pay people to help them avoid it. Most of us are not so lucky.
As the fascinating report, by Stewart Lansley, points out, there has been an astonishing concentration of wealth in the hands of the very few over the past century. Fewer people own more money than at any time in history. Why this has happened is still not fully understood, but it's clear that the neo-liberalism of capitalism has failed to deliver the trickle-down effect anticipated.
What is interesting is that there is absolutely no debate within the Labour Party about these growing divisions. That's why Mr Barber's intervention is so piquant.
But, curiously, it is a debate that's taking place in the Conservative Party. There are many progressive thinkers studying how this phenomenon has occurred and what can be done to spread wealth, other than by penal taxation. That's not the answer. Mr Barber probably knows it, but at least he's on the right track.
30 million reasons why Libya is a land of opportunity for Westerners
Tripoli airport lounge is where the City's out-of-work bankers should be heading now that the "mad dog of the Middle East", Colonel Muammar Gaddafi, Libya's leader for nearly 40 years, is turning into the West's favourite pin-up boy. Gaddafi's meeting last Friday with Condoleezza Rice, the first time in 55 years a US Foreign Secretary had been to the country, was just his latest with a Western leader in recent weeks.
Whatever the motives on either side, it's a move to be applauded, as better relations can only help US diplomacy in the Middle East generally. The clerics in Tehran will be watching. Rice will also be visiting neighbouring Tunisia and Algeria, and Morocco, all waiting desperately for more foreign investment from the West too.
But the most astonishing volte-face took place in Libya itself last week. On Monday, Gaddafi stunned even his own people in a speech extolling the virtues of capitalism. He claims free-market reforms will be introduced next year, and announced that state-run businesses will be handed back to the people. His precise words were: "After four months, everything will be in your hands. Do not be scared. Begin discussing this issue and prepare yourself ... because this is a crucial and inescapable matter." On education he said: "The money that we put in the education budget, I say let the Libyan people take it. Put it in your pockets and teach your kids as you wish. You take responsibility."
Even Conservative education spokesmen daren't say such things. Whether the maverick leader will stand by his Damascene conversation is unclear but Gaddafi knows that he needs the West. Sanctions and exclusion from the Western club have meant that Libya's vast oil fields have not been fully developed, but it has Africa's largest proven oil reserves. Up to 30 million workers are needed to man the fields, and Libya has a population of only five million. It also needs the infrastructure – airports and ferries – to carry this vast workforce around. Work on building the world's second-biggest port after Singapore has already started, and a new stock exchange is planned. Railways, roads, luxury hotels and hospitals are all essential too. That's why Gaddafi wants privatisations and will need the advice of foreign companies and bankers. Start learning Arabic.
Wanted – a spongy ceiling women can bounce against
All these reports on women hitting ceilings – the latest, according to the Equality and Human Rights Commission, is made of concrete rather than glass – are becoming really boring. They keep telling us that women are not getting the most powerful jobs but none of them ever face up to the truth and give the reason why. There is only one: women have babies and juggling looking after them with work is hard. But it can be done, usually with great support.
What women want, therefore, are spongy ceilings that they can hopefully adjust to the child's needs and age. That's difficult and costly for employers and it's why so many women, such as Deborah Meaden (above) from 'Dragon's Den', set up their own companies.
But the vital question is whether women who want to go for top jobs have equal access – or are they discriminated against? The best line I have heard on this came on the appointment of Kathleen O'Donovan – the first female finance director of a Footsie company when she joined BTR. As she told me then: "Women will only be equal at work when there are as many mediocre women in business as there are men."
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Trickle down was one of Thatcher's favourite props, and was full discredited even during her reign. To use it again is disingenous in the extreme, and another example of the fact that New Stasi take us all for fools.
Posted by Jeremy Poynton | 07.09.08, 12:52 GMT