Featured post

Gender in the Merovingian World

Monday, 6 June 2016

Philip Green: The insanity of neo-liberalism

‘Sir’ Philip Green, eh?  What a guy.  Knighted by Blair, a government advisor to Cameron.  Now his business ‘skills’ have led to the collapse of the 90-year-old BHS business, the loss of 11,000 jobs and the collapse of the company pension fund that he raided.  He is a fine example of unfettered neo-liberal capitalism.

In 2005, Green paid himself nearly £1.2bn. The figure I have seen is £1.17bn. Let us think a little about that. £1,170,000,000. That is £3,205,479.45 a day (that 45p matters; an extra £164 a year would make a big difference to a lot of people).  The UK average wage is about £26,000 per an. Put another way, on every single day of 2005, ‘Sir’ Philip Green earned 123 times what the average UK wage-earner makes in a year. Every single day. In the year, he earned, in that payment alone, for I dare say he had other sources of income, the equivalent of what just shy of 45,000 (that’s forty-five thousand – the population of a small town or the average gate at, say, Old Trafford) average wage-earners made.

I’m not arguing that everyone only deserves the same pay or that no one should be allowed theirfinancial success or to earn great wealth. I have no particular objection to people being millionaires or even multimillionaires. But … £3million a day? Let's just let that sink in and – more than that – think how utterly pointless that amount of money is in one person's off-shore bank account, or even in one person’s on-shore bank account. How could you even spend it all?

Let’s think.  You could buy all of the nine properties listed in this Telegraph piece on the most expensive properties in London and still have getting on for a billion pounds left over! Out of that, you could buy a couple of super-yachts like this or perhaps the world’s largest private vessel at a cost of $600m (£414.353m) and still have well over £500,000,000 (half a billion quid) to spare. So, let's buy one each of the ten most expensive types of car in the world. That's about £20m. We could hire 100 staff and flunkies for our houses and cars and yacht/s and pay them £30k p.a. each. Just to guard against future hiccups, we could set aside their wages for the next 10 years: £30m.  Let's invest £20m in various funds which, all being well, ought to give us an income for life of a million a year, probably more. What else could we do?  I know, we could buy another ten mansions around the world to sail to in the yacht (and maybe keep one of our super-cars at each). Roughly matching our London properties in price, with three staff at each, with wages for ten years: say another £250m?  Blimey. We still have £180m left. Now we could invest it, but that would only yield even more income and the point of this thought experiment is to think how we could spend the money (and we’ve already set ourselves up with a million per an for life, so we hardly need to work again)..  I’ll tell you what we could do. We could give 11,000 employees £16,363.63 each either as a bonus or – maybe better – into their pension fund, but oh dear, that smacks a bit of socialism.  Maybe we could donate £180m to charity…  Think of the good that could do.  Or – get this – pay it as … tax?!?!  Just that last bit? 15% of the total?  You have to admit that £180,000,000 would be a reasonable shot in the arm to schools or hospitals.  Hell, we could pay nearly ten percent of the entire country's university research budget for the year.  But, oh dear again, we don’t like tax, do we? It's a dirty word. Oh, I know. A jet. We haven’t bought a private jet yet…

You see what I mean about the difficulty of spending it all?  And what – really – would you do with nineteen mansions? Much more to the point, all that was in just one year.  Even I am sufficient of a champagne socialist (call it aspiration if you will…) not to think it that much of an issue if someone possessed nineteen mansions around the world, ten super-cars, a super-yacht or two and a private jet at the end of a long career of hard work at the top end of the successful business world.  But the experiment we have just indulged in concerned just one element of one year’s income.  He could have paid himself £170m and said to the government ‘fuck it. Here’s half of this year’s university research budget for the whole country. You're welcome.’  Or, better, he could have not let the government off the hook and said ‘here: raise this year’s university research budget by 50%.’ 

One thing to remember at this point is that one person is earning this, literally almost unimaginable, wealth in one year in a country (and not merely a first-world country but a G12 country) where ever more people are descending into poverty and being dependent on food-banks.

Where does all that money go? In Green’s case it was shunted by a tax-avoidance dodge into his wife’s account in Monaco, which rather illustrates the left-wing Facebook meme that money paid to the rich just gets salted away off-shore rather than going back into the economy.  All that money could instead have been distributed among the employees of the companies or in the creation of new jobs.  As I have said, 45,000 average salaries could have been paid out of that sum.  That probably misses the point that it wasn’t a sum he paid himself every year but it hardly negates the general issue.  More to the point, those salaries would have been taxable (and the sort of legal tax avoidance that ordinary people go in for costs government revenues way less, even when multiplied by 45,000, than that indulged in by the super-rich) and the rest would have been spent in the UK economy.

People will doubtless defend Green on two scores.  The first is that what he did is not illegal.  That really is something that governments need to think about.  Whether or not technically illegal, this sort of tax avoidance is profoundly unethical.  Who pays for the education of Green’s workforce, or their health-care when they are sick, or for the roads and infrastructure on or by which his goods are transported, or for the police that maintain their security and the armed forces that protect them?  By tax-dodging he is expecting us – and his own workforce – to pay for all that. For his own benefit (and remember, he benefits to an unimaginable extent).

The other defence, which I have seen proposed by the equally awful Karen Brady (though grudgingly  I still have to respect her success in the boys’ own world of football-club ownership and admin), is that by creating jobs and business, he contributed enough to the economy and deserves his tax-free billions.  I don’t think that that withstands the arguments above, and I don’t think it defends the sheer scale of the wealth being taken out of the country (he could, after all, have paid himself £100 million and still paid 100,000 employees a £10,000 bonus, which would have stayed in the country, without affecting the companies’ ‘bottom line’).  In the thought experiment above, no more than a couple of hundred jobs were created, as much outside the UK as in.  More importantly though, it is completely undermined by his long-term failure. Eleven years (and god knows how much additional wealth) later, he has ruined the business, screwed their pension fund and left 11,000 people jobless (whose benefits, insofar as this government will still allow them any, although their unemployment is no fault of their own) will have to be paid for by the rest of us.  In the meantime, who has benefitted?  Not many traditional Tory-voting demographics, that’s for sure.  That money could have gone into sustaining rural communities, for instance and supporting farmers; companies of the sort that Green runs (generally dodging corporation tax too, remember) are the ones ruining the high street and forcing small businesses out.  This is the short-termism of neo-liberalism, witnessed by heaven-knows-how-many of Osborne’s economic ‘policies’.  Take as much money as you can, here and now and screw the rest, screw the future.

This isn’t just greedy. It's sociopathic.

Unimaginable, un-spendable wealth, looted by a few and taken abroad in unsustainable get-rich-quick schemes, benefitting almost no one.  That is the utter insanity of extreme, unfettered neoliberal capitalism.

No comments:

Post a Comment

Note: only a member of this blog may post a comment.