17 November 2014

Get back to spreading the benefits of ownership


What is missing from Piketty’s whole thesis, and from the views of many others in this field, is the potential – which he largely ignores – for spreading the ownership of capital itself more equitably in society. Instead of further attacking income  with blunt and dubiously effective tax weapons, a much nobler, and more practical focus should be on enabling more and more people to share in national wealth and its  returns and thus acquire the dignity , degree of security, and possibly the sense of social obligation which ownership, as well as earnership, confers.

The idea of wider personal ownership as the central goal of social policy has been persistently advanced over the years by a handful of politicians and one or two economists, and persistently ignored by almost everyone else. In particular, the academic and intellectual establishment has paid almost no attention at all to the wider ownership idea or its implications for the structure of society or the role of government.

Yet the notion of widespread personal ownership as an antidote to impersonal collectivism and as an obvious escape route from the class war between wages and capital, and  from of the excesses of inequality, is far from new. In the thirties Anthony Eden was making speeches about the need for a property-owning democracy. In the forties both Conservative and Liberal leaders in Britain strongly supported a variety of wider ownership ideas. Privatisation certainly widened ownership –although not enough.

In practice, the shift away from formal work and wage struc­tures, and towards a more personalised capital-plus-income work pattern is already  under way. For example, self-employment is  growing at a phenomenal pace in the UK. There is an enormous surge of interest in almost every part of Britain – even including the allegedly ‘dead’ inner city areas – in small enterprise, how to get it going, how to be part of it, how in short to escape the deadweight of  sole income dependence.

Every magazine and newspaper Saturday supplement  is now jammed with advice on getting a small enterprise up and running and overcoming all the teething problems. ‘Starting your own business’ has long since ceased to be an impossible dream and became the subject of the most normal everyday discussion, along with house prices, planning and managing your pension savings.

Even sleepy and floundering clearing banks are beginning to be less downright discouraging towards the would-be entrepreneur who at the outset has nothing but self- confidence and a few savings as security. Asking for a return of Mr. ‘Mannering’, as the friendly local bank manager, may be too much. On the contrary branches seem to be disappearing faster then ever.

But some of the latest pension reforms will certainly help in the right direction – as well as other reforms which give individual wage and salary earners the access to funds, the encouragement and the guidance they need to launch out into an independent environment.

At this moment people are saving less in Britain, not more, in sharp contrast to the high-savings economies of rising Asia, which of course are becoming the dominant forces in world affairs. They spend less time worrying about inequality and more time creating and spreading wealth.

Here there needs to be a pro-savings, pro-wealth-sharing cross-party and cross-ideology consensus. This would do more to overcome the bitterness and division of inequalities than any amount of income redistribution.

If across most of the Western economies the sheer affordability of welfare state structures is now in question, the chance of reforms and reductions ever being politically manageable, will depend upon other imaginative measures to spread capital rather than attack it, and to devise measures to bring the dignity, security and  sense of commitment to the community in a way which radical income redistribution can never deliver.

David Howell was Secretary of State for Energy and then Transport between 1979-1983 under UK Conservative Prime Minister Margaret Thatcher.