Keynes2
Government of the People, by the Rich, for the Rich?
There is, I think, no disagreement that we are currently governed by
the rich; and there can be little disagreement that it is for
the rich. There may, however, be some division of opinion on the advantages for
the bulk of the population of being so governed. I am going to argue that being
governed for the rich is disastrous for the
country, and that, given the force of natural prejudice, being governed by
the rich (so for the rich) is also against the
common interest. I should like to see a revival of the Common Wealth Party (q.v.)
The marginal propensity to consume.
JM Keynes, in "The General Theory of
Employment, Interest and Money" (1936), discusses (among other things) our
'marginal propensity to consume', which can be visualised
thus: If you give £100 to each person in the country, some would spend £99 (and
doubtless buy a lottery ticket with the change), some would spend £50 and save
the remainder and others would scarcely notice the gift. These would represent 'marginal
propensities to consume' of 0.99, 0.5, and 0.001 respectively. Keynes points
out that, in general, poor people tend to consume a large part of their income,
and the rich tend to save (or invest) a large part.
In
Britain during the last two or three decades we have seen a marked increase in
the gap between
the very rich and the very poor. Worse still, we are seeing an
ever larger fraction of GDP going into the hands of well-off people. This would
be galling enough if the well-off spent that money; but at least then it would cascade
down the social scale, and the makers of smart cars, their chauffeurs, their
petrol-pump attendants and their skivvies would all benefit. But if the rich
merely sit on their money (or lend it out at interest, or use it to buy out
competitors) it is very damaging to the economy; the country goes into recession;
we all sit around waiting for signs of recovery, from someone else. We need the
'multiplier'
effect. In the classical phrase "supply
creates its own demand"; meaning that, in aggregate,
everything that is sold has to be bought; and buyers must sell something if
they are to be able to buy.
I
am not crying for astronomical rates of income tax. Nor is this an anti-business
agenda. Indeed it is a pro-business agenda, because it is arguing
for the importance of markets for enterprises. But it is indeed an anti-rich
agenda. The money has to be recirculated somehow. If they are smart, the
rich will spend it and enjoy it. Otherwise it has to be taken off them by some
means or other; by VAT, by domestic rates on large properties (whether lived in
or not), and finally, if any remains, when they die. (Rich sons are not noted
for their enterprise.)
Unless
you are yourself significantly wealthy you should not vote for the
party of private wealth.
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