Af­ter the crash the rich man­aged a quiet se­ces­sion of the suc­cess­ful

The Guardian - - OPINION -

This sum­mer marks 10 years since the be­gin­ning of the fi­nan­cial crash in the UK, when de­pos­i­tors lined up out­side branches of a small Bri­tish bank, North­ern Rock, to with­draw all of their sav­ings as quickly as pos­si­ble, par­tic­u­larly since ev­ery­one else was do­ing the same. This led to the UK’s first bank run in 150 years. The global crash that fol­lowed saw panic, which seemed a pru­dent re­ac­tion. When the dust set­tled, it was clear the elites had failed to an­tic­i­pate the near­a­poc­a­lyp­tic events. They had placed too much faith in mar­ket lib­er­al­i­sa­tion, dereg­u­la­tion and tax cut­ting that ben­e­fit­ted the very wealthy dis­pro­por­tion­ately. In an in­stant ev­ery­thing changed. Yet noth­ing did.

As re­search for the Res­o­lu­tion Foun­da­tion at the week­end shows, the rich are back. While the rest of so­ci­ety have shared in an equal­ity of mis­ery fol­low­ing the crash, the top 1% – house­holds with in­comes of £275,000 – have now re­cov­ered all the ground they lost dur­ing the world’s worst post-sec­ond world war slump. The share of in­come go­ing to the very rich­est is now 8.5%. That’s dou­ble their share in 1985. The ques­tion has to be asked: has the value of the 1% in so­ci­ety dou­bled in the last 20 years? What have all th­ese higher earn­ers – in the City or in the board­rooms – done that has been so so­cially use­ful to see their share of to­tal wages go up so much?

It’s not that we are richer as a na­tion. The econ­omy is about £300bn smaller than would be ex­pected if the crash had not hap­pened. Re­mem­ber the re­ces­sion was caused by the fi­nan­cial sec­tor’s in­no­va­tions – the ex­ces­sive lever­age; the per­verse in­cen­tives; the fraud­u­lent pro­mo­tion of risky prod­ucts as safe – and its pro­mo­tion that greed was the ul­ti­mate good. While pub­lic spend­ing as a pro­por­tion of GDP might be roughly con­stant since the crash, the coun­try’s needs are higher, so there’s a feel­ing of less to go round. This has hap­pened while there’s been a quiet se­ces­sion of the suc­cess­ful.

All the rise in in­equal­ity is due to this group rac­ing away with the good­ies from the econ­omy, while the rest of us are squeezed closer to­gether. For the very wealthy, rules are bent to suit their needs. When a div­i­dend tax was read­ied for 2016-17, the very wealthy took their pay­ments early and avoided £800m, money that could have been used for schools and hos­pi­tals. More than £100m of that tax sav­ing was en­joyed by 100 peo­ple. Can you imag­ine a su­per­mar­ket worker ask­ing to bring for­ward his pay to avoid a tax charge? The rich­est in our so­ci­ety are not worth the re­wards they give them­selves. It’s be­cause they have cap­tured ide­o­log­i­cally the po­lit­i­cal process that th­ese ab­sur­di­ties con­tinue. Stud­ies show a de­cline in the in­flu­ence of the mid­dle-classes, com­pared with the wealthy, fu­elling so­cial and po­lit­i­cal in­sta­bil­ity. The rich mis­tak­enly think all their power and money and suc­cess is down to their bril­liance and hard work. This is why FTSE CEOs now earn on av­er­age £5.3m a year, 386 times more than work­ers on a na­tional liv­ing wage.

The more as a so­ci­ety we have pur­sued mer­i­toc­racy and “equal­ity of op­por­tu­nity” the more un­equal we have be­come and the less so­cially mo­bile. That’s why the pro­fes­sions are be­com­ing closed shops for the pri­vately ed­u­cated. Be­cause pol­i­tics is colonised by the thoughts of wealthy “mer­i­to­crats”, we end up ad­vo­cat­ing so­cial mo­bil­ity in un­equal sys­tems with­out think­ing about who is go­ing down when the clever are go­ing up. Lots of de­bate about stu­dent debt but barely a squeak about the other half of the coun­try that needs ap­pren­tice­ships.

Be­cause mer­i­toc­racy is a myth used to for­give the vice of greed, univer­sity vicechan­cel­lors and BBC stars end up be­ing paid as­tro­nom­i­cal amounts. Both are work­ers whose wages are not very com­pet­i­tive be­cause qual­ity is hard to judge, par­tic­u­larly in ad­vance, and it is worth pay­ing a lot more for bet­ter out­comes. So they get paid what­ever they can get away with. Labour have their an­swer: tax­ing the rich and spend­ing to re­shape the wel­fare state. The Con­ser­va­tives un­der­stand the prob­lem but do not want to in­ter­vene and reg­u­late to en­sure the sta­bil­ity that af­ford­able homes, job se­cu­rity, ed­u­ca­tional prospects bring.

The prime min­is­ter has sought to por­tray the di­vide as one be­tween “lo­cals” and “glob­als”, who in­habit dif­fer­ent economies. One linked by road­side chats; the other by FaceTime. To­day’s Con­ser­vatism does not want to level re­la­tion­ships be­tween poor and rich, to pro­vide poli­cies that al­low work­ers to set bosses’ pay or ten­ants to hold their land­lords to ac­count or em­power con­sumers over cor­po­rates. Be warned: if a party can­not stand with the coun­try, the coun­try will end up stand­ing with some­one else.

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