Dragon on the stack of gold

The Dragon’s Hoard

Craig Dalzell – 26th May 2022

The villagers lived in hopeless fear of the dragon. They worked hard to provide for themselves but it was so hard when the dragon owned the land under their feet, owned the rooves over their heads, owned the tools they used to till the fields and owned the store where they bought the things they couldn’t make for themselves and even owned the carts they used to bring things to market. Everything the villagers did fed the dragon in the end. It took a share at every step of the way and its hoard grew ever higher. The villagers had once tried to slay the dragon – it was a hard fight and cost the lives of many of them – but in the end, the dragon’s offspring just slid onto the top of the hoard and things carried on as they had before. They asked their mayor to tax the dragon, but the dragon whispered promises of power into the mayor’s ear and gave him baubles to make sure it didn’t happen. The villagers tried to vote out the mayor but the dragon whispered into the ears of some of the villagers and told them that if they worked really hard in precisely the way that the dragon didn’t, then they too could become dragons themselves. Even when the mayor was voted out – all the dragon had to do was whisper to the new one and make sure things were never so bad for it in the time it took to ensure the next mayor was more compliant. And so the villagers worked hard – harder than ever before even as the storms that ruined their harvests became stronger and more frequent – and the dragon’s hoard got larger.

Last week, the Sunday Times published its 2022 edition of the UK Rich List. The list of the 250 wealthiest individuals and families in Britain. You’ll recognise some of the names as high profile people in the British media – either because they use their wealth to influence or because they are held up as an ideal to aspire to. You won’t recognise many of them – some kinds of power are best wielded without drawing attention to onesself. Rishi Sunak is in there. The man who currently tells us that a wealth tax is a terrible idea comes in at number 222 out of 250 – a couple of places ahead of legendary “Old Money” families like the Rothschilds or Scottish entrepreneur Tom Hunter.

Even these people though are relative lightweights – their fortunes measured in the mere hundreds of millions. 177 of the top 250 richest people and families in the UK are billionaires. Many of them are billionaires multiple times over. The collective wealth of the top 250 Rich List is £710 billion and all but £60 billion of it is owned by the billionaires and this total collective wealth has increased by £57 billion in the last year. The top three multi-billionaires – the top 1% of the Rich List if you will – own over 10% of the total hoard of this collective. Even for the ultra rich, inequality abounds.

Wealth isn’t a static thing. Many of the members of the Rich List have moved up or down as their fortunes have soared or fallen. Some of the entrants are either new to the list or their stated fortunes haven’t significantly changed in the past year but 128 of the 250 were previously on the Rich List and have seen their wealth grow. Some have, of course, made losses – the biggest “loser” who is still on the List is Roman Abramovich who, due to sanctions and the loss of Chelsea football club, has seen £6.1 billion wiped off his accounts, leaving him a mere £6.0 billion to console himself with. The biggest winner was fintech entrepreneur Guillaume Pousaz who managed to increase his dragon hoard by £13.7 billion last year. In 2012, artist Blake Fall-Conroy created a “Minimum Wage Machine”. If you turn the crank on it, it would drop a penny every few seconds. If you turned the crank for an hour, you’d earn an hour’s Minimum Wage in your location. If you turned the crank on a “Pousaz Machine” it would produce over 150kg worth of pennies every second.

There is a strong correlation between the amount of wealth that an entrant on the List had last year and the amount they earned this year – very few millionaires earned billions in the past year. There is a proverb amongst the very wealthy. “The first million is the hardest”. It’s impossible to earn money from renting when you don’t own a house. It’s hard when you only own one. But if you already own a dozen it becomes harder and harder to not earn more than you can ever spend.

The total collective wealth of the Rich List is equivalent to about 30% of the UK’s GDP (or about 430% of Scotland’s GDP) and the median wealth of the Rich List (about £1.4 billion) is over 4,600 times the median wealth of all UK households. The wealthiest person on the list, with a fortune of £28.5 billion, is worth the same as 94,500 average UK households. If the number of “average” households equal to the wealth of this one entrant formed their own community, they would form the 5th largest town in Scotland with a population somewhere between that of Paisely and Dundee.

The micro-story at the start of this article should give an idea of why such extreme wealth concentration is corrosive to the common weal of society. If we look at the sectors that the Rich List made their fortunes from you see the words “property”, “energy” and “retail” come up time and time again. We cannot live without adding to these hoards yet the amount that is returned to society, even by the most philanthropic of these billionaires, is comparatively small. You buying groceries from your local store does more to support your local economy than the owner of a supermarket chain does by buying another mega-yacht.

So let’s play a game of what could happen if we slay these wealth-hoarding dragons – metaphorically of course. I’m not even going to propose anything too drastic or radical here. All I’m going to suggest is that the existence of a billionaire is so corrosive to the common weal of society that we shouldn’t have any multi-billionaires. I’m going to propose that we cap total wealth at one billion pounds. You see, being the sensitive souls that they are, I’m not going to take away their status as “billionaire”. We can even throw them a few extra pennies each so that they can maintain their respective rankings on the Rich List if we like. I wouldn’t want to take that away from them.

I’m not going to worry too much about how we do this. Perhaps we do it via aggressive taxation on all wealth above £1bn. Maybe we do it by legislating that all shares of property above £1bn are committed as a silent partner to a public Common Good Fund – this would let the tech entrepreneurs maintain control over their hyper-feudal empires even if some of the profits are taken from them and returned to their workers. Either way, all wealth above £1bn is taken from the entrants of the Rich List and returned to the rest of us.

As mentioned above, the total wealth of the Rich List is £710.723 billion. If we apply a one-off wealth tax of 100 per cent of the wealth held above £1bn then that would return revenue of £653.122 billion. The total population of the UK is only about 68.2 million. This implies that the government could, if it chose to, deliver a “Dragon’s Dividend” of just about £7,000 to every single person on these islands. That’s the magnitude of the dragon hoard we’re talking about here. Right now, we’re facing down the barrel of food shortages and an energy crisis that we’ve just been told is going to get even worse than it already is. If wealth was distributed more fairly around the country, would there even be a “Cost of Living Crisis”?

The whispers of the dragons have long made us believe that things are already fairer than they are – even if they’re not as fair as we think things should be. The dragons have managed to hide their hoard in plain sight and tell us that they deserve it more than we do. As Adam Smith famously said in the Wealth of Nations, when the job of government becomes to protect the owners of wealth from the people, corruption is inevitable. A core tenant of democracy is that no-one should have more power and influence than that granted to them by their one vote – a vote that itself should be no more or less valuable than the vote of any other person. If wealth is a route to power and influence beyond that vote, then it works against the very principle of democracy. If that wealth becomes self-reinforcing and unassailable, then so does that power and the corruption of democracy that comes with it. You probably sit on a spectrum somewhere between a “no private property” Communist and a “Deil tak the hindmaist” Libertarian but unless you sit exactly on one of those extremes, you already agree with this principle to at least some extent. Whether “no billionaires” is too radical for you or not radical enough I think we all agree that, for the good of society, democracy and the common good, some dragons should be – again, metaphorically – slain.

2 thoughts on “The Dragon’s Hoard”

  1. A suitable experimental rate would be a flat rate wealth tax of 1% of total wealth of the billionaire club, raising a modest £7b, approx £600m to Scotland via Barnett. Over five years this would raise £35b, £3b for Scotland. Assuming it did not lead to a mass migration of the club from UK, at the end of five years, it could be reviewed, and hopefully increased, by increments of no more than 1% per five years. Many readers will query why I am so cautious; however there are lots of technical, fiscal and political reasons why this should be done incrementally, as it is a long term project to alter some deep-seated and well-protected inequalities.The wealth tax should be, more or less, restricted to the £1b club, again for political reasons eg: to avoid spurious allegations of discouraging investment, reducing the value of ordinary folks pensions etc etc. I too share the fantasy of taxing at 100% and sentencing tax avoiders to life in prison etc; but pragmatically we should start low and build up. A wealth tax of 1% would be a massive step forward. This idea is not mine; I recall reading stuff about wealth tax, at Scotland level, but can’t recall who. The wealth tax on the club would not replace other taxes including income, inheritance, corporation tax etc all of which also require attention. Simplicity is important for the wealth tax, i.e. all wealth with zero exemptions, otherwise we just go back to square one! Anyone who lived through the 70s will know that any attempt to impose tax on the rich will be undermined by vested interests (hence why the phrase “redistribution of income and wealth” is now banned by mainstream parties). It could be done in an independent Scotland albeit we have less of the wealth?

    1. Aye. I’m not too concerned with the “how” of this kind of wealth tax at the moment but it’s worth saying that it’s not really about the wealth itself. “Redistribution” of wealth around an unequal society doesn’t /really/ fix the inequality so much as salve the effects of it. We should also keep an eye on “Predistributive” policies that prevent such inequalities in the first place. Inherited power or privileged access to networks of power and influence are linked to but don’t precisely require money. Even without a hoard, a whispering dragon is still a dragon.

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