What should we do about the rich?

What to do about the rich, is a question never asked, yet this deviant group with its anti social behaviours is the one that inflicts more harm on society than do the much maligned poor. It is a poverty of resources that limits the harm that the poor can do to others. The most anti social might become muggers or burglars but the damage they can inflict on society is very limited. Usually it is individuals who suffer burglaries or muggings, whereas the rich or super rich can number their victims in thousands or at the most extreme in hundreds of thousands. Wealth gives the rich power, power over people which means they can hurt many more through their anti social or even criminal behaviours.

Having described the rich as a deviant social group, that deviancy needs to be demonstrated. Perhaps the most destructive behaviour is their refusal to pay taxes. A good society is one in which taxes are paid to finance those joint enterprises that benefit of society as a whole. Britain is a bad society as few of the rich, particularly the super rich pay taxes. In fact the higher up the social scale an individual moves, the more tax becomes a voluntary payment. Millionaire footballers and others can reduce the proportion of their income paid in tax to 2% through having their income paid into a company set up to receive their income. Some rich tax payers find even a tax of 2% onerous and become overseas residents to avoid tax. Unlike other countries the tax authorities in Britain aid rich residents to avoid paying tax. Given that some of the super rich find that the requirement to live six months abroad to qualify as an overseas resident is too onerous, the tax authorities allow them to break the six months into a series of extended week end breaks. There is one British millionaire who who qualifies for non residency status by taking to the air for the weekend. One estimate of the scale of tax avoidance is £100 billion (estimate. made by Richard Murphy the anti tax avoidance campaigner) which is just about 10% of national income. This huge tax avoidance is not cost free, public services such as health and education are left short of funds, the ill are delayed treatment and admission to hospital and classes in schools are constantly increasing in size due to shortages of teaching staff.

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Another deviant act are the ways in which the rich and super rich have managed to manipulate company regulation, to turn many businesses from being wealth creators into money harvesting machines. The ways in which this is achieved are numerous, but in essence they are all the same reduce; that is to the costs of production or service to a minimum (usually achieved through wage and staff cuts), if it is a service industry to reduce service to a minimum and to manipulate costs to make it appear that costs are much higher than they really are to justify high prices. There are also the various means used to artificially reduce profits to avoid tax, the most usual being to borrow large sums of money from a another company in the group, usually located offshore, any ‘artificial repayments’ reduce the companies profits and its taxes. The usual way in which this is achieved is through private equity, whereby a public company open to the scrutiny of all is turned into a secretive private business, where these changes can take place away from public scrutiny.

One criticism that could be levied at my analysis is that the majority of business is conducted by large companies which are owned by thousands of people and in some instances millions. However all companies are dominated by a few large shareholders, these large shareholders are often proxy companies owned by groups of the super rich. It is through these proxy companies that rich and super rich are able to manipulate companies to serve their own interests. These large shareholders can nominate their own directors knowing that the others will follow their lead.

In their greed for more money the rich often force these companies to adopt cost cutting measures that can impact very negatively on society. Due to such cost cutting as reducing their in house quality inspection services to a minimum, scandals such as the substitution of cheap horse meat for beef in meat products will occur with increasing frequency. Companies selling these food products are not subject legal redress and can continue with these dubious practices.

The very structure of business in which proxy company is layered on proxy company means the rich owners are never held to account for negligence even if criminal. If a company through an act of negligence caused an accident which lead to the death and injury to hundreds, it could avoid liability for its actions. All has to be done is for the company to be wound up and to the business to be transferred to a new company. This company cannot be held liable for any of the acts of negligence committed by the former company. The new company may be almost identical with the former company, it will have the same business premises and much the same staff, but as a new business it has no responsibility for the actions of the former business.

Usually the rich seek to corrupt the government as a means to protect their interests. Usually corruption is by means of illicit payment, but in Britain its a more subtle form of corruption. Corruption is by ideology, this ideology is Neo-Liberalism an ideology that states societies welfare is maximised if the free market is left free of all state interference. Intervention in the markets is regarded as anathema and so British government refuses to intervene even in the most dysfunctional of markets. They regard the various scandals in the food trade as a small price to pay for the benefits of the free market system, which are principally low prices. This ideology has such a dominant hold on the political,imagination in Britain the government invites businessmen to run services that would normally be undertaken by the state, hence the privatisation mania. They also advise government on the regulation of their industries, for example the manufacturers of pesticides run the service that advises on the use of pesticides. It is a system that is open to abuse, it can be compared to inviting criminals to advise on policing on the grounds that they best understand criminal behaviour.

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What is to be done about this deviant group, how are they to be stopped from doing harm to society? They like the criminal cannot be eradicated from society, their violent removal through revolution never ends well. Wise politicians have known that it is impossible to eradicate crime from society, but it is possible to minimise its harmful effects. The harmful effects of crime are minimised by having laws that outlaw criminal activity and a police force to enforce those laws. The sanctions for being caught are never going to be a deterrent to all criminal activity but they are a sufficiently effective deterrent to most criminal activity. To minimise the harm done to society by the rich, the tactics used by the judiciary and the police should be copied.

One of the most blatant abuses is the avoidance and evasion of tax. What needs to be introduced is a law which makes all tax avoidance illegal. This would remove the majority of the ways by which tax is avoided. Penalties could be introduced to penalise those that devised such schemes. At present accountants who devise tax avoidance schemes suffer no penalty if the scheme is found to be illegal. In such cases the only loser is the client who avoided the tax. As with policing any crime there needs to be an effective policing force, at present the numbers of British tax officials are too few to effectively police the system. Unlike other forms of government increasing the number of tax inspectors would increase and not diminish government revenue. After all there could be as much as a £100 billion in lost tax revenue to be recovered.

There is then the much trickier problem of what to do about the proxy organisations through which the rich rob society. Company law reform would be difficult to achieve, but some of the more obvious abuses could be quickly remedied. Setting up arms length companies in tax havens such as Luxembourg, Dublin or the Cayman Isles to acquire a head office in a tax haven for the purpose of avoiding tax could be made illegal. The argument is that by doing so it would result in a exodus of businesses to countries in which taxes were lower is unlikely. Some footloose companies would move but for most companies Britain is an important market and it is unlikely many would really go. The list of potential changes to the law is almost endless.

Convicted criminals while in prison are subject to education programmes, such an approach should be tried with the rich. Previous generations of the landed aristocracy has a strong sense of noblesse oblige, which meant that they believed that in return for the the privileges and benefits they received they had in return an obligation to improve the lives of the les well off. From my childhood I can give a good example. The Lord of the Manor on the estate on which my father was employed put into practice a welfare system to improve the life of his employees. He saw to it that all his estate staff were well housed, if necessary funding improvements to the housing stock, providing retirement homes for retired workers and treating well those unfit for full time work. There was on the estate a man blinded by gas in the First World War. He was employed to collect eggs from the hen houses and given a house to live on in the estate. If it had of not been for the charitable intent of Lord *** he would have been unemployed and forced to live on benefit. When his son inherited the estate he declared that this welfare system was too costly and brought it to an end. Children of the rich need to be educated in the ways of noblesse oblige, there is a price to be paid for wealth and the price is to behave responsibly. Why not compulsory lessons in civic responsibility for the rich?

What I believe is that until the most powerful deviant group in society is identified as such no action will be taken to reduce the harm they inflict on society. The super rich should not be celebrated, as they are not the ‘movers and shakers’ that are responsible for the dynamism that drives society forward but a group that is moving society backwards to an unpleasant past.

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