Billionaires shouldn’t exist?

A former Labour MP, Lloyd Russell-Moyle, has attracted huge attention by claiming on a radio programme that billionaires shouldn’t exist. He explains his view in this article in the Guardian. There are, apparently, 151 billionaires in Britain. Russell-Moyle talks about the increasing concentration of wealth, how the top 1% of earners take home 14% of the national income, and how billions are squirreled away in tax havens.

What he does not refer to is the source of all these “earnings”. If he looked deeper he would discover that they are mostly not earnings; their source is economic rent of land or intellectual property rights. In both cases they are a monopoly privilege granted and protected by government. These incomes are not wages – a reward for work. By failing to make the distinction he indicates his own confusion and goes on to propagate this confusion among the public at large. This in turn leads to the formulation of damaging policies such as those currently offered by the Labour party. Hopefully they will be rejected, since they are a medicine which is worse than the disease.

As for tax avoidance through the use of tax havens and the like; the phenomenon is a product of systemic failure. Badly designed taxes will be evaded and avoided. One of the characteristics of land value tax as proposed here is that it cannot be avoided or evaded, because land cannot be hidden or removed to a tax haven. The remedy for the problem is there for the taking. Complaining about the problem and advocating ever more anti-avoidance legislation is avoiding the issue and the policies are little more than window-dressing. But perhaps those doing the complaining are not really serious and are just doing it for the sake of appearances.