Saturday, 21 January 2012

Who are the undeserving rich?

In today's Daily Telegraph, Peter Oborne returns to his well-rehearsed subject of the rich and the poor. Or more precisely the evils of those Mr Oborne defines as the "overclass":

Senior bankers, private equity moguls and hedge fund managers appear cut off from the rest of us. They often pay little or no tax, increasingly live in heavily guarded enclaves, and some have little or no real allegiance to Britain. The sources of their wealth are often mysterious, and appear unrelated to merit. These feral rich pose, in their way, every bit as much of a danger to society as the rioters who stole and pillaged London streets last August. 

Nothing new in this argument - it is a familiar traditionalist conservative viewpoint that sits with the idea of "one nation" and the concept of duty. Indeed, part of Mr Oborne's revulsion at the "feral rich" is their very internationalism, their independence:

Among both the very rich – the “overclass” – and the very poor – the “underclass” – the idea of responsibility, duty, patriotism and neighbourliness has been destroyed. 

The men who Mr Oborne demands are reined in have no desire for the state, we might almost observe that their wealth enables them to break free from the state. And Mr Oborne dislikes this. It cannot be allowed since it is tearing away at the fabric of society. And such sentiment echoes past views on the wealthy - or more particularly on the need to make a distinction between the rich we approve of and the rich we disapprove of: is right that men and women who have made a fortune through ingenuity and hard work – such as writer JK Rowling and inventor Sir James Dyson, for example – should be allowed to retain their wealth. The question is how to create a set of rules which achieves that aim while penalising the greedy and rapacious.

You see here how Mr Oborne has framed the argument? Somewhere we require a means of making some sort of moral judgement between the deserving and undeserving rich. So smiling actresses, trendy musicians, slightly wacky inventors and tieless entrepreneurs might be allowed their riches but others - carefully ill-defined here - who are merely "greedy and rapacious" must have their riches seized for it is the proceeds of "bad" capitalism.

So who is included in Mr Oborne's parade of sinners? Is it just those whose sources of wealth "are often mysterious, and appear unrelated to merit"? And how in all this do we define whether riches are deserved - presumably the scrapping of the national lottery is an imperative in Mr Oborne's New Britain. What better definition of unmerited wealth is there than winning £40 million from a £1 stake?

We are grasping at straws - almost floundering - here. While we can appreciate why Mr Oborne is so cross about the "feral rich", he fails to answer the big question - who is undeserving of their riches? Now, it seems to me that the solution to Mr Oborne's problem isn't to indulge in some form of moral distinction but to recognise that the problem with capitalism lies not in the wonder of free markets but in their corruption by the choices of government.

The undeserving rich are those whose wealth derives from exploiting regulation and government rather than from creativity, enterprise and innovation. In alluding to crony capitalism, Mr Oborne hits the nail on the head - this is at the core of the problem. Many business sectors - aerospace, pharmaceuticals, transport, construction and, of course, finance - have worked hand-in-glove with government to create wealth for the owners of those businesses. Legislation and regulation is used to protect the interests of existing operations, to favour the state's interests over the innovator and to allow many businesses to become little more than rent-seekers dependent on the political class.

And the political class is likewise dependent on these rent-seeking businesses - for politics is a poorly paid business. You need only look at the immense wealth accumulated by Bill Clinton and Tony Blair so see how crony capitalism works for the political class.

I fear, however, that Mr Oborne's arguments will be taken as an incentive to regulate and control. To set rules - probably unenforceable rules - about the remuneration of company directors and the payment of bonuses. Speeches will be made announcing endless crack downs on "abuse" with a new collection of regulatory bodies set up to police this system. Each of these will have a board of well-padded felines and a chief executive earning half-a-million. Politicians will announce that something has been done!

And the rich will remain as they are today - free from the state. Not individually free from the moral imperative of duty or any responsibility for others but free from the state. For my part I see this as a growing up process - we should aim for a place where everyone is able to live like the financier Mr Oborne describes:

"The only time that I use the state,” one financier worth an estimated £500 million confided in me recently, “is when my driver drives on public roads from the City to my country estate."

Is this not a good thing? If we are wealthy enough to no longer to require the soft cushions of the welfare state surely that is something to be celebrated, not something worthy of condemnation?


The solution to Mr Oborne's challenge is fewer rules, less government and more free markets. Somehow, I suspect we'll actually get more intervention, more regulation and less free markets.  And we'll be poorer for it (unless we have the right connections, of course!)


1 comment:

Weekend Yachtsman said...

"The men who Mr Oborne demands are reined in have no desire for the state..."

Au contraire, these people have a very great desire for the State; it's the State that rigs the rules in their favour, it's the State that sets up barriers to entry so as to limit their competitors, it's the State that steps in to print money so as to save them from the consequences of their actions, and so on and so on.

They love the State, they're in bed the with State, they are symbiotically entwined with the State; it provides all of their power over others, after all.

The way to deal with this is to reduce the power of the State drastically, so that it can't provide a cosy environment for these parasites.

Which is pretty much what you say in your last paragraph.

Accepted that it amounts to belling the cat, but we have to start by undestanding what we're up againt.