Common Wealth or Private Riches?

John D Anderson considers five ways to rebuild a commonwealth – a society that shares accumulated wealth broadly.

“Private affluence and public squalor” were denounced by J K Galbraith a generation ago in the USA.  As inequality has grown, particularly in Britain and the USA, more individuals can afford bigger houses, several cars and expensive holidays, while others sink deeper into debt and find a £20 cut in universal credit insupportable.  As Oliver Cromwell said in 1651, “If there be anyone that makes many poor to make a few rich that suits not a Commonwealth”.  For many, individual riches have grown; for all, the common wealth has shrunk. When we remember the basic meaning of ‘wealth’ is ‘welfare’, we realise why we need to act.

Piketty showed in Capital that those with wealth are getting wealthier. Only for a limited period after the Second World War was there a considerable expansion of the common wealth.  In Britain, income tax was above 30% in the pound. Local rates were high enough to enable councils to buy properties and land, build houses, run schools and subsidise bus fares.  This communal funding was available while few individuals owned cars, few extended their houses, virtually no-one had holidays abroad and very few left wealth to their descendants. 

I remember politicians coming to us students at university and promising that they would double the amount of money in our pockets in 30 years; they did.  I vociferously denounced this at the time. I could see that it would be obtained by reducing taxation so that more money was put into our private pockets, an electorally successful ploy, but a disaster for Britain as a community and the world as a unity.   We have now reached the point where transport normally means using a car, insulating us from others, taking up per person 10 times as much space as we need when walking or going by bus or train. As was evident while COVID’s tentacles atrophied, “holiday” now means a “holiday overseas”, almost always travelling by air. Political parties vie with each in other promising never to raise taxes.  And yet we do not get happier.  We are not overcoming societal problems. Worst of all, the young are becoming deeply disturbed.

Taxation should not be a dirty word. Taxes are the price we pay for civilisation.  They are the means for increasing equity. Wilkinson and Pickett have shown in The Spirit Level how more equity makes both poor and rich happier. As has been said to Jeff Bezos: “If you can afford to fly to the moon, you can afford to pay your taxes on earth”. The hyper-rich expect to leave mundane constraints behind; what they should be doing is helping to solve earthly problems rather than trespass into the heavenly sphere.

So how exactly should we seek to increase the common wealth, the common welfare?

First, Mark Carney’s urbane and magisterial book, Value(s), asserts persuasively how our society should be based on the value of an activity, not the financial profit made from it.  By this measure, care workers, nurses and teachers should be paid far more, as is often the case in Scandinavia. We are the only animals that can see into the future: we’re quite good at preparing for the next annual balance sheet or harvest but have proved unable to plan effectively for 30 years ahead. If we did this, we would understand the long-term value of an activity, not the profit accrued on next year’s bottom line.

Secondly, we would reduce consumption. Consumption is from the Latin ‘consumere’ which meant ‘to destroy’. We see this in the old word for TB, “consumption” because that dread disease effectively destroyed the lungs. The measurement of Gross Domestic Product (GDP) is predicated on any priced economic activity, however destructive. For example, a flood and the consequent reconstruction increases GDP. The construction of an aircraft carrier or Trident-missiles-carrying submarine massively increases GDP, despite the fact that they’re designed to destroy.

Thirdly, we should husband resources. Norway used the enormous gain from its oil boom to build the international seed bank in the Arctic where specimens of all seeds are safely stored for an indefinite future. The British North Sea oil boom, on the other hand, was used to reduce our taxes.  The Norwegians helped build an international common wealth. The British enriched private individuals. In our everyday lives we should use – again – repairable wood and metal to make necessary artefacts instead of the ubiquitous plastic which is so difficult to biodegrade that much of it has to be burnt. We would have fewer things but more long-term utility.

We should in the fourth place replace the accountants’ rule of thumb that an investment should have a positive financial return in eight years. In the new era, that of global heating, the measurement should be, “What reductions are being made in CO2 emissions by this investment?”  By such a standard, tidal lagoons, where the return on investment (ROI) is measured in many decades, would be ‘profitable’ in the original sense of ‘beneficial’. 

Lastly we should reduce taxation on good activities such as work, and increase taxation on bad activities such as emitting carbon dioxide. Carbon taxes exist but for decades they have been ludicrously low and therefore ineffective. Gordon Brown’s fuel escalator duty on the fuel used in petrol and diesel cars was designed to be increased each year from 2010 but, every year, is dis-applied to a fanfare of praise to the Chancellor for being understanding of the needs of motorists.  Thus private motoring flourishes; public transport atrophies. Inequality is becoming heritable; wealth taxes, particularly on death, should be much increased. There is no moral reason why somebody lucky enough to have rich parents should inherit a fortune which they did nothing to create.

In what does a commonwealth consist? It is a land in which accumulated wealth is spread: as Francis Bacon said ‘Wealth is like muck, not good unless it be spread.”  There would be a well-funded National Health Service and adult social care.  We would have taxpayer-funded schools where the funding per pupil is massively increased, as in Finland, so that fee-paying schools do not, as at present in England, often receive five times as much money per pupil   as state schools. There would be a well-maintained and supported public transport system (except aeroplanes).  The electricity grid would distribute renewable energy for everyone to well-insulated homes.  As Shakespeare writes in King Lear, “So distribution should undo excess, and each man have enough.” Our riches should be shared; our abundance commonly administered. We would have a commonwealth.

John D Anderson.   04.10.21

One Reply to “Common Wealth or Private Riches?”

  1. Very well written piece, I think we need to re model the economic system, starting to read DOughnut Economics, but basically at the moment we have the system of capitalism, or state controlled capitalism as in Communist China. This is a growth monster, it is a swarm of locusts that to exist, has to keep turning a profit, thus consuming the planet. To move to a system based on survival isn’t something yet recognised by economists or governments nor companies. Instead lip service paid to climate change goals while carrying on regardless. I often wonder at what point did the Easter Islanders realise that by cutting down all their trees, they were doomed to a life without fishing boats and so subsequent bad periods?

    Like

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