Читать книгу From Here to Prosperity - Thomas Burgess - Страница 15

Our democracy has been damaged; the widening gap in economic inequality has disenfranchised many who are not able to participate in the opportunities that their country should be able to offer. The rise and rise of the super-rich has turned our democracies into plutocracies: societies ruled and dominated by the small minority of the wealthiest citizens. At the same time, money from big business is poured into lobbying and electoral campaigns. We have strayed a long way from government of the people, by the people, for the people.

Our liberal democracy has been undermined by big money and political polarisation. Governments are becoming dysfunctional. In the USA, particularly, the government has come to a halt on several occasions thanks to intransigence over budgets and spending. In 2010, in the UK, the lack of an outright majority for one party led to the first coalition government since the Second World War. It failed to act with a sense of urgency or clear direction and was antithetical to stimulus initiatives and focussed instead on austerity measures that mainly hit the poor. An election in 2015 put the Conservatives into power by a narrow majority promising more – much more – of the same. But in recent decades both the US and UK governments have lacked any clear agenda for sustainable and socially just structural change. Their purpose should be to sow the seeds of prosperity, to cultivate them and harvest the benefits for all. Yet their policies are making matters worse for the majority, and the problem is partly down to tax.

Tax codes have become increasingly complex, as have the ways of avoiding taxes. Governments still raise most of the revenue from taxes on incomes. In the UK, over 43% of government revenue comes from taxes on incomes including National Insurance. As its name suggests, National Insurance was introduced in the UK in 1911 as an insurance scheme to which workers and employers contributed to cover for illness and unemployment. It was later expanded to cover retirement pensions and other benefits. Successive governments have undermined the concept and it is now treated openly as a tax. In the USA, the cost of health insurance, while not a tax, adds significantly to employers’ costs. Domestic property taxes (Council Tax) in the UK have to be paid by both homeowners and renters so are just another tax that falls harder on the less well off. The UK also has a sales tax, Value Added Tax, paid by the end-user, which has a disproportionate impact on the poor. The concept of taxes on wealth and higher tax on higher incomes seems to be side-lined. 80% of British Income Tax payers earn below £32,000 and yet still have to pay Income Tax which actually adds so little to the government revenue. It is not worth causing so much hardship for such a small return. Yet there are no effective taxes on the wealth accumulated by the few. Capital Gains Tax and Inheritance Tax account for just 1% of UK tax revenue. If Stamp Duty (a tax on property transactions) is included as well, then it rises to just 3%. Austerity programmes have hit hard but, by definition, the wealthy are protected. Huge numbers of low-paid workers are still below the poverty line and receiving state benefits. In effect, taxpayers are subsidising wealthy shareholders and low wages. So very clearly the government is not working for us, the majority.

In his book Public Revenue without Taxation, my father, Dr Ronald Burgess, showed that there is a more equitable and efficient way of funding government. His argument rests on a widely accepted definition of tax: ‘a compulsory contribution to a public authority irrespective of the exact amount of service rendered to the taxpayer in return’. It follows that, if what the taxpayer is required to pay is in direct relation to services rendered, then it is not a tax: it is a payment for services rendered, just like any other transaction and indeed a much more palatable process than the current system.

So, if all ‘tax’ could be in direct relation to the services and benefits received from the government, then the payments to the government from the people would not be a tax. Instead they would be getting what they paid for. This could be achieved by using the value of land, the natural resource that is in limited supply, as the tax base. The price of property already includes the value of these public amenities, but it is necessary to distinguish the value the land from the value of any building or other improvement on the site. The former is a publicly created value and the latter is privately created. To tax the building and improvements is to penalise private investment, but to ‘tax’ the value of the land is to collect for the public purse what has been created at public expense.

This is equitable, but there is a further benefit: as improvements to public infrastructure and local services are automatically translated by the market into higher land values, this will trigger higher contributions to the public purse from the land owners who benefit in proportion to the benefit received, as valued by the market. This is a virtuous circle: the more services provided, the higher the land values and the greater public revenue. This concept will be examined further to see how such system could be implemented and its significant impact on rampant inequality.

This principle could and should be extended to more areas of local and national revenue collection. While it has been shown that sufficient public revenue could be raised without taxation, tax could still be a useful economic management tool, in which case, with current levels of inequality, it may still be necessary to keep some taxes for the time being. But contrast this model with what we do now.

Too many are in what is described as the poverty trap. It’s bad for them and bad for the rest of us. Because employers are subsidised to pay low wages through the system of in-work benefits, there’s less money moving through the economy and consequently less flowing into the Treasury. Broadly, it is estimated that it is not worth coming off welfare benefits in UK unless the job pays more than £15,000 per year. The policy of successive governments has been to cut welfare budgets to save money; austerity measures have meant more people need more welfare; there is less scope to meet this need. Initiatives to increase growth and provide more work that would have alleviated the pain for those most hard-pressed, have been eschewed. But if we took bold moves to increase income for the lower earners it would also create more opportunity for those currently in poverty to break out of it, and it would boost consumer demand. Increasing both the number and the value of jobs would reduce the welfare budget so that government could focus funds on growth and wealth creation. Win-win instead of lose-lose-lose.

Talk of cutting back on government, reducing its role, and therefore decreasing taxes, misses the point that government is there to provide a service to its people. We, all of us, are the people. We elect a government to provide what we cannot provide for ourselves, individually or as a local community on a small scale. Government is not there just to legislate and regulate or only act as a protector of the individual against others or outsiders. What services it should provide and to what extent, we decide. Others may differ, but in my view, it makes sense for the government to provide healthcare, welfare, education, infrastructure, law and order, defence and international relations. Its primary roles should be to ensure opportunity for all and to minimise inequality in line with basic human rights. This is neither a recipe for the ‘Big Government’ so despised by right-wing libertarians nor for ‘rolling back the state’ to the point where every other activity would be beyond its remit. It is simply a question of resetting our priorities. Narrowing the wealth gap and abolishing the democratic deficit that it creates are all part of the same process. We tell ourselves we live in a democracy with freedom and opportunity for most if not all. Yet we see policies directed and influenced by those with wealth while the poor and the powerless are marginalised and disenfranchised; this is not democracy but plutocracy, a society dominated and run in the interests of the wealthy.

The idea of tackling poverty and empowering the poor instinctively worries some people who think it might lead to swarms of the discontented tearing down the gates of their mansions, invading their holiday islands or tossing them through their penthouse windows. Why should it? If anything, putting even greater distance between haves and have-nots is far more likely to end messily. In 2008, then Australian Prime Minister Kevin Rudd called today’s new rich ‘the children of Gordon Gekko’, referencing the character in the movie Wall Street who said, ‘greed, for lack of a better word, is good’. Between them a class of fat cats and wide-boys backed by political zealots brought about the Great Recession of the early 2000s, ruined countless lives and – against all natural justice – did very nicely out of it. There has been no let up in the eye-watering salaries, golden handshakes and ‘bonuses’ that help create the wealth gap.

The multi-billionaire owner of luxury jewellery Cartier, Johann Rupert who has amassed a fortune of around $7.5 billion from brands including Cartier, Chloe and Vacheron Constantin commented in June 2015 that the thought of the poor rising up and overthrowing the rich keeps him awake at night. He added that he fears that such a revolution will mean the middle classes won’t want to buy luxury goods in the future for fear of exposing their wealth. ‘How is society going to cope with structural unemployment and the envy, hatred and the social warfare? We are destroying the middle classes at this stage and it will affect us. It’s unfair.’ It seems the harsh reality may be starting to sink in to the 1%.

New York-based, Insite Security, specialising in personal security for wealthy individuals as well as executives in multinational corporations has seen a 40% annual increase in demand for work on panic rooms in 2015. Founder, former lawyer and US secret service agent, Christopher Falkenberg told The Financial Times that ‘Fears of inequality have heightened concern among people on Wall Street and those in hedge funds. Inequality is an issue. People are concerned for their safety from activists or criminals targeting the affluent.’

For some the remedy appears to lie in the enlightened self-interest, even philanthropy. Take Bill Gates and Warren Buffett, two of the wealthiest men in the world. On a March day in 2010, they sat in a diner in Carter Lake, Iowa, and hatched a scheme to ask America’s billionaires to pledge the majority of their wealth to charity. Buffet decided to donate 99% of his, saying, ‘I couldn’t be happier with that decision.’ Even bearing in mind how much they will have left in the bank when all is done, this is about as generous as it gets and it chimes with a long tradition of benefaction amongst the super-rich in the USA.

J. Paul Getty made his first million dollars by the age of 24. By the middle of the last century he was one of the richest men in America and by any measure he was both shrewd and successful. He said:

No matter how many millions an individual amasses, if he is in business he must always consider his wealth as a means of improving living conditions everywhere. He must remember that he has responsibilities toward his associates, employees, stockholders and the public.

I have no doubt this was honestly meant but in a democracy we all have these and similar responsibilities. Our duties and rights are, or at least should be, the same. Philanthropy on the industrial scale practiced by Gates, Buffett et al, is the privilege of the 0.1% who have acquired countries’ worth of wealth or the even more infinitesimal number who choose to exercise it. There is nothing wrong and a great deal right with people contributing to worthwhile causes to alleviate misfortune, help cure disease and spread happiness. We should all be in a position to do so in our own right or through the people we elect. Something is very wrong if plutocrats are setting the social agenda.

The US property billionaire and Presidential candidate Donald Trump may have some questionable and outrageous views but in 1999 he came up with an interesting idea. The national debt has always been a burden for most countries. The high cost of servicing it comes out of the current account every year but it goes no way to reducing the debt. At the turn of the century, Trump proposed a plan to pay off the US national debt with a one-time ‘net worth tax’ on individuals and trusts worth $10 million or more. A 14.25% levy on such net worth would raise $5.7 trillion and wipe out the debt in one fell swoop. The value of the individual’s principal home would be exempt, deducted from the net worth total. At the time, he calculated that eliminating the national debt in this way would save the Federal Government $200 billion a year in interest payments. He proposed to earmark half the savings for middle class tax cuts, and the other half for Social Security. Trump, whose own net worth was then estimated at $5 billion (it’s slightly less now), said, ‘personally this plan would cost me hundreds of millions of dollars, but in all honesty, it’s worth it.’ He predicted that debt elimination combined with his tax cuts would trigger a 35 to 40% boost in economic activity, with more business start-ups, more jobs, and more prosperity. ‘It is a win-win for the American people, an idea no conventional politician would have the guts to put forward.’ It went nowhere, which is no surprise, but what is particularly shameful is that it took a plutocrat to propose it in the first place.

When wealth captures government policymaking, the consequences include the erosion of democratic governance, the pulling apart of social cohesion and the vanishing of equal opportunities. The Oxfam report Working for the Few highlights one of the potential effects of the plutocracy and the wealth gap as irreversible ‘opportunity capture’ by the wealthy: this is where the lowest tax rates, the best education, and the most effective healthcare are all claimed by the children of the rich, creating cycles of advantage that are transmitted across generations. As US Supreme Court Justice Louis Brandeis famously said, ‘we may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.’

One of the demands of Britain’s mid-19th century Chartist movement was that Members of Parliament should be paid an annual salary of £500, so that any adult male who was qualified to stand and was elected, could afford to serve without needing to be independently wealthy. Today, MPs are a mix of committed people who have given up their jobs, others who combine being a paid representative with another career (often the law or multiple company directorships) and career politicians whose entire life and income revolve around Westminster. Their basic salary is £67,000 a year but they also receive expenses to cover the costs of running an office, employing staff, accommodation in London and their constituency, travel between the two and sending out letters. They receive a pension when they retire and a one-off payment if they lose their seat. Small parties that are not in government are given a helping hand in the form of ‘short money’ (in the House of Commons) and ‘Cranborne money’ (in the Lords). All of this is designed to ‘keep them honest’.

When these arrangements are seen to be abused there is a scandal. In a case that caused outrage and amusement in equal measure in 2009, Tory MP Sir Peter Viggers was forced to retire when The Daily Telegraph revealed that he had claimed £30,000 for gardening, including £1645 for a floating duck house. MPs have to sign a register of interests but they can quite legitimately take on outside work. In 2012 the Daily Mail calculated that some were earning 13 times their public salary from second jobs, including a former environment minister paid £140,000 by green companies for a 51-hour month. MPs are often accused of being remote and disconnected from ‘real life’ and, if earning ability alone could make this true, many probably are. Some are also remote from Parliament because they are actually working elsewhere.

Like their US counterparts, British MPs are subject to lobbying by interest groups, big business, party backers and powerful individuals. In 2012, the multi-millionaire Conservative co-treasurer Peter Cruddas resigned after being filmed asking a donor for £250,000 for his party, to fix up a meeting with the Prime Minister. In 2010 the Sunday Times and Channel 4 TV uncovered the influence-peddling of three former Labour ministers including Stephen Byers who was secretly filmed saying that he was like a ‘cab for hire’ at up to £5000 a day. While in some countries these ‘extramural’ activities would be considered a perk of the job and the amounts involved piddling, what it demonstrates is a mindset contaminated by greed and contempt for voters. The two go hand-in-hand. No wonder we are loosing trust in politicians.

It is fair to say that while the UK and America share common problems in this area there is a difference in scale. One of the most notorious lobbying scandals in the USA blew up in 2006. A group of lobbyists led by one Jack Abramoff were accused not only of giving gifts to politicians and making enormous campaign donations in return for votes, but also of ripping off their clients, mainly Native American casino interests, to the tune of $85 million. Significantly, Abramoff was jailed for conspiracy, fraud and tax evasion. Somewhere along the way the idea that tens of millions of dollars were involved in exercising influence over legislation, seems to have been overlooked. Perhaps one reason is that politics has always been an expensive game. Somebody had to pay for all those trains that candidates took to using for whistle-stop campaigns, starting with William Henry Harrison in 1836.

From George Washington onwards, barely a handful of US presidents, such as Abraham Lincoln and Harry S. Truman, have been non-millionaires, or the equivalent, either on assuming office or in later life, the richest of all being John F. Kennedy. In either country, being an exminister or former congressman or woman will not harm your chances of a comfortable retirement. But if it helps to be rich to be in power, in a plutocracy the super-rich do not have to be in government to shape laws or alter policy. The super-rich can deal at arm’s length through lobbyists or at closer range, around the dining table, aboard the super-yacht or each winter in the Swiss Alps at the World Economic Forum, an annual event hosted by a foundation whose 1000 members are mainly global corporations with yearly revenues exceeding $5 billion.

I was impressed by the American constitution when I first studied it at school. I liked its clear and ordered approach compared to the British mish-mash of laws collected over the centuries. I admired the consensus politics in America. In the British system the Government and opposition benches of the Houses of Parliament are the length of two swords apart, just in case debates get a bit rambunctious. Both houses are plagued by a confrontational system, tempered by quaint rules that, for example, forbid members from calling one another liars, but will allow them to say they have been ‘economical with the actualité’ (French scholars look away now). I remember talking to a Conservative MP back in the early 1990s who saw his main role as keeping the ‘socialists’ out; foolishly, I had assumed it was to serve his constituents, whatever their beliefs.

If my picture of US politics was ever entirely true, things have certainly changed: the left and the right in America are now so at loggerheads that the Government has been paralysed repeatedly by budget disputes and constant blocking of proposals. This meant that significant pieces of legislation like the Affordable Care Act were watered down in order to please all factions as well as the men with the money.

Even before Obamacare (which still leaves many without healthcare), efforts to improve healthcare provision has been going on for a long time but get bogged down in trying to make health insurance more affordable, rather then making healthcare available to all. This is a classic case of the government not working for us but working for those that provide health insurance and medical and pharmaceutical services. A similar plan for healthcare was proposed by Harry S. Truman six decades ago and has been attacked ever since as ‘socialist’. The World Health Organisation calculates that the US has the highest health spending in the world, equivalent to 17.9% of its Gross Domestic Product (GDP), or $8362 per person (more on this later). US politicians, the health care ‘industry’ and pharmaceuticals companies however, are determined that Americans would rather ‘go private’ and spend twice as much per head on healthcare than submit to the semi-Communist tyranny of a system like the UK’s state-funded National Health Service, which, horror of horrors, is free at the point of delivery. The British government that brought in the NHS almost 70 years ago did so through sheer weight of numbers after a landslide victory in which wartime coalition leader – and aristocrat – Winston Churchill was thrown out of Downing Street. The British were sick and tired both of the ‘Giant Evils’ identified by the Liberal William Beveridge – want, disease, ignorance, squalor and idleness – and the country’s class system. The NHS is the holy cow of British politics; a great example of the government working for us, support for it is the equivalent of motherhood and apple pie, despite the fact that its introduction was bitterly resisted and subsequent governments have tried to ‘marketise’ it, ready to hand it over to big business.

In Britain there is not much scope for the government working for us in the short term even though the ruling Conservative Party has moved from serving (or self-serving) the land-owning aristocracy to the centre ground. After a General Election with no clear winners in 2010, the Conservatives formed a joint administration with the minority Liberal Democrats (which was formed in 1988 by the merger of the Liberal Party and Social Democrats). At times the coalition had a bumpy ride, even as the junior partner in the coalition, the Lib Dems, managed to get some of their policies enacted and put a brake on what they would see as the worst excesses of the Conservatives whose instinct is to cut taxes for the rich and slash benefits for the poor (which they still did). The coalition demonstrated that is was possible to have an alternative to two-party confrontational politics of the type that has stymied progress on either side of the Atlantic. However, due to a clear lack of direction, the coalition did not achieve the much needed, bold reforms; it was really just business as usual, with the same structural problems still there and unsolved.

But if the government is not working, would the opposition fare any better? In Britain the opposition Labour Party seems to have lost direction and lack a consistent, cohesive message, resulting in it loosing the 2015 general election. Then with massive popular support far left-leaning outsider Jeremy Corbyn was elected leader but with many dissenting Members of Parliament. Despite his radical views and his determination to bring change, it appears his management and communications skills leave a bit to be desired. He has however done a massive service to the nation by bringing the belief that change is possible, business as usual needs to end. It now needs a bold visionary leader to pick up on this strength of feeling in the electorate and turn it into reality for the betterment of all.

And in thanks for their contribution for government the Lib Dems were reduced to not much more than a handful in the House of Commons in the 2015 General Election, with very little clout to achieve anything, for the time being at least. Similarly the Green Party and the UK Independence party did also not make much ground.

And even the lawmakers believe that the government isn’t working. John Dingell is the longest-serving congressman in US history with over 60 years in office. In February 2014 he announced his retirement. He said the institution he once revered was riven by acrimony and marked by lack of productivity. He had grown frustrated with the law-making process; he had run out of patience with Washington’s divided, confrontational politics. Aside from partisan animosity, Dingell despaired of the cor rupting influence of money and the increasing cost of running for election. He recalled when Democrats and Republicans actually worked together, now they were against this or against that and he did not hear what we are for or what they would be willing to compromise on. Dingell said he always sought compromise during a career working ‘with – not under, and not for – 11 presidents, from Eisenhower to Obama’, adding that this is not a Congress that is working, but it could be and should be. ‘The problem comes when disagreement is expressed through venomous name-calling, mindless vitriol, and ad hominem attack,’ says the American political economist and commentator Robert Reich.

Hatefulness too often blinds us to what we hold in common; it makes it impossible for us to listen to opposing views; and it serves as cover for the powerful and privileged who would rather divide us than have us join together for the common good.

The best ideas come from listening and talking. Those with a lifetime of experience can understand how things have changed for the worse, though.