It’s a rich man’s world

This week a report by government advisor Lord Hutton stating that public sector workers should work for ten years longer, for less pay, was released on the same day as the Forbes Rich list, which showed that the number of billionaires in the world has risen from 1011 to 1210 in one year. One document was like a mirror image of the other, if you plotted a graph of the wealth of the richest people in the world it would be shooting off the charts, with loads of fat cats looking on, toasting each other and chuffing on cigars. Turn that graph upside down and you have the financial fortunes of the rest of us, standing about looking miserable with our pockets turned inside out, realising we have to work longer for less.

The fattest feline of the clowder (the collective noun for cats in case you were wondering) is the un-aptly named Carlos Slim. The man from Mexico made a large chunk of his $74 billion pile from telecoms and like bronze placed Warren Buffett he prefers accumulating money to spending it. He has lived in the same modest house for the last forty years and has driven the same car for nearly as long; whereas Buffet, aka The Sage of Omaha, auctioned off his banger complete with the number plate bearing his 'Thrifty' motto. Buffet may be frugal but he's not tight, he's pledged to give away 99% of his wealth during his own lifetime, with much of that money to be disbursed by Forbes runner-up Bill Gates' charitable foundation, The Bill and Melinda Gates Foundation.

Both men are the founders of The Giving Pledge, which they announced in December last year, it specifies that they and 55 other billionaires in the US will give away 50% of their wealth to charities whilst they are still alive. Well over $125 billion has been pledged so far. This seems like good news, especially for people in the developing world who benefit from the global health programme organised by the Foundation which funds inoculation programmes against diseases such as polio.

Carlos Slim hasn't signed the pledge (no billionaire outside of the USA has), although he is said to fund initiatives to combat illiteracy and healthcare in Latin America, so perhaps he's doing his bit, possibly more than can be said for others on Forbes List. What about people like Roman Ambramovich who own, multiple mansions all over the world, a Roman Navy of luxury yachts and more planes than the RAF? Last month Gorbachev attacked his countryman's 'rich debauchery', a charge which can be leveled at the majority of the people on the Forbes List and can be quantified by the huge growth in sales enjoyed by Bernard Arnault, chairman of LVMH and the top ranking European in the list of shame at number four. Louis Vuitton, Moet and Hennessy experienced double-digit growth last year, with operating profits up 29 per cent as the nouveau mega-riche of the BRIC countries (Brazil, Russia, India and especially China) splurge on luxury tat, while not using one of their Montegrappa pens (entry level model $575) to sign the pledge.

The Giving Pledge has only been signed by Americans, possibly due to Yanks having a much stronger culture of philanthropy (typically rates of giving are double that of the UK) whereas we pay higher taxes and the state takes a stronger role in redistributing funds to the needy. It currently seems that Brits are getting the worst of both worlds as we exist in a system which fails to tax the mega-rich (like Top Shop owner Philip Green) but is unsuccessful at persuading these people to give their money away. Also do we want to have to rely on the largesse of the super-yacht class to fund public services and pensions?

The richest man in the world comes from a country racked by a drugs war and with one of the highest murder rates in the world, so even his reportedly charitable intentions don't seem to be making much of a dent.

Charity can't replace fair taxation. There would be no need to penalise public sector workers in the way Hutton describes if the government prevented tax avoidance by some of the richest people on the list who live here, by ending non-domiciled tax arrangements and worked with other countries to close tax havens like the Virgin Islands. The Forbes List and Hutton's pension report represent a massive failure of the government to act in the interests of the vast majority of the people of this country and the world.