Saturday, April 01, 2006

In the UK wealth is being transferred from the poor to the rich.

Stewart Lansley, in The Guardian, 1 April 2006, relates that:

1. In the UK wealth is being transferred from the poor to the rich.

2. The UK has low innovation and productivity rates.

3. The rich are getting richer due to 'fast buck' deals and tax avoidance.,,1744534,00.html

Some quotes from Lansley:

Twenty years ago Britain was one of the most equal countries in the developed world.

Today it is one of the most unequal.

We are not living through an entrepreneurial and economic renaissance in which the new rich are making society wealthier, dragging up the rest of us.

In fact, Britain has internationally low innovation and productivity rates.

What is happening is a complex transfer of wealth from ordinary taxpayers, shareholders and customers.

Twenty years ago the typical chief executive of a FTSE 100 company earned some 25 times the pay of the average worker; today it is close to 120 times.

The City in effect operates as a giant, informal cartel, charging excessive fees for activity that, for the most part, involves the transfer (or sometimes destruction) of wealth, rather than its creation.

Increasingly, the emphasis is on short-term, "fast-buck" deals that are at odds with the patient organisation-building on which enduring companies and long-term wealth creation are founded and many large and successful companies were originally built.

Mergers and acquisitions are often driven by the prospect of fat bonuses and fees for directors and their City advisers rather than the long-term interests of the companies.

What has happened is that the richest 1% have been taking an increasingly disproportionate share of the nation's wealth: 23% today compared with 17% at the end of the 1980s.

In contrast, the share going to the bottom half of the population has fallen from 10% to 6%. This is more "trickle-up" than "trickle-down".

· Stewart Lansley is the author of Rich Britain, The Rise and Rise of the New Super-Wealthy.


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