The FT is a paper I rely on, for better or worse. It does have the best coverage of news, some of the best editorial material and some columnists of note. And then, on occasion, it reveals its true level of incompetence, as it has in an editorial this morning. In a discussion in wealth taxation, prompted by Elizabeth Warren, it says:
Contrary to the comments of radical leftwing politicians on both sides of the Atlantic, billionaires should exist. Those who come up with valuable ideas, take risks and build successful companies are entitled to the fruits of their labours. But their fortunes are not only down to their own talents: bigger markets thanks to the internet and globalisation, and the rise in the value of financial assets because of falling interest rates, have boosted wealth.
How much can you get wrong in a paragraph? Let's ignore inherited wealth, because bizarrely the FT seems not to notice it. Let's also ignore the fact that most wealth is utterly dependent on state support for its existence. Without copyright, patent and other now hopelessly biased and prejudiced intellectual property law much of this wealth would not have accumulated. Let's also ignore then, as the FT does, that almost all this wealth results from market failure. And let's instead mention that a fair degree of regulatory arbitrage, from the abuse of tax havens to ensure tax is not paid onwards, has often underpinned many of these so called ‘fruits of labour', which are anything but that. To describe the FT's view as wilful misrepresentation is to be kind in the circumstances.
And then, as if it wants to compound its incompetence it adds:
A key principle of taxation is that those with the broadest shoulders should bear the heaviest burden. The wealthy are the most able to fund public services.
Let's be clear, billionaires do not fund public services. People working in public services create public services, and the wealth that flows from them. Government credit creation pays for those services, as should be more than readily apparent in the USA of all places. What the wealthy supply are the most available targets for making repayment to government of the benefit generated from the surplus that those services create, largely for the purpose of controlling inflation that would otherwise arise, which control so happens to preserve the well-being of the wealthiest most of all, making them by far the most appropriate people to pay in that case. The FT reveals it can't even get its head around tax now.
And it needs to ask the right people the right questions. It concludes its piece by saying:
Ultimately, the proposals are a warning shot for billionaires. A wealth tax is unlikely to pass Congress, whoever becomes president. It may even be unconstitutional. Yet there are other reforms that a US president can pursue to ensure the wealthiest pay their fair share. If they are to avoid punitive measures, the super-rich must explain how exactly they want to pay more tax.
So the FT reveals a perhaps unsurprising truth, which is that it shares a Rees-Mogg view that the right people to answer any question are the wealthiest because they are, after all, the brightest, aren't they? This comment is perhaps not quite as insensitive as some Rees-Mogg manages, but it is as arrogant and crass in its presumption that only the wealthy can work out how they might be taxed.
Ignorance when mixed with prejudice and wealth is a toxic combination that the FT puts on full display this morning. It would be too kind to say ‘shame on it'. What it needs to do is wake up and smell the whiff of smoke from the bonfire burning to consume the conceited arrogance of ill gotten wealth that it is inappropriately defending and work out how to save itself before it falls on the pyre it is right now making for itself.
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The FT has clearly not read Jonathan Aldreds book ‘ License to be Bad’ especially the Chapter ‘Because you’re worth it’.
Oh hold on, the FT’s ‘economics reporter’ Gavin Jackson did review it in August 2019 and just poo-pooed it. What a surprise!?
🙂
I have still not read it…
Barely excusable to publish such drivel as an opinion piece, but as an editorial. FFS !
I’ve been trying to remember Yannis Varoufakis’s observation on this issue, and found it in this quote from an article from Michael Roberts’s blog, critiquing Varoufakis (see
https://thenextrecession.wordpress.com/2015/02/10/yanis-varoufakis-more-erratic-than-marxist/)
“For YV, Marx exposes the ‘false consciousness’ of bourgeois economics that reckons “wealth is privately produced and then appropriated by a quasi-illegitimate state” when the opposite is the reality “wealth is collectively produced and then privately appropriated through social relations of production and property rights”. ”
Clearly, the FT cleaves to the false consciousness of the first proposition, whereas I, and probably others, including Richard (?) support the second, that wealth is collectively produced.
The “market failure” that permits billionaires to arise, is the failure to charge them an appropriate charge for the benefit they have derived from the society and economy in which they operate.
YV was right on this
“Clearly, the FT cleaves to the false consciousness of the first proposition…”
Ft has been taken over by closet Marxists ? FFS what next ?
What this tells you is that Marx didn’t understand reframing an argument, so he fought on somebody else’s terms. (Assuming Varoufakis’ assessment is correct, and he’s right about about quite a lot ….)
Mariana Mazzucato s also confirms this I feel in ‘The Value of Everything’ as I recall.
“Contrary to the comments of radical leftwing politicians on both sides of the Atlantic, billionaires should exist”………..so that in the case of ones such as Jeffrey Epstein they can prey on young girls over decades, protected by their money (ditto the film producer whose name slips me for the moment). Epstein and his activities is the tip of an iceberg.. & that having vast amounts of money facilitates – money corrupts, vast amounts corrupts absolutely.
Given the above, can I thus construe that right wing politicians are in favour of child abuse by billionaire? (whilst “left wing” are not)? Money, lending legitimacy to their “activities”?
I appreciate the above is not about tax – but rather about the moral dimension – so often overlook in a society where money is worshipped & seen as lending moral legitimacy.
I think you extrapolate too far
Child abuse exists, unfortunately, at all income levels
I agree with your response, Richard, that this may be an extrapolation too far, form Mike Parr on this issue. Most child abuse is reckoned to take place within the home and in the ‘bosom’ of the family. (Cf most women are raped by people they already know)
…….but “money is worshipped & seen as lending moral legitimacy.” Money is power and power corrupts and the mighty Roman church has been a bastion of various abuse for generations….and they supposedly espouse a moral compass.
Religion generates hierarchies and hierarchies devolve power to the abusive. Chuck God out of the meeting house I’d cheerfully join the Society of Friends. A hierarchy can only be broken from the top down.
Of course if the monster is a Hydra there may be trouble ahead.
I have reviewed it on a well known website with south american pretensions in case you are interested.
Hi Richard,
It seems that wealthy people are unable to acknowledge that they are not objective observers of tax and economic regulations, but actors with a very partisan interest. By a process of self-interest and self-deception (which can be a problem for anyone) they persuade themselves that the policies that are actually in their (short-term) interest are in fact for the common good.
Did you see the Long Read piece int The Guardian about South Dakota trust law? https://www.theguardian.com/world/2019/nov/14/the-great-american-tax-haven-why-the-super-rich-love-south-dakota-trust-laws It’s scary stuff.
I have still to read it
It’s been an onerous week….
Hi Richard, I hope you will find time to comment on the proposals announced today by Labour that they will nationalise part of BT (Open Reach) and provide free fibre optic broadband to the country. I’m surprised that the proposal (as reported) is to forego revenue income streams from providing the service. I am aware that we are well down the order of countries in terms of standard of broadband provision but is this not a step too far??
Good piece on the reality of income tax contribution by the 1%. Thank you.
Alan
I’ll try
This is the real issue, just tweeted by me:
Why do we need action on Broadband? Try this. The UK has low levels of full-fibre broadband internet, at just 7%. In comparison, Portugal has 89%, Japan 97% and South Korea 99%. Now do you see why existing solutions can’t work? If they could have they already would have.
Alan Wallace says:
” provide free fibre optic broadband to the country. ”
Government set up the necessity for this when it determined that the only way to communicate with government is via the interweb.
If they couldn’t see this coming they are even more stupid than I thought. That amounts to being very stupid. Very stupid indeed because I had few illusions.
The Economist made a similar argument recently and as you say these guys should really know better, especially as their priority is efficient markets. In an efficient market excess profit cannot exist because there should always be a more efficient competitor that will drive down those profits. As you say excess wealth is a market failure that champions of capitalism like the FT should be concerned to address.