The left across the world is embracing the idea that soaring wealth inequality can be tackled by giving employees a stake in their companies - and a say over the profits and decisions of their employersThe rich really are different from you. While the pall of the financial crisis still hangs over the ordinary worker, whose income is lower today than in 2008, the share of pre-tax income going to the top 0.1% of UK adults, the 53,000 who earn half a million pounds a year, is approaching the level just before the crash a decade ago. How have the rich done it? One reason is the `light touch` nature of UK company regulation. Another is that they can muster armies of lawyers and accountants to help them reduce their tax bills. A third is that they extract a great deal of wealth from their ownership and control of companies. To see how these factors might coalesce it is instructive to note that in 2017, to avoid paying a new higher rate of tax, 100 extremely wealthy individuals withdrew dividends averaging £30m each from their companies to save a total of £100m before the change took effect.The French economist Thomas Piketty presented a simple explanation for rising inequality. He argued that wealth generally grows faster than the economy, and it tended to become concentrated, as more wealth brings more opportunities to save and invest. Tackling disparities in power and capital has become the leitmotif of the left globally. This is a very good thing. The chosen method is often some form of collective action by the state on behalf of workers. France“s president, Emmanuel Macron, has just pushed through a law for mandatory profit-sharing schemes for employees in firms with more than 50 workers. In the US, Democratic presidential hopefuls Bernie Sanders and Elizabeth Warren propose to tackle soaring wealth inequality by giving employees a stake in their companies - and increased authority over the profits and decisions made by their employers. Continue reading...
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