Thursday, December 13, 2012


On Plutocracy and Democracy

[Lord] Andrew Adonis, in the current issue of Prospect magazine, cites the new book by Chrystia Freeland, Plutocrats. It details the philanthropic activities of Bill Gates, pointing out that his foundation's contributions to international charity, make it equal to the world's 10th largest aid donor, employing 1000 people on an 8 acre site in Seattle.  However, she also paints in the less attractive features of the US 'plutocracy', so far removed from the 'general equality of conditions' which 'struck'  De Tocqueville so 'forcibly' when he visited in the mid 19th century.

There are 84,700 people each worth no less than $50m in the world, half of them living in North America. Adonis notes how the 'political status' of  this new class of 'super rich'  enables it to 'shape law and society in its own image'.  Freeland shows how the super rich do not bother themselves worrying about the poor: they are obsessed with those richer than they are, to the extent they, in their 'self pity', believe they are being persecuted for their success.

It is not that they pay somewhat less tax proportionately than the middle class. They avoid and evade tax wholesale, courtesy of tax havens, tax loopholes and gaining different tax treatments for different classes and locations of income and assets. This is organised by what Freeland calls the 'income defence industry' with its internatiional armoury of lawyers, accountants and consultants, who are paid multiples more than the public officials they confront and routinely outwit'

Freeland writes that 'within the top 1 per cent, the richer you are, the lower your effective tax rate.'

Adonis' solution? A simple reform: 'they should pay tax on their overall income, however derived, at no less than the average for middle income earners.'

Adonis concludes that he sees this as 'the critical test for reconciling plutocracy and democracy in the next generation.'

Bravo, say I. 


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