ourEconomy: Opinion

Jeremy Corbyn is right: billionaires and poverty should not coexist

It's ludicrous to suggest that we need billionaires to incentivise work and wealth creation. 

Luke Hildyard
5 November 2019
Image: Romain, CC BY-SA 2.0

A billion pounds is an almost incomprehensible amount of money. 

One of the most successful tricks that the rich and powerful have pulled on the rest of us is not merely capturing a disproportionately large share of global wealth, but hoarding amounts so vast that it is practically impossible to grasp the scale of it, and thus to criticise.

If you had been given £1,000 a day, every day since Jesus died, and stuffed it under a mattress, you would still not be a billionaire. 

There are around 15 or so countries whose entire wealth does not equate to that of an individual UK billionaire. 

With a net worth of £5 million invested sensibly, you could pay a 50% tax on the returns and still have enough to support a lifestyle of fast cars, luxury holidays and multiple property ownership, all without eating into the initial £5 million. A billionaire has 200 times that much.

So billionaires are very rich indeed, compared even to other people who are also very rich indeed, never mind the wider population. While some billionaires are smart, hard-working business people, the idea that their wealth is proportionate to how smart they are or how hard they work is obviously ridiculous. 

Similarly, given the opulence of the lifestyle that one could enjoy on a tiny fraction of their wealth, it is completely ludicrous to suggest that we need billionaires to incentivise work and wealth creation. 

So Jeremy Corbyn’s recent observation that we shouldn’t really have billionaires or poverty in this country ought to be pretty uncontroversial. And the two things are connected.

The wealth accruing to billionaires could be put to better use lowering prices for the products and services that the companies they own provide, or better pay for the workers that work in them. It could be properly taxed and used to fund schools, hospitals, housing, green energy and better public transport. 

The Sunday Times rich list calculates that the 1,000 richest people in Britain, including 151 billionaires are worth a total £771 billion. This is about six times as much as the entire NHS budget, roughly 8 times what the Government spends on education and is far in excess of the total wealth of the poorest 40% of the population. 

It’s hard to argue that this is a terribly sensible or efficient way to distribute resources. There are lots of policies that would help us to do a bit better. 

For example, corporate governance reforms that gave workers a seat on company boards and a share of company ownership would ensure a bigger share of those company incomes went to the wider workforce, rather than into the pockets of billionaire owners and investors. 

Changes to the tax system including the introduction of a wealth tax, updates to property taxes and taxing capital gains at the same rate as income from work would also mainly hit those that could afford to pay a bit more to fund public services that benefit everybody.

Polling repeatedly shows that this would be very popular. For example, 59% of survey respondents support worker representation on boards. 60% support a wealth tax on the very rich.

The counter argument to these policies, very often put about by campaigners and lobbyists paid by the billionaire lobby, is that very rich people can afford to move elsewhere or pay someone to help them get around these rules.

But firstly, that assumes the debate about inequality in the UK is taking place in isolation. In fact, there is worldwide concern about extreme concentrations of wealth, and some degree of international co-ordination on policy shouldn’t be beyond the wit of different governments.

Secondly, the implications of this argument for democracy are terrifying. It effectively says whatever the will of the people with regard to building a fairer society where the super rich contribute a little extra and prosperity is shared more evenly, those with enough money and influence don’t have to abide by it.

This is not reasonable. Indeed if those at the top are prepared to take such drastic steps to avoid making a fair contribution to the common good, it only underlines the sociopathy associated with such excessive wealth accumulation, and demonstrates the need for policy to prevent billionaires from existing in the first place.

Who's getting rich from COVID-19?

Boris Johnson's government stands accused of 'COVID cronyism', after handing out staggering sums of money to controversial private firms to fight COVID-19. Often the terms of these deals are kept secret, with no value-for-money checks or penalties for repeated failures which cost lives. And many major contracts have gone directly to key Tory donors and allies – without competition.

As COVID rates across the country surge, how can we hold our leaders accountable? Meet the lawyers, journalists and politicians leading the charge in our free live discussion on Thursday 1 October at 5pm UK time.

Hear from:

Dawn Butler Labour MP for Brent Central and member of the House of Commons Committee on Science and Technology

Peter Geoghegan Investigations editor, openDemocracy, and author of 'Democracy for Sale: Dark Money and Dirty Politics'

Jolyon Maugham Barrister and founder of the Good Law Project.

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Chair: Mary Fitzgerald Editor-in-chief of openDemocracy

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