Aspiration Can Belong To The Left

I have prepared the article below for a Labour-linked blog. While still reeling from the shock result of the election, with Labour making very limited headway in England and all but wiped out in Scotland, I think it’s crucial that the upcoming leadership election is not defined by the ‘aspiration’ espoused by so-called ‘modernisers’.

 

People are still working out why the election outcome was so strong for the Conservatives. They managed to more or less maintain their 2010 position and capitalise on the collapse of the Lib Dems to build a wafer-thin majority. So the question must be asked: how did Labour gain so little ground over the past five years? I don’t think the Mansion Tax lost Miliband the election: once the perception of a weak leader and economic incompetence was formed, it was fatal to Labour’s election prospects.

 

In politics, if a narrative is repeated often enough and is not challenged, it rapidly comes to be treated as fact. Within the Labour movement, one such story threatens to cloud our judgment: it is said we’ll never be re-elected unless we ‘get aspiration’. The words themselves ring true, but the idea attached to them is flawed.

 

The truly popular governments of the past were propelled into power because they understood the aspirations of large sections of society. The Attlee government promised nothing less than a war on poverty and injustice. Thatcher and Blair after her saw the longing for freedom to own, speculate and just maybe make big money.

 

Aspiration means different things to different generations. And thus in the meritocratic society governments inherited in the 80s and 90s, when opportunity and wealth (to varying degrees) was in the hands of the many and not the few, it was popular to go easy on the rich and powerful. Naturally so, when kids from council estates were growing up to become millionaire investment bankers, even the poorest support generous tax breaks for millionaires!
Some have attributed Labour’s defeat to its moderately redistributionist platform. They call for a return to the early Blair orthodoxy of avoiding anything that smacks of tax-and-spend like the plague. But to do so would be to wrongly assume the electorate of 2020 wants the same as that of 1997.

 

The young people of today don’t aspire to own a large house in Islington. They’ll count themselves lucky if they can afford a part-share in a tiny flat in Peckham. Gone are the hopes of a stable, rewarding career when today millions scratch out an existence on scraps of agency work or zero hours contract. In these and countless other ways, it seems the hopes of the many have been comprehensively trashed by powerful interests. Governments of all parties have chosen not to address these issues, leading to the toxic feeling of disempowerment and betrayal that so many would-be voters feel.

 

Labour exists to represent working people, so why don’t we get back to that job? If we show voters that we’re in tune with their most simple aspirations, they’ll respond. Our offer in 2020 should be based on aspirational socialism. Let’s promise the next generation the affordable, quality homes it needs; equal access to a world-class education and confidence in having a good job and protection from a strong welfare system. Also, our children deserve the best start in life, so let’s resurrect our pledge to eliminate child poverty altogether.

 

As a country, we seem to have forgotten how to get these basics right. Solutions exist, but they will cost billions of pounds to implement. Labour will have to explain where its priorities would lie if it were elected in 2020. It would inherit a devastated public sector crying out for investment, an eroded tax base to pay for it and probably a small budget deficit to close. Labour must be frank: a just society costs money and we will expect the most privileged to help out.

 

Progressive tax rises should be intelligently designed: for example taxing unearned wealth through Capital Gains Tax or ending tax breaks for landlords is fairer than taxing wages. And above all, our emphasis must be resolutely on these taxes allowing opportunity to be shared with ordinary people. To that end, every tax increase should be linked with a spending policy to aid social mobility. That’s what aspirational socialism means: opportunity for all, ensured by everybody making a fair contribution.

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Momentum Gathers Behind Citizen’s Income Policy

When Governments across the world are broke, and public hatred of the unemployed remains high, it seems like an odd time to float the idea of a Citizen’s Income. Yet the policy of the state paying a basic income to every citizen has become more popular than ever. Switzerland will hold a referendum on the policy this year; a citizens’ initiative is being held to force the EU to consider it; and the resurgent Green Party of England and Wales has adopted the idea as its flagship manifesto offering. The latter is particularly exciting, as the Greens are poised to eclipse the Liberal Democrats as the fourth most popular party in Britain.

But isn’t “paying for people just for being alive” (as critics brand the policy) an economic impossibility? How could the state afford to dish out £3,600 per year, the current level of Income Support benefit, to every citizen? Is a citizen’s income just a far-left daydream?

In Switzerland, economists and politicians agree that that a Citizen’s Income is viable. They only argue as to whether it is desirable, often on the grounds that people should not ‘get something for nothing’. I think that drawing profits from speculation in property, currency and shares might also be described as getting something for nothing, but that doesn’t seem to concern these people. And in any case, a Citizen’s Income is also useful in that it can drastically reduce the size of the welfare state: unemployment benefit, child benefit, the basic state pension, child benefit, student loans, and income support can all be reduced or abolished altogether, something many right-wingers have been dreaming about since the welfare state came into existence. Overall, a Citizen’s Income would render £171 billion worth of benefits and administration unnecessary, reducing the welfare state to as little as 30% of its current size.

In order to calculate the costs of a Citizen’s Income, its UK supporters have proposed the following rates:

  • £56.25 per week for under 18s. This would be paid to parents instead of Child Benefit and Child Tax Credit.
  • £56.25 per week for 18-24 year olds. This is equivalent to the ‘youth rates’ of key benefits like JSA.
  • £71.00 per week for 25-65 year olds, equivalent to standard rates of JSA and Income Support.
  • £142.00 per week for the over 65s, identical to the flat rate state pension that is being introduced anyway.

Together with £3 billion a year for running costs and administration, the total costs would be £261 billion- a net cost of just £90 billion per year.

OK, there’s no ‘just’ about £90 billion, but it is a surprisingly low figure given how ambitious the scheme is. That money could then be found with surprising ease: by abolishing the Personal Allowance and 0% National Insurance bands altogether, meaning that workers would pay normal tax rates from the very first pound they earned. Ordinarily, that would be a hugely regressive move: the Personal Allowance exists to mitigate the benefits trap. As means-tested benefits are withdrawn quite sharply as one’s earnings increase, it has been known for some people to be better off on benefits than working with a low income and benefits ‘top up’. By removing taxes on very low wages, and now with the ‘Universal Credit’ policymakers have aimed to make it worthwhile to work on very low wages. They have had very limited success.

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Source: the Guardian

However, Citizen’s Income would immediately solve the benefits trap by ensuring that every extra pound earned through work would translate into 68p (after Income Tax and NI) in a worker’s pocket, as Citizen’s Income is not means tested. This also means that part-time work becomes a viable option for those who want it. Thus the Citizen’s Income empowers people to shape their careers around their needs, not those of a complex and often self-contradictory benefits system.

It has been argued that this financial freedom could be abused. Why would people work if they could live off the Citizen’s Income, which won’t be withdrawn for failure to find work? Won’t it be a magnet for immigrants? To the first, I would answer that it would be tough to survive on £71 per week in the long-run, as any JSA claimant could testify. True, there would be some who decide not to work, but they would not have a comfortable existence. And as previously explained, it would always be worthwhile to work: in a region of rural India where a Citizen’s Income was trialed: the employment rate actually rose. Also, a top-up unemployment benefit could be introduced to reward the unemployed who are seeking work. To the second, it should be noted that those supposed ‘benefits tourists’ with the determination to milk the system can do so already. All these tabloid reports of benefits tourists aren’t describing migrants sleeping on the street and being denied access to existing benefits! In any case, payment of the Citizen’s Income could, as the name suggests, be made conditional on British citizenship.

The Citizen’s Income is a revenue-neutral idea that could provide a substantial boost to low earners and sure up support for a welfare system based on solidarity and universality. The only barriers to its introduction are political, and not necessarily from right-wing opposition. Alaska, hardly a beacon of socialism, already operates a limited Citizen’s Dividend of around $1,000 per person per year from its sovereign wealth fund. All that would actually be needed to make the policy a reality is the opening of people’s minds.

For further reading, please see the Citizen’s Income Trust 2013 report. American readers may be interested in the Basic Income Guarantee Network.

Is Cutting the 40p Tax Band a Real Priority?

It is almost politically impossible to explicitly increase a tax rate, or to impose any new tax on individuals. But politicians struggle to square this with public demands for enhanced public services or, more recently, opposition to austerity measures. Consequently, ‘stealth taxes’- tax levies or other revenue raising measures designed to evade public notice- have become a widespread phenomenon, but Britain specialises in them. The Thatcher government more than doubled VAT, masking a tax hike in people’s shopping bills, whilst presenting itself as a ‘low tax’ administration. Later, Gordon Brown used various stealth taxes to finance much needed public investment. Today, left-wing opponents label the Coalition’s bedroom tax and tuition fees increase as stealth taxes (they were designed to cut spending, but both have actually cost the government money).

Meanwhile, right-wing critics accuse the Coalition of stealthily raising the tax contribution of the ‘middle class’ by raising the thresholds at which the 40p Income Tax band, Inheritance Tax and Stamp Duty are paid, at sub-inflation rates. That the former two affect about the richest 15% and 5% of the population respectively does not stop talk of ‘hitting the squeezed middle’. Nevertheless, as the thresholds fall in cash terms, more and more people pay the respective taxes, and they pay more of them. This ‘tax creep’ can raise billions of pounds, and can do so quite progressively, in stark contrast to the the rest of the Coalition’s regressive austerity agenda. In certain cases, tax creep could be a Good Thing.

The problem is, it offends the upper middle class, the Tories’ electoral bedrock. That’s why they have revived talk of cuts to the 40p Income Tax band and Inheritance Tax after the next general election. Cynics would suggest that the Conservatives said the same thing before the last election, but failed to honour such expensive policies. However, I think the Tories intend to follow through this time, aware that it costs less, politically and financially, to give tax breaks to the modestly affluent than the ‘filthy rich’, who have already benefited hugely from Tory government.

Given there will be a budget deficit of £70 billion in 2015 that will need filling, at least partly, through tax increases, there could be a fairer and more transparent means of doing so. For example, a 30p Income Tax band could be introduced at the current 40p band threshold (around £42,000) and frozen in cash terms. Over a period of several years, the 40p threshold would rise with inflation, over time creating a significant 30p band between the thresholds. This would have the benefit of increasing tax revenues whilst softening the impact on high(ish) earners. It would also mitigate the rather sharp rise from 20p to 40p Income Tax that can come as a shock to those promoted into the upper band.

Solutions are yet more complicated with regards to Inheritance Tax and Stamp Duty, particularly given their connection to the issue of housing. With British house prices rapidly soaring into the stratosphere (for example, London prices rose by 18.5% last year) policymakers are beginning to consider inheritances to be the difference between property ownership and rental ‘slavery’- being tied to an overpriced and insecure rentals market. As such, the 40% paid on inheritances above £325,000 has become deeply unpopular- though only with people with any hope of buying a house. The ‘have nots’ who expect modest inheritances generally don’t care.

Then there is Stamp Duty, peculiar in that it is not banded like other taxes. For example, someone buying a house for £249,999 pays 1% of the entire sum, £2,499.99 in Stamp Duty, but 3%, £7,500, on a £250,000 house. Before the post-2000 house price boom, the majority of homeowners would never have paid a penny in Stamp Duty, but most houses have ascended in value whilst Stamp Duty (SD) thresholds remain static. The Daily Telegraph complains that Stamp Duty dampens the housing market- as if a) house prices were not already increasing at an unhealthy rate and b) a few thousand pounds in tax is really noticed when the value of a given house rises by that much in the space of a month. However, it is fair to say SD is applied unfairly: it was designed to apply only to the most expensive houses, not all of them. Also, its ‘slab’ banding distorts house prices.

A new tax regime is needed to raise the several billion made by Stamp Duty, but in a more equitable fashion, ideally in a way which does not exacerbate the present housing crisis. The stealth tax of static SD bands should give way to a transparent tax system. I would like to float the idea that SD is abolished on homes worth less than £1 million. Instead, a reasonable rate of Capital Gains Tax (CGT) should be levied even on taxpayers’ main homes. This move, which would be politically untenable if not accompanied by a sweetener like the removal of SD, would mark a symbolic transition from taxing people’s need to house themselves to taxing unearned wealth. It would also shift the tax burden from cash-strapped first-time buyers to those in larger properties. And crucially, CGT would actively discourage housing speculation, a problem which is damaging our economy by restricting the mobility and spending power of workers.

There might be fairer and more honest ways of raising money for public services than ‘tax creep’. However, the aim of them must be an equitable and people-friendly distribution of social costs, not the placation of the Daily Telegraph.

Poor Doors: Segregation Made Classy

When news reached Americans that a new upmarket apartment block in New York would have a separate entrance for inhabitants of its social housing units, there was uproar. These “poor doors” were seen as an unnecessary humiliation for those on low incomes. The Mayor of New York, Bill de Blasio (an unusually left-leaning Democrat) promised swift action to prevent the policy being implemented in any other housing developments.

Britain is, generally speaking, kinder to its ‘lower classes’ than the US. That is why many people will be shocked when they read a Guardian report on the proliferation of poor doors in London. Most of the public would consider poor doors not only an affront to good manners, but rather tacky as well. In polite society, the only respectable means of flaunting one’s wealth (insofar as that is not a contradiction in terms) is to do so in an modest, understated way. I can imagine that ‘rich door’ developments appeal to the sort of millionaire who buys diamond-encrusted smartphones and rings with rubies the size of hubcaps. Tackiness, as I say,

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Supposedly, there is more to justify poor doors in these developments other than preventing wealthy residents having to endure the sight of people on incomes beneath six figures. (But, to be fair, the plebs do smell, don’t they?) After all, members of the elite have to interact with waiters, shop assistants and suchlike on a daily basis. No, additional features like concierges, swimming pools and hotel-style lobbies have become fashionable in upmarket developments, and social housing tenants are denied access to these in order to save them the service charge.

That’s the official explanation, which I shall consider shortly. Unofficially, the absence of interaction between the ‘social strata’ is advertised as a selling point to wealthy would-be residents. In London, it is difficult for housing developers to avoid the mixing of their open market and the social housing units they are obliged to build alongside them. So their response is the poor door. I’m sure many rich home-buyers are put off by the tastelessness of the policy, but clearly there is sufficient demand anyway. As for the social housing tenants; they have little choice in the matter. Those who reach the top of comically long housing waiting lists may often only decline one or two properties allocated to them by their council, or they risk being struck off the list altogether. Having to use a poor door becomes a trivial concern.

Whilst it is true that social housing residents cannot afford the service charges that accompany the upkeep of upmarket lobbies and concierges, I don’t see segregated entrances as a proportionate solution. If developers can come up with a creative solution (they are paid to devise creative solutions) to provide unnecessary extras to those who want and are able to pay for them, that’s fine. Poor doors, however, are not fine. If developers cannot devise an alternative, then unfortunately London’s millionaires shall have to live without a 24-hour concierge service.

It is important to remember that these poor doors are not only separate, but unequal to the “rich doors”. Almost invariably, the poor doors are located in dimly lit alleys alongside bins or commercial goods entrances, whereas rich doors have accessible street entrances. Moreover, even the doors themselves look different. The Independent reports the case of one development “the affordable [housing] has vile coloured plastic panels on the outside rather than blingy glass.”

As if this were not sufficient demonstration of the perceived inferiority of social housing residents, everything from the corridors to refuse collections to postal deliveries tend to be segregated too. This blatantly and inexcusably eliminates any prospect of affluent and less affluent neighbours coming into contact at all, which is hardly conducive to community cohesion. And the Establishment wonder why there are periodic riots. Many social scientists maintain that mixed tenure housing developments, hosting communities in which all social classes interact to the greatest possible extent, are the key to mutual understanding and respect. A pity nobody is heeding their advice.

A Chinese ambassador once visited the Khmer Empire at the end of the 13th century, and reported with a sense of wonder the treatment of slaves there. It was extreme even by medieval standards. He wrote:

They are permitted to lie down or be seated only beneath the floor of the house. To perform their tasks they may go upstairs, but only after they have knelt, bowed to the ground and joined their hands in reverence.

The snubbing of social housing residents is perhaps not quite as extreme. But you do wonder if those inflicting poor doors on London would feel it reasonable to demand similar ‘reverence’ from the second class people, who are grudgingly tolerated in these developments!

A Wealth Tax in the UK?

Today, income inequality is so extreme that the interest alone on the accumulated wealth of the richest few exceeds the growth of many economies in which they live. In other words, by owning so much already, the rich are now absorbing all of the growth generated by many of the world’s leading economies, and more. It’s not even a case of active exploitation any more: the only way a multimillionaire could avoid perpetuating her/his build up of wealth is to stick her/his millions under a mattress. Or deposit it in Barclays. This is why economies with apparently healthy GDP figures, like the UK and US, are delivering rising living standards only to a tiny minority.

The Simpson’s Mr Burns on wealth inequality

Logically speaking, the only way to end this spiral into virtual feudalism is to redistribute not only income (as inequality of wealth is now so great) but also wealth too. That was relatively easy from the 1940s to the 1970s. But in today’s globalised society, wealth redistribution through the tax system- when capital is highly mobile and capable of skipping between competing tax regimes- is easier said than done. It’s not even easily said when the majority of politicians (but fewer and fewer economists) are attempting to ignore the issue.

The Green Party has proposed that Britain follow France, Norway and the Netherlands, and introduce its first tax on accumulated wealth, rather than income. The “Wealth” or “Solidarity” Tax would apply to all British residents with assets (of any kind) worth £3 million or more. The rate would vary (it would presumably be banded) between 1% and 2% per year. Green Party policymakers estimate revenues of £21.5 billion and £43 billion- greater than the entire transport and defence budgets respectively.

I think the idea deserves consideration, even if a 2% wealth tax is quite steep for a medium-sized economy to pursue without international co-ordination. Although I don’t hold with the notion that tax rates must fall through the floor or the wealthy and talented will leave the country, there are limits to practicable tax rates. Without exchange controls or an internationally co-ordinated wealth tax rate, we’ll find that there would be little wealth left in the UK to be taxed at 2%.

Not that a wealth tax itself is an impossibility. The Netherlands, for example, has a marginal top rate of Income Tax of 52% and levies a wealth tax of 1.2% on all investments above €21,400. While this is quite heavy, the Netherlands is seen as one of the most “business friendly” (a phrase which is often code for “anti-worker” and “pro-inequality”) economies on Earth. Assuming that Britain could raise even £10 billion a year with a similar rate, one in eight pounds of planned spending cuts could be cancelled altogether.

Not that the policy has any significant prospect of fruition. The most influence the Greens could yield in the next parliament is as a band of two or three MPs negotiating with a minority Labour government. The list of policy concessions made by Labour would not be long.

‘Socialist Worker’ Should Apologise for Mocking Schoolboy’s Death

Everybody knows that the Socialist Worker, the weekly ‘newspaper’ published by the Socialist Workers Party (SWP), is extremist. The supposedly communist ideology that the paper espouses seems largely harmless, however. Few would be offended by the publication’s call for the abolition of all immigration controls- it’s just amusingly naive. Unfortunately, the paper has offended the public with an article making light of a schoolboy being killed by a starving polar bear on Svalbard. The full article is available here.

The schoolboy, Horatio Chappie, was a pupil at the elite private school, Eton College. He had been taking an adventure holiday when he was dragged out of his tent and fatally injured by the bear. The Socialist Worker writer joked “now we have another reason to save the polar bears”.

Eton College epitomises the extreme privilege that a tiny elite enjoys in this country: the all-boys boarding school, whose fees exceed the average worker’s annual salary, The school boasts over 30 cricket pitches; 24 football fields; its own boating lake; 3 theatres and palatial buildings. 19 of its alumni have become British prime ministers (including the current one); whilst more of the school’s 1300 pupils go on to attend Oxford and Cambridge universities than of all 550,000 pupils receiving free school meals. An Etonian is more than 400 times more likely to attend ‘Oxbridge’ than his poorer counterparts. So yes, Eton lends its students an arguably unfair advantage over other pupils.

Does that make Horatio Chappie a bad person?

No.

Is his death any less of a tragedy because of his parents’ decisions about his education?

No.

Is it appropriate to joke about his death because of some sort of twisted ‘class warfare’ instinct?

Of course not.

The Socialist Worker is not worthy of its title if this is the counterproductive bile it insists on bothering the world with. Workers don’t laugh at boys being slaughtered by starving animals. Socialists don’t judge people on their background: that applies to the rich just as much as it does the poor.

Not that we should be too surprised. We’re talking about the journal of a political party which almost collapsed last year after its leadership responded to allegations of sexual assault (said to be committed by a senior party official) with a series of cover-ups and insinuations about the drinking habits of the alleged victim drinking habits. It seems that SWP leaders have a radically different idea to normal people about what is acceptable and what is not.

That disparity cannot continue if the SWP wants to survive. Until recently, it was perhaps the only far-left organisation with a shred of influence. Its newspaper; thousands of members; strength within organisations like the National Union of Students and Stop the War; and plethora of prominent intellectual members made it the ‘centre of gravity’ on the far-left. It lost much of that following last year’s events. The SWP cannot withstand another scandal, which is another reason, other than basic decency, it should instruct the editors of its paper to apologise to the Chappie family for insulting their dead son.

If the SWP fails to do this, it will only drive away yet more potential support. That would be no tragedy.

Religious Segregation Must End

I have no intention of raking over the “Trojan Horse” scheme- the alleged plot by extremist Muslims to take over various state schools in Birmingham. However, international readers may care to read more on the issue here.

Out of the controversy has emerged a broader debate on the role religion should play in any of Britain’s state schools. About one in three of Britain’s state schools are classified as “faith schools”- mostly affiliated with the Catholic or Protestant Churches. A few Muslim schools are beginning to emerge, but they are few and far between.

The influence that the affiliated Church or religious organisation exerts on a school is actually extensive. They are represented on schools’ Board of Governors; they can dictate the Religious Education and Personal, Health and Social Education curricula. Other things which characterise Church schools are the regular Assemblies given by the local vicar (which always seemed reasonably interesting to me, by Assembly standards at least); the frequent hymn singing and the daily prayers.

But most importantly, faith schools impose religion-based admissions criteria. Children from practicing Christian families are placed at the front of the queue for places. Inevitably, this leads to some families suddenly finding God when their child reaches the age of 4 or 11. The moment the vicar confirms to their desired school that the family are committed churchgoers, they suddenly find ‘better’ things to do with their Sunday mornings. Some faith schools are a little more strict. A state-funded Hindu school made headlines by allowing school places only to children of teetotal, vegetarian families.

It is dishonest, but it’s not fair to blame parents for playing the system, if that’s what it takes to secure a decent school place. It is the system of legally-endorsed religious segregation in our schools which is reprehensible. In a 21st century liberal democracy, it is surprising that discrimination against non-Christians is still permitted. Incidentally, it’s also odd that there is still a state-sponsored Church, but I’ll spare you that particular rant. In countries like France and the United States, there is a constitutional separation between the Church and the State, and that is how it should be.

What is to be achieved by separating children according to religion? Surely in Britain’s diverse and meritocratic society, it is sensible for our children to learn to work and interact with other groups as early as possible. Boys and girls; Christians, Muslims and Atheists; rich and poor; white and black: doesn’t history tell us that ghettoising these groups only leads to misunderstanding and conflict? Most religions- and common sense- teach that humanity is better off when we overcome division.

As the Trojan Horse story has shown (with the isolation of British Muslims), children’s understanding of the world can become badly warped if not exposed to other cultures. Schools inspectors have found several cases of teenagers, many born on British soil and who have lived in a British city their entire lives, with no understanding of the country to which they should belong. Many believed that Britain is a predominately Muslim country (in fact 4.8% of British residents identify as Muslims) whilst many others did not know that London was in the UK. These myths could not have been peddled if religious influence was kept out of schools, or if there was a balanced ethnic mix in the schools.

It has been argued that faith schools must be doing something right, or else their opponents wouldn’t make a fuss about the placing of religion at the heart of their admissions criteria. That is wrong on two counts. Firstly, it is a matter of principle. For example, feminists have pressed for the right to attend stuffy Gentleman’s Clubs. That doesn’t mean said Clubs are superior to other organisations. In fact, many wish that these dated, bourgeois institutions died out. However, it rankles that people are excluded from them because of their gender. A similar principle applies to religious segregation.

Secondly, if one in three schools in the country is religious, it is inevitable that there will be many excellent schools under that category, just is there will be some dismal ones. The laws of probability lead to that conclusion.

There is a very strong case for ending religious segregation in our schools, if not abolishing state-funded faith schools altogether.

Welcome to the World of Trillionaires

Credit Suisse has predicted that, by the 2070s, there will be around 11 trillionaires (as measured in US dollars) in the world. They claim that the first trillionaires have already been born. $1,000,000,000,000 is a difficult figure to comprehend, but it’s equivalent the entire Australian economy, or $140 for every man, woman and child on the planet. The interest alone on such a fortune would generate Bill Gates’ total wealth every year.

This prediction follows a report from Oxfam which estimates the personal wealth of the world’s 85 richest individuals equates to that of the poorest half of the world’s population. There is absolutely nothing that these billionaires need that is more important than meeting the needs of the masses who live in extreme poverty. And yet we are set to allow a club of 11-or-so individuals to control about 5% of the global economy between them. They will make John D. Rockefeller, the oil magnate whose $350,000,000,000 fortune (which was 1.5% of the US economy) made him the richest man ever to live, look like a small time multimillionaire.

It’s true that the hyper-rich have varied approaches to their vast wealth and power. Some, such as Bill Gates, have decided to use it for social good- though in Gates’ case, not before going through a phase of intense egotism and selfishness. Gates has said that his children inherit very little of his fortune: most will go to charitable causes. Yet other billionaires and trillionaires will be more selfish, opting instead to pass on their fortunes to descendants to create dynasties with vast assets, the huge power that comes with them and a total lack of understanding of the real world.

There are adverse implications for democracy and the global economy if the community decides to allow trillionaires to become a real, rather than a theoretical phenomenon. We’re deluding ourselves if we imagine trillionaires will not influence the political elite. If one has the wealth of a medium-sized economy, few politicians or businesspeople will dare to oppose you. Meanwhile, its us who will work to support these huge fortunes whilst extreme poverty persists.

Does that sound fair to you?

How Will IDS Tackle Child Poverty?

Later this week, the Work and Pensions secretary and the Schools minister will outline their the Government’s programme it will use to meet its own target to eliminate child poverty by 2020. Iain Duncan Smith (IDS) has been associated with some of the worst spending cuts imposed by the Coalition, so will be keen to demonstrate his more caring side in the universally popular cause of helping impoverished children.

Yet he has been accused of political manoeuvring following his plan to redefine the “child poverty”. Presently, the figure shows the number of children living in households on less than 60% of median income- admittedly a blunt but effective measure of poverty relative to the entire population. (Incidently, the Living Wage is approximately 60% of median pay, suggesting that the general rule for policymakers is to reduce inequality to the point that everybody is on at least 60% of median income). Yet IDS wants other measures incorporated, such as being part of “stable family” and having access to a good education. It would be ambitious statistical engineering to quantify some of those factors, though I’ve no doubt that IDS has good intentions in proposing it. Nevertheless, they would allow his successors to point out that several contributory factors to child poverty are outside of government control, and therefore shrug off responsibility for existing targets.

Besides, some of the ideas sketched out are ill-defined. What is a “stable family”? Will a child be considered impoverished simply for having separated parents? Or, on the other hand, does a child belonging to a nuclear family have to be more financially deprived than her neighbour from a “broken home” (as the Daily Mail would so open-mindedly term it) to count as living in poverty? Furthermore, any more tampering with statistics by the government will render them untrustworthy. It is interpretive that we have neutral, trusted statistics at the heart of policy debate.

Such is the argument deployed by the Treasury against redefining child poverty. I think there is room for compromise: the Office for National Statistics could be asked to compile figures on material child poverty (the existing definition) and holistic child poverty, along the lines of IDS’ proposals. Government would remain committed to existing material child poverty targets, but could also tackle the holistic figures in time.

After we’ve agreed how we are measuring the problem, we have to turn our attention to devising solutions. I can’t say that the Government line sounds particularly encouraging; referencing the £50 energy bill imposed last month; restrictions on water cost inflation; and food vouchers.

I’m curious as to the last one. The last thing the UK needs is to import the American invention of food stamps. We’re doing a good line in foodbanks already: bit by bit, we’re stripping the poor of dignity and independence. I’ve said before that the universal subsidy of basic foodstuffs would be a fairer way of controlling living costs. It will be interesting to see the scope of the proposed voucher system, given the limited resources available to ministers.

Short of a multibillion investment in food vouchers, there are no measures proposed by the Coalition that will make a significant reduction in child poverty, material or holistic. No wonder Britain is set to have 2,000,000 children still living in poverty by the time it is supposed to be eliminated. That’s because inequality can only be reduced with a combination of skill, determination and resources. I wonder which of these the Coalition is prepared to use.

London Homes Are For Londoners

We all know that the British housing market is an absolute joke. It has become so distorted as to lock-in vast proportions of the national wealth in housing that is overvalued and of relatively low quality (British housing is notoriously cramped and energy inefficient by European standards). In the nation’s capital, the situation is even more surreal. Families of even the skilled middle class are being priced out of the city altogether, pushed out by slum landlords, chronic under-supply, amateur landlords, housing speculators, foreign owners and migrant workers with tragically low expectations. The average house price in the city  is £449,500. That’s 18 times the median income.

As I’ve said, there are about half a dozen factors that have rendered London unaffordable for ordinary people. Ultimately, demand will force the city to grow further into the surrounding countryside (who fancies a daily Tube commute to the Square Mile from the suburban London Borough of Sevenoaks?) or a consistent policy response to ease, and even reverse, the capital’s recent population growth. By massive regionalisation of government and key industries, the pressure on a city that represents about 12% of the UK population- but most of its power- could be eased. In the future, London should not have the monopoly on the ambitious, the high fliers and the head offices: regional powerhouses like Manchester, Cardiff and Bristol must become just as important. Even clusters of “New Towns” could between them become economic centres.

But such an aim will take decades to realise, leaving the issue of soaring housing demand in London chasing a limited supply. It is the government’s responsibility to address this, as it can in three ways. It can curtail demand, boost supply or abandon housing to market forces, forcing the poor out of the city (or into ghettoes on its outer edges). The present government has chosen option three, slashing Housing Benefit to accelerate the process. The opposition is calling for a combination of options one and two.

Londoners must be given a real chance to buy or rent [new] homes.

We will stop developers advertising properties overseas first and ensure they are available for the people that really need them.

We will give councils proper powers to tackle ‘buy-to-leave’. We will consult on allowing councils to double the amount of additional council tax they can charge on empty properties, and close loopholes which mean homes are not considered empty if they are furnished with just a single table and chair.

Ed Miliband, Leader of the Labour Party

The principle is 100% sound. Why on earth would we sell homes to millionaires in Malaysia when there aren’t enough to go round for existing Londoners? This is not a debate about immigration: a large number of the new houses built in London are being sold to absentee owners who do not intend to move to the country; they are being purchased as investments. Besides, it is actual immigrants who are suffering the most due to London’s housing shortage. However, my concern with the policy is just that it doesn’t go far enough.

If the aim is to reduce artificial demand for homes caused by speculation, then no half-measures will be effective. Here’s how to end the scandal of houses left empty for profit while others go homeless:

  • Hike Capital Gains Tax on houses. If somebody is looking to profit by sitting on an habitable house, they must pay towards the social costs. A standard rate of, say, 95% of the properties’ appreciation should be sufficient.
  • Impose a residency test on home ownership. Nobody can own residential property unless they are a UK resident. Immigrants may buy their home, speculators who live elsewhere cannot.
  • Multiply Council Tax on spare homes. In particular, it should be prohibitively expensive to own a third house. A second is questionable enough.

Some things are more important than appeasing speculators and fat cats. And I’m afraid that providing everyone with a decent, secure and affordable home is one of them.