Theresa May clearly shares George Osborne’s understanding of economics. The FT has reported:
Britain will make it easier for wealthy individuals to immigrate, the home secretary has said, in a policy that aims to promote the UK as the destination of choice for rich foreigners seeking a new home.
Theresa May said on Tuesday that she would exempt “high-net-worth investors” and entrepreneurs from the government’s new cap on non-European migration, to be introduced in April. “I will not limit the number of these wealth creators who can come to Britain,” she said.
I think that safely pre-ordains the outcome of the domicile review promised to Vince Cable (and requested by him after discussions with me).
But there’s something much more sinister in this — it is the wholly mistaken assumption that the wealthy are wealth creators. No they’re not. most inherited it. And these days the vast majority of the rest will have got it by being in exceptionally safe employment in which they never took a risk — as bankers or as major company directors.
Two things to note. Once wealthy people cease to be wealth creators: they become wealth preservers. With rare exceptions they have two obsessions. The first is making sure they keep their wealth — so they cheat and abuse to stop paying tax, for a start.
Second they are determined others should not catch up with them. being wealthy is about being different — and they don’t want to give that difference up. That’s why trickle down was never going to work.
But this explains something else: these people will never be wealth creators because they have no appetite for risk. Their appetite is for maintaining the status quo. It’s the hungry who are the entrepreneurs, not the wealthy. And it is small business that creates jobs and wealth, not big business as evidence has shown time and again. And wealth puts up all the barriers it can to small business.
So this policy will not work, unless of course May’s plan is to increase inequality in the UK — with all the outcomes we know only too well now.
Since I think this is the plan I find this profoundly worrying.
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Richard
You say “most inherited their wealth”. If you read a recent edition of the Sunday Times Rich List I’m not sure that your statement is correct. Some certainly have inherited their wealth, but not “most”.
This is simply enshrining into ConDem policy what nuLabour had always promoted, Richard. For example, read Hollingworth’s and Lansley’s ‘Londongrad’ (2009) for a detailed account of how this applied to Russian’s who’d mainly acquired their wealth from asset striping what had been the Soviet Union and thus dumping on most of their ex-comrades.
But you’re absolutely right to point out that there’s no necessary relationship between being wealthy and being an entrepreneur, and that the psychology of wealth nowadays is almost certainly primarily about consolidation, protection, exclusion and more accumulation.
Nevertheless, despite the fact that no ConDem politician (and I suspect a good few Labour ones to be honest, eg. Mandelson) would publicly admit to believing in ‘trickle down’ many still do – after all its such a supremely simple principle isn’t it. May’s announcement simply confirms that, while further reinforcing a trend that is now clear – that the UK will become a whole lot more unequal as a society over the coming years.
What about spending? If wealthy people spend more they increase profits of UK businesses (thus increasing tax take indirectly) as well as the VAT income of the country.
Wealth creators are good, but don’t we need spenders too?
If my (no relation) namesake James Dyson had been a foreigner seeking to come to the UK before he developed his cleaner, would he have qualified under these rules?
I suppose it’s politer than saying a large proportion of them stole it…
Just drop the phrase “1.1.k” into the conversation with minister May – this is what an open-door policy to the very wealthy will look like, and it is not pretty.
It is quite astonishing how blatant the coalition is being in supporting the wealthy… but I suppose that the Murdoch press will not be likely to expose such collusion with their owner’s agenda.
@Ivan Horrocks
Wholeheartedly agree
This was, perhaps less blatantly, a New Labour failing
Except for Mandelson, where he was open and blatant
@Adam
No, we don’t need that spending when it’s OK and Hello magazine style
That just reinforces divisions in society
And reduces well being – which has little to do with £££££
Arguing for trickle down economics, via spending/investment/creativity by the wealthy is exactly where QE went wrong. I like Richards view around an alternative qualitative easing. Personally I would go a step further and make it a permanent redistributive measure via a basic income. The core principle remains the same, putting stimulus in via a bottom up approach rather than top down. But it has the added benefit of giving some real choice and creative opportunity to everyone. This latest announcement is just more of the same, there have been no serious steps taken to generate wealth creation.
Inheritance is a big problem, if you look at economics as a vast game of monopoly. Everyone knows how long and painful the end of a game of monopoly can be, but we start playing with high hopes because we all start with the same. No-one would be bothered playing if a few players started way ahead, it’s just pointless. Yet that’s exactly how most of us are expected to take part in the economic game.
@MacB
Excellent analogy.
@MacB
Funny you should mention Monopoly in this context. The game derived from the Landlord’s game, invented in the early 1900s to illustrate how the ownership of land, and the ability to charge rent to users (unearned income), distorts economies and produces gross inequality.