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License [2]: Creative Commons 4.0 - Attributions/No Derivities/Int'l.
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Why are ultra-rich allowed to gain from crises that hit poorest the worst?

By:   []

Date: 2021-11

British prime minister Boris Johnson has set out his stall at COP26, with climate commitments that he says should be funded by the private sector. In response, the Labour Party has released its own recommendations, that involve substantial public funding. This, of course, has attracted some criticism over who should pay.

This approach has been around ever since the Thatcherite theme of “There is no alternative (TINA)” to cutting public spending. This model was prominently enforced during the long period of austerity that the Conservative-led coalition imposed in response to the 2008-09 financial crash.

TINA thus survived, largely unscathed, for years until being finally called out during the brief Corbyn era, especially by John McDonnell. Now, there is widespread acknowledgement among UK political parties that responding to climate breakdown is the crucial challenge of our era, and this response will be very costly. Yet the TINA principle remains in place, as most politicians ignore the fact that government-led funding will be a crucial component. They also ignore the 800lb gorilla in the room – the runaway wealth being accumulated by the ultra-rich.

Many columns in this series, along with other openDemocracy articles, have highlighted the key issue of runaway wealth in recent years. Occasionally it is also flagged by the mainstream media, including Rupert Neate’s contributions as wealth correspondent for The Guardian, and occasional coverage in the Financial Times.

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Given its core topic, the Financial Times is unsurprisingly a remarkably good insight into the spending capacities of those who enjoy runaway wealth. The property pages, for example, point to a world light years away from the experience of most. And the intended readership is clearly defined by the rather blunt title of the designer product-laden pages of the weekend supplement: ‘How to spend it’.

Fractured Britain

Even as we teeter on the edge of the climate crisis, the COVID pandemic has already highlighted how the neoliberal system of wealth accumulation shows up in fractured Britain. Government spending on the pandemic has already run into hundreds of billions and could be as high as £500bn, yet the wealth of the world’s richest billionaires surpasses this.

The 2021 Sunday Times Rich List identified 171 billionaires, 24 more than in 2020, with a combined wealth of more than £597bn. That is more than enough to meet the cost of the pandemic, yet the idea of a windfall wealth tax on the elite’s business interests in the UK is simply not on the agenda of Britain’s main opposition parties, and most certainly not on the government's either.

Instead, public spending is being hacked into again, while taxes are raised – with minimal effect on the super-rich but plenty on the poor.

Meanwhile, as the pandemic trundles on, reports have shown how people on the margins are much more likely to be worst affected by the disease. And a report by the Welsh chief medical officer from earlier this year showed that deprived people in Wales were twice as likely to end up in hospital from COVID, as well as more likely to die from it. Contrast this with the fact that the pandemic has enormously increased the wealth of the world’s richest, not least through market volatility being easily milked for quick profits. The first major global COVID surge came in the months from April to July 2020 and during that time, the world’s 2,189 billionaires increased their wealth by 27.5%.

All of this brings us once more to the mystery of that wealthy gorilla. Finding ways to extract money through a wealth tax is hardly new, with the most recent proposal coming from the Labour MP and former frontbencher, Jon Trickett, in a detailed report published on 21 October.

The report “includes four different options for a wealth tax, including a one-off tax, an annual tax and a hybrid tax targeting increases in wealth. The median revenue of the four options is £218.4bn, although the hybrid option would raise a further £85.7bn. It also finds that bringing taxes on dividends and capital gains into line with income tax would raise a further £127bn in revenue over a five-year period, while closing tax avoidance loopholes and tackling tax evasion would raise a total of £145.5bn.”
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