Wednesday, 29 August 2012

tax the wealthy, but do it to redistribute wealth

Wednesday 29th August is the day the church 'celebrates' the beheading of John the Baptist, granted it is a 'lesser festival' nevertheless it is good day to turn our minds to those who abuse power and wealth. No doubt this is the reason Clegg picked today to launch his proposal for wealth taxes. Liberals have for generations challenged the mal distribution of wealth in Britain and put forward schemes to remedy this state of affairs. Most famously of all Elliot Dodds chaired an inquiry into the distribution of property set up by the Liberal Assembly meeting in Buxton in 1937. The resolution, which was adopted unanamously, read:

This Assembly of the Liberal Party, indignantly aware of the grossly unequal distribution of property in this country, believes that the greatest possible measure of personal ownership, with the independence and security it brings, should be enjoyed by all. It also believes that the opportunities of a full life hitherto open only to the rich should be placed before all.

It recognises these twin ends as the inspiration of its domestic policy and pledges its whole strength in urging on the nation far-reaching reforms to achieve them.

The scene from Struass's opera based on Oscar Wilde's Salome where John the Baptist is beheaded

It is interesting that the report explicitly refers to Mr Belloc-one time Liberal MP for Salford and author of the Servile State and clearly echos some of his distributist views.. ‘in order to provide the upmost scope for the development of personality, it is necessary to bring about the widest possible diffusion of ownership and opportunity’ (It is not Belloc’s fault that his flame is kept alive by strangeAmerica right wing libertarians or that Orwell misinterpreted him) This tradition remains important to Liberals in the UK, Grimond praised it and the Unservile State was the tittle of the collection of essays edited by George Watson that launched the Grimond Liberal revival and did much to restore the view that the party was the home of original thinking.

In many ways it underpins the Liberal belief in employee ownership as a way of spreading wealth and power and the ideas championed by Professor Alan Meade and taken up by David Steel for distributing assets. Meade also influenced the early SDP who adopted some of his redistributionist proposals. Meade was a doughty fighter against Thatcher’s Hayekian liberalism. We could do with his presence today. Interestingly Meade wrote in his 1948 book -sub titled the Liberal Socialist solution- that some of the actions proposed by the Labour Party had ‘the hallmark of the Servile State’ Central to Meade’s thinking was the belief that the government should act to ensure a ‘tolerably equitable distribution of income and property’

In this context a Liberal Leader proposing wealth taxes is not out of place. The difference is that Clegg is proposing the tax as a way of filling the government’s financial black whole not as a way of re-distributing wealth.

We should welcome Clegg's endorsement of a short term fix for the deficit -not as a way to accept more welfare cuts-but as a good end of itself and turn our attention to the more important aim of asset redistribution.

Politicians of all stripes have nodded in this direction. There was Labour's short lived rhetoric about a 'stakeholder economy', some Tories spoke of 're-capitalising the poor-but it didn't last and one felt that it was just a rouse to reduce the state. Of course there are some who genuinely have signed up to bits of the agenda. Tristan Hunt talks about mutualism -although my hunch is that for most Labour folk it is a very poor alternative to state ownership and control. Some Tories like the MP for Leominster have talked about workers' co-ops .

COMPASS published a paper about redistributing assets and rehearsed many of the arguments familiar to past generations of Liberals. The author Stuart White who has written about the radical Ownership for All policy of the Liberal party wrote the COMPASS document and in it said of the reasons for linking freedom to ownership :

These reasons are centrally to do with the relationship between wealth and freedom. Someone who earns a high income but who has little or no wealth is constrained to keep working to maintain their income, whereas someone who has wealth is more able to take time out of work because their wealth can cushion the financial loss. Such a person does not have to put up with a bullying boss (or spouse) but has the financial independence to exit such relationships. Someone who has wealth in their early adulthood can afford to think more creatively about what they wish to do with their life than someone who has no wealth and who must get into work as quickly as they can to put bread on the table.They have much greater capacity for self-direction.

Given this greater freedom, people may feel generally more self-confident and willing to act creatively in economic and other contexts. This is not only good in itself, but may have desirable knock-on effects in terms of, for example, reduced income poverty. A financial buffer can help prevent the trigger events, such as divorce or losing a job, that cause falls into poverty. It can also help prevent short spells in poverty from becoming longer ones. If individuals have a financial buffer, financial shocks, such as a drop in income or the need for a one-off purchase such as a fridge, do not have to result in unsustainable debt spirals.

While there is a lively academic debate about the exact nature and extent of the so-called ‘asset-effect’, there is a large body of empirical research which is consistent with these claims about the impact of wealth on personal freedom.

A range of policies flow from this analysis -many of which were known to Liberals but need to be revived. I shall return to those later. In the meantime we should welcome a tax on the wealthy but our objective should be to redistribute that wealth not just lodge it with the state.

When I was checking out that today was the day the church remembers the beheading of John the Baptist the  C of E website linked me to the the service of Compline. Lord Bonkers was retweeting bits of it after his visit to Ripon Cathedral but they missed out my favourite bit:

The Lord almighty grant us a quiet night and a perfect end.
Amen. sober, be vigilant; because your adversary the devil,
as a roaring lion, walketh about, seeking whom he may devour:
whom resist, steadfast in the faith.

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