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Wealth – Trickling down or sucking the poor dry?

October 20, 2014

Mike Joslin was quite right (Dorset Echo letters 8th October, ‘A warning from Orwell’) in pointing out how a very few people own most of the world’s wealth, and are the ‘power behind the throne’. Whether they are fully conscious of it or not, they replace the ‘Inner Party’ of Orwell’s dystopia. In his ground breaking book ‘Capital in the 21st Century’, Thomas Picketty points out what ought to have been obvious. Owners of capital receive a return in the form of interest, dividends, rents etc., and under most conditions, far from wealth ‘trickling down’, capital sucks the poor dry. His analysis is based on an extensive historical study of the distribution of wealth and its causes, rather than relying on the poisonous and baseless doctrine of neoliberalism which the rich promote to justify their privileged position.

The tendency towards ever increasing inequality is only checked or reversed by shocks such as the two world wars and periods of exceptionally high economic growth, such as that between about 1945 and 1975. Since then income inequality has been steadily rising. Wealth inequality lags behind but has been steadily rising since the mid 1980s. So long as the return on capital remains substantially above the rate of growth – absent major ‘shocks’ or changes in taxation inequality will continue to rise.

Increasing inequality means misery for more and more people. It could suppress the overall level of economic activity because it is the poor who need to spend a greater proportion of their income. It will lead to a downward spiral. Conventional thinking argues for high growth as the way out, but as natural resources become depleted this involves extreme methods of extracting fossil fuels and minerals such as opencast mining, fracking, tar sands, dangerous deep sea drilling… As well as the obvious and visible signs of these activities and the poisoning of the oceans with CO2, there is the question of man made climate change, which few genuine scientists dispute.

So we are, it seems, caught between on the one hand an increasing fraction of the human race (including Britons) living in extreme poverty and dying of the diseases that engenders, and on the other hand making the surface of the planet virtually uninhabitable. The latter course seems to be favoured by the very rich, if their actions are anything to judge by. But do they want their offspring to have to live in underground bunkers?

There are just two ways out of this dilemma:

  • One is a dramatic reduction in the global population through disease. Few would admit to preferring this option; the Duke of Edinburgh is a possible exception.
  • The other is redistribution of income and especially wealth. The rich are determined to prevent this.

The rich use ‘manufactured consent’ to keep us in line. This includes neoliberal ideology endlessly promoted as unassailable truth by captive media, mainstream politicians, and economists working for the banks and transnational corporations; and by the endless ‘war on terror’ which just promotes more terror. Voters distrustful of mainstream politicians are moving to UKIP, but how can a party led by a banker, and whose main policies are to bash the immigrants and leave Europe, address inequality?

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