Over the weekend, Liberal Democrat deputy leader, Simon Hughes, penned a piece for the Guardian’s Comment Is Free site arguing that Britain needs to become a more equal place both in terms of the distribution of wealth and of opportunity.
Here’s a sample:
We must now focus on the redistribution of wealth. But this will not succeed by means of greater hand-outs. Financial benefits must seek to engage people positively. The redistribution of hope and opportunity means the redistribution as well as the creation of work. Co-operative and mutual businesses and social enterprise should be prioritised. The private sector, like the public sector, should not be allowed to get away with obscene pay ratios and bonuses. All employers should be required to consider how they can increase employment and training, by themselves or with others.
Where communities are unable to provide work the government must be prepared to intervene.
A responsible economy is necessary for a responsible society. Building local, regional and national economies which provide the opportunity for all to participate in for fair reward will build much stronger communities. This will counter the appeal of the gangs and the get-rich-quick merchants. Other people and activity must now capture the energies and abilities of a generation that has greater potential than any we have had before.
You can read Simon’s piece in full here.
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16 Comments
Taxation is the most efficient means of wealth redistribution.
Well done Simon. The redistribution of wealth and power achieved by ensuring that all workers have a financial stake in their company and a say in its control is long over due. The Liberal Party policy of co-ownership was a very radical policy and very relevant to today’s economy. We ‘reject the traditional legal conception of the company or enterprise as being responsible to the interests of the shareholders alone. We believe it should be replaced by a system in which employees become legal members of the company and call for legislation redefining the responsibility of the Board to employee, to shareholders and to the public interest…..’ so said the Liberal party of my youth.
This year Robert Oakeshott died. He was a Liberal Parliamentary candidate and the great advocate and practiser of worker owned enterprises. He introduced Jo Grimond to the successful and large scale movement of worker owed industries centred on Mondragon in Spain and the local savings banks that funded them. It is hard to understand how a policy- that stood in one form or another for nigh on a century as a cornerstone of the Liberal Party-should have been so completely buried. We were not talking about a few mutuals in the public sector or praising a few co-operatives, but legislation to compel companies to give employees a at least the same rights as share holders. It did not stop there, both Oakeshott and Richard Wainwright spoke a time when ‘labour would hire capital’
The market collapse we are suffering from was in significant part due to the short termism of capital. Firms were bought and sold without a second thought for the employees or the community. Long term investment and sustainability was sacrificed for the short-term building of share holder value. We need to start advocating employee ownership again. Firms like Scott Bader, Baxi and John Lewis represent the future. Surely we have had enough of pandering to the interest of capital investors who are here today and gone tomorrow.
I like his vision but do we have concrete policies to make them happen? Can we get them past our coalition partners?
Having the vision and values is a start but we need to follow this up with policy.
What can we do to grow the mutual and cooperative sector?
Mr Osborne is currently expressing doubt as to whether the 50% rate of tax is more expensive to collect than it raises! Obviously this is simply a ploy to eventually scrap this Labour initiative. He also reduced corporation tax because his primary aim is to encourage global corporations to site their EU operations in the UK and to do whatever he can to make the UK ‘Global Corporation Friendly’.
The likelihood of Osborne agreeing to impose restrictions of any kind on these giants is zero, Although the redistribution of wealth is much needed, SH’s plan is more fantasy politics. However is he, and the Party, really wanted to take on these economic monsters – I would rejoin without a moment of hesitation.
It looks as if Osborne has not made the UK cosy enough even for Richard Branson!
http://www.dailymail.co.uk/news/article-2019193/Sir-Richard-Branson-Virgin-Switzerland-blow-British-economy.html
@g
How well did it work between 1997 and 2010?
Ah another vote winning policy from Simon Hughes. higher taxes on the middle classes.
IaainBB – I am all in favour of more worker involvment but if emplpyees have the same rights as shareholder why would anyone invest in the companies?
@John – why is “his primary aim is to encourage global corporations to site their EU operations in the UK” a bad thing?
This is all meaningless unless we are prepared to change the law on corporate governance to provide the necessary information and empowerment to shareholders to hold directors properly to account.
This would improve the efficiency of the private sector by ensuring that companies are run in the interests of shareholders rather than to featherbed directors and board members with obscene pay ratios and undeserved bonuses and perks.
It would also help to ensure that there was more money in private pension pots that many people rely on for their retirement.
@ Hywel:
This is a complex issue, However, some of the key points are these.
1] As I have said, global corporations have become almost stateless in so far as most do not demonstrate any allegiance to the nation of their birth [consider Apple with its fabulous profits and high US unemployment – majority of production Foxconn – but this is standard for corporate giants]. They will conduct EU operations from the UK if they are given the most attractive terms for basing themselves here, but will soon move HO and/or production elsewhere if some other nation, able to trade within the EU, offers a better deal. Continually courting these corporations, always at the expense of the people, offers no hopeful future.
2] Giant corporations need increasingly less middle ranking staff because their size allows software to be developed to replace these people. Staffing becomes a relatively few highly paid specialists and low paid manual tasks compared to small & medium sized firms who need to use proportionally more middle ranking staff. See HSBC reductions:
http://www.bbc.co.uk/news/business-14362471
3] They gobble up virtually all business opportunities, making it extremely hard for small and medium sized firms to start or develop and if they do manage to start and keep going, generally, most of their custom will be from the giant corporations who will force down their prices to the bone.
The people of the UK will become ever more subordinate to these giants if things continue as they are and it is one of the reasons why I want us out of the EU – because we are defenceless against them whilst we are a member. Out we could increase taxes for those who wanted to trade here knowing that a UK firm, in most cases, could easily grow to replace them and redistribution of wealth would be possible along the lines that SH suggests.
Sorry – my last post s/b @ Simon McGrath
Hywel, would that be the period when the Labour party decided they were comfortable with the extremely rich? That was probably their greatest failure from a wealth inequality pov. But the statistics show that Gordon Brown’s tax credits were essential in preventing the gap between the poorest 10% and the rest increasing.
But since you are so concerned about wealth inequality, care to justify tuition fees, public service cuts, increases in train fares above inflation, utility bills, and all the other costs that have risen in part due to councilt tax freezes and cuts since the Coalition was formed and which disproportionately fall on lower earners?
@Al “This is all meaningless unless we are prepared to change the law on corporate governance to provide the necessary information and empowerment to shareholders to hold directors properly to account. ”
What changes are needed? Shareholders do have rights at the moment so can you tell us which addiotional powers you think are needed?
@John Roffey I am baffled by why you think leaving the EU would make any difference to the trends you identify.
@ Simon McGrath: I am not sure of the cause of your bafflement. However, this from the Guardian might help you to understand why Osborne wants to keep corporation tax and income tax on the higher earners low. These are the two obvious ways to raise extra cash for the Exchequer, but if these are increased the global corporation simply moves its operations to a nation with a more friendly tax regime.
http://www.guardian.co.uk/news/datablog/2011/feb/21/corporation-tax-rates-world
With these global corporations accounting for such a large proportion of economic activity in the UK [and to be a great deal more with the privatization of ever more public services] significantly more tax is required from them if there is to be any redistribution of wealth, or even to maintain the existing distribution. In order to tackle this problem, which must be tackled if their ever growing dominance is to be halted – the UK has to become a single market, which by definition is not possible whilst we are in the EU. Once out the UK government can set conditions for these global monsters to operate here which would include raising a great deal more tax from them.
@John Roffey – if we were out of the EU, surely we would be even easier prey for the global corporations. The big problem is our over-reliance on financial services and international financial trading. Global Corporations are able to swamp what remains of our industry because our lack of rules of corporate governance and the assistance of the of the casino banking sector make it easy for them. Kraft could take over Cadbury and tear up any assurances over plant closures with impunity. Such things don’t happen in Germany or France, which have proved much more resilient economies in the current recession than our own.
@Daniel Henry – not only would a policy on revising Company Law to include rights for employees and the wider community be just and more efficient in curbing short-termism, it would also help us re-define Liberal Democrats in the public’s mind as the Party of mutuality and community. Since such policies would be unlikely to be enacted before 2015 anyway, we should re-adopt them as a Party and let the Tories and Labour act as the apologists for corporate interests.
Incidentally, I don’t know if Robert Oakshott is any relation to the LibDem peer Matthew Oakshot but it would be interesting to know if Matthew shares the former’s views on employee ownership.
BTW – the 3 best performing supermarket chains (in growth) in the last period were Lidl and Aldi (German, family owned) and Waitrose (John Lewis partnership, mutual). The lowest growth was ASDA, owned by US Corp Walmart.
@ Peter Chivall
Germany has been able to fair better because it has a robust economy and France because the French, unlike the British, are loyal to home producers – even if they are more expensive. However, you are right that once the UK was a single market, it would require a government determined to free the nation from the dominance of global finance and corporations. It would be like a three dimensional game of chess, but I believe we would need direct democracy so that the measures taken had the support of the people for some would cause real hardship.
The EU is an ideal market for these global giants because its size provides many opportunities for bribery and corruption so that laws are passed to benefit their products. As we are seeing, the nation states within the eurozone are finding it increasingly difficult to keep afloat because of the complexities of operating in such a large area.
Although I recognise that there would be short-term hardships, this is a battle that has to be fought, for it is clear that the global corporations hope to replace the dominance of nation states [that’s why the Republicans were content to see the US lose its triple A rating] and things are going to get increasingly worse if action is not taken. Global corporations are not interested in the well-being of the people or liberal values – they are the equivalent of an economic Genghis Khan!
Labour spent 13 years making the country more and more unequal. The economy grew for most of their term but who benefited? The income of the top 0.1% grew way faster than inflation whilst the income of the bottom 50% didn’t keep up with inflation. Most people grew poorer in real terms.
The young are especially screwed. They’ll end up with huge debts if they go to university and Labour created a property boom that will prevent many young people being able to buy a home. Many young people will end up paying huge amounts of money to buy to let landlords and be left with nothing as a result of Labour building less council housing than the Conservative government before them.
Labour voters couldn’t stomach them by 2010 but they wouldn’t accept the Tories fully either.
The centre left is considerably bigger than the centre right but it was divided as most Lib Dem voters were centre left voters. But I suspect the coalition has changed this, much of the Lib Dems centre left vote will go to Labour at the next election and I think the Labour Party will win that election despite their appalling record in government, in government Labour are moderate Tories minus civil liberties. Lib Dems appear to just be plain old Tories.
Simon, the thing that most impressed Grimond about the Mondragon co-ops was the way they were funded namely via the ‘Caja Laboral Popular’. The temporary state ownership of the banks does give us a chance to create something similar providing return for capital without the downside of the present regressive model