A taxing agenda - how the rich much take responsibility in building a new capitalism

There appears to have been an awakening of late that our current version of capitalism is simply not working; in the words of ex-Telegraph editor Charles Moore, ‘We are bust – both actually and morally’ i. The financial crisis of the latter years of the last decade, the MP ‘expenses scandal’, and the phone hacking scandal have each discredited our economic and supposedly moral elite, whilst the widespread rioting of summer 2011 has led some to assert that the virtues of the 1980s – consumerism and ‘popular capitalism’ – have damaged moral fibreii. Admissions that the rich must take responsibility have not only come from journalists and commentators, in a startling comment piece in the New York Times on the 14th August, billionaire Warren Buffet argued forcefully that the mega rich should pay more tax – and do their bit to contribute more to society iii. This call was echoed from across the Atlantic when 16 French billionaires requested and pressured Sarkozy to impose an additional tax levy on the super-rich iv.

Yet, the attitudes of our government seem completely adversarial, with George Osborne showing dogmatic determination to remove the 50% tax bracket that was introduced by the previous Labour government. Admittedly the 50% bracket raises little additional revenue for the Treasury, yet it is important symbolically, and its removal will be seen as a slap in the face by the majority who are confronted with 20% VAT and squeezed living standards. Further, A close look at the recent deal aimed at taxing Swiss bank accounts between the UK Treasury and the Swiss government shows a roughly 20% -25% adjustment rate – far less than the prevailing 40% tax rate. This has been criticised heavily by tax campaigner Richard Murphy, who warns that ‘Britain’s top-rate tax payers can now quite legally bank in Zurich to pay less tax’v.

So, why should the rich take up more of the tax burden? In a western world of blooming budget deficits, savage public spending and austerity measures, the extra money created by levies would be valuable to treasuries. Richard Murphy estimates that the weak deal on Swiss bank accounts has cost the UK government £20billion, which would be very useful in saving public sector jobs. However of course, levies are just short term; the general system of taxation needs to be altered in order to provide long term benefit. Higher income tax, capital gains, and inheritance tax would allow regressive taxes such as VAT to be reduced, creating a more income equal society – the benefits of which are convincingly put forward by Wilkinson and Pickett in their work, ‘The Spirit Level’. International cooperation is needed to ensure the success of such a tax regime however; else capital flight would be likely. It appears fiscal harmonization may be on the cards in the Eurozone, yet it is likely this will follow the principles of the now widely discredited Neo-liberalism.

Of course, building a new capitalism is not all about tax and spend. A new capitalism needs to have an emphasis on corporate and social responsibility and ought to be acutely aware of the benefits of cooperation, as well as competition. Before the crash occurred, an important yet largely ignored school of thought began to emerge, named ‘Co-op capitalism’. As expressed by Noreena Hertz, Co-op capitalism:

“Has a renewed idea of business as a force for innovation and improving the world, but which needs to be reined in when the pursuit of profit conflicts with society’s interests and helped when the short term finances for innovation are not there”

The notion put forward by Hertz that business can be a force for good should not be ignored by the left; capitalism has brought us many benefits, and we in the Western World are now more healthy and prosperous than ever before. Yet, it is clear that unfettered capitalism has not been a complete success. Hertz is absolutely correct that fast food companies should take a role in curbing obesity, and big pharmaceutical companies should put innovation before profit. Aspiration in the UK has for too long been based solely on individual gain and profit; this must change in a new capitalism, focused on the gains of mutuality and the benefits brought by cooperating with one another.

So, where does all this all end? One of the buzzwords of the moment for David Cameron is ‘responsibility’, yet this has been largely directed at the poor. It is clear that this narrative must be broadened; responsibility needs to become a virtue of the rich and of the large corporations. Strong government intervention (state by state and multilaterally) is crucial, as it would be naïve to assume that an element of coercion will not be necessary. The rich must be made to take responsibility for their share of the tax burden; corporations must take responsibility for their social ills. Timing is critical here – we are at a time of uncertainty, austerity and widespread discontent. A choice desperately needs to be made; a new capitalist order to benefit society, or the continuation of a system that benefits the few; a system that has been described by one of its main proponents as ‘actually and morally bust’.

Sources and further reading:
i Moore, C., ‘I’m starting to think the left might actually be right’, The Telegraph, 22nd July 2011, http://www.telegraph.co.uk/news/politics/8655106/Im-starting-to-think-that-the-Left-might-actually-be-right.html. Accessed: 29th August 2011
ii Hawkes, A., ‘UK riots were a product of consumerism and will hit economy, says city broker’, The Guardian, 22nd August 2011. http://www.guardian.co.uk/business/2011/aug/22/uk-riots-economy-consumerism-values. Accessed: 29th August 2011
iii Buffett, W., ‘Stop Coddling the Super-Rich’, The New York Times, 14th August 2011. http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?_r=1&hp. Accessed 29th August 2011.
iv Toynbee, P., ‘Where is Britain’s Warren Buffett or Liliane Bettencourt’, The Guardian, 26th August 2011. http://www.guardian.co.uk/commentisfree/2011/aug/26/buffett-bettencourt-tax-rich. Accessed: 29th August 2011.

A rant – the commercialisation of Youtube

I, and quite possibly along with you, regularly use Youtube to listen to music. After all, it is now one of the only remaining sources of free music, especially now Spotify have gone back on their original mission statement and have imposed stupidly restrictive limits on the free service (I mean, stopping me from playing my favourite Journey track more than five times in a month – counts as torture that, surely!)

So, having returned to Youtube after years of using Spotify for music, at first everything seemed the same. I mean, the same familiar red logo is still present, and pretty much any song can be found on Youtube when searching for it. That familiarity was shattered however when I went to play my favourite Gaga track and had my ears metaphorically boxed by Cher Lloyd’s tragedy, Swagger Jagger. Adverts on Youtube? For Simon Cowell’s atrocity? I almost fell off my chair! Upon closer examination, it also appears that pretty much all music videos are now uploaded by VeVo – who the hell is VeVo? I remember the days when music videos were uploaded by real music fans like me, not some faceless organisation that is blatantly sponsored by Simon Cowell.

Will I stop using Youtube for music? No, since I can’t think of anything better. Will I be listening to Swagger Jagger again? No, I’ll be rushing for the mute button!

Lesson of the day? Never sell out to Google!

A rigid ladder or a greasy pole? Social mobility in a supermarket setting

nAs those who know me probably know, I’ve been working in a local supermarket this summer. This piece reflects my limited experience of working in a supermarket, combined with general readings on social mobility, inequality and opportunities in 21^st century Britain.

Supermarkets divide public opinion, but love them or hate them, they are not going away – quite the contrary in fact, they are expanding, and fast – Tesco now has over 40% market share and is one of the largest businesses in the UK by turnover. They are big machines too – they devour large swathes of land, pollute our rivers with their carrier bags and monopolise our monthly expenditures. One side of the supermarket story is often forgotten though; that is the opportunities (or lack of) that they provide to the millions of staff they employ UK wide.

At first glance, progression within store seems to be good. In my store, the General Manager started out as a teenage produce boy, working nine hours a week, with little intention to pursue a career in retail – a situation very similar to my own! When I heard this fact, I assumed it was fairly exceptional, yet recent research by Broadbridge (2007) supports this individual experience – a significant number of Store General Managers joined straight from school at shop floor level, with little intention to pursue a career in retail. Progression from shop floor level to Store Management has been found to generally take between 5 and 12 years. There are countless reasons that can be put forward for this upward progression, for example, many supermarkets actively promote those who perform well and run numerous management development programs. Staff rotation has also been reported to help, as it allows staff to better appreciate what is involved in managing the store operation in its entirety, as well as boosting skills, although the most significant factor is no doubt hard work and determination by the individual, in what can be a very competitive internal market. Breaking above Store Management level appears to be more challenging however, as many supermarket firms headhunt experienced graduates to manage at the regional and national levels; it is exceptional for a shop floor part timer to progress to the board of directors.

Of course, supermarkets don’t only provide opportunities to those who are available for full time work – they employ legions of part time workers that march in and take up posts, often at the busiest times of day. Progression is quite predictably harder, for part time workers, but other opportunities are provided – the main being jobs! The flexibility of the shift work required in the supermarket environment allows many with commitments to childcare, university or school to earn some extra money as well as form new (and sometimes valuable) social contacts.  

So, is it all rosy for supermarket workers? Job progression opportunities appear good, and job security reasonable. Yet, scores of supermarket workers complain of low pay, long hours and few perks to compensate – arguably the most important issue in a Britain with rife inequality. You may have noticed I’ve italicised opportunities – that is, because research shows whilst they are available, they can be notoriously hard to gain. One only needs to take a look at the (admittedly normative) online reviews of supermarkets as employers written by employees to see various complaints of cut throat competition for promotions, favouritism within the management, and in some cases, discrimination on grounds of gender. Sadly unbiased research on such issues is currently hard to obtain although it would be fair to assume that such accounts are generally accurate – after all, cut throat competition is a key feature of the deregulated labour market.

There’s panic on the streets of London

There is genuine panic on the streets of London. Riots are raging (and have raged) in a multitude of boroughs all over the capital and it is becoming more and more obvious that the police simply cannot cope. Panic is not only present in London. It is now spreading north, south, east and west – there was glass on the streets of Birmingham last night, and troubles are currently stirring in Leeds, Nottingham, Liverpool and even some Kent Medway towns. The riots represent a sheer degradation of the social order; scenes on the street represent the metaphorical ‘state of nature’, and the human cost is proving to be high with many police injured and a man shot dead in Croydon. What on earth can prompt fellow members of humanity to turn on each other in such a way?

The right wing is lacking in explanation. Whilst it is clear that the violence now is not motivated by the Duggan affair, the Daily Mail seems gleefully happy to tell us that the violence is simply ‘mindless criminality’ and destruction, completely ‘copycat’ with no meaning. In my eyes, this fails to stand up. How can individuals risk so much (injury, imprisonment – and now death) ‘mindlessly’? It is no coincidence that the rioting is set to a backdrop of austerity measures and budget cuts that have hit communities in areas such as Tottenham and Hackney particularly hard. Tottenham has the highest incidence of child poverty in the UK and youth employment in Hackney is estimated to be in the region of 30%. It is hard to see opportunities as an impoverished youth today, and the perceived government disregard for the young people of this country (cuts in EMA, education funding and youth services) will inevitably result in a certain amount of contempt for government and the general image of ‘authority’. Many a youth of Hackney can see for himself no opportunities; no employment prospects, no career, and in many cases, no support network, so why not riot and loot? It satisfies the free market lust for consumerism, and probably gives a sense of power and meaning, though in a false, destructive and immoral way.  

Yet I think restricting the explanation to simply socioeconomic issues is dangerous. Many of the areas in which riots have erupted have a deep history of segregation and poor relations with authority. Institutional racism in the Met is well documented and it is quite possible that the hatred of the police by many of the rioters dates back to prejudices that were present years ago, passed down generations through parental influence. This is a complex multifaceted issue and can’t be reduced to a single explanation; whilst the rioters must be condemned and punished through the courts, the government and the police must also take considerable responsibility here – it is hardly as if the riots were completely unforeseen (Nick Clegg ‘predicted’ them before the 2010 General Election’).

So, where to go from here? The immediate priority is to stop the rioting, and there is currently no real solution out there for this. Appeals to communities by government have so far fallen largely on death ears and the police at present appear powerless – there are too few officers available and they are restricted to what is essentially crowd control. There have been calls to bring in water cannons and rubber bullets; there are moral implications here, but they have to be weighed against the moral implications of rioters destroying people’s homes, businesses and livelihoods. May it be a case of human rights vs human right? What is certain here is that we are witnessing a very significant event here in the political and social history of the UK; commentators in ivory towers are likely to discuss causes and implications for months after the riots end, yet the ultimate judgements are likely to be made in future books on British history.