Addressing wealth inequality ~ Strategic Human Capital Management (HCM) Blog

Monday, 23 February 2015

Addressing wealth inequality

I hope you enjoyed my post and linked article on pay differentials. I now want to focus on the broader issue I also referred to which is wealth inequality, This may be a harder issue to impact as HR practitioners, as most of the increase in inequality is due to appreciating assets rather than high reward though I think I have a solution to this! - see below.

However I wanted to start with a few more thoughts on the issue.

Firstly I think the big issues, here, as with pay differentials, are trust and collaboration. Today’s huge inequalities destroys the fabric of society and stops people working with each other effectively.

There are of course other issues too, particularly around economic inefficiency. Very wealthy people run out of sensible things to spend money on. So they keep more of their money, meaning that there is less in circulation, putting brake on the economy and reducing any trickle down effect (which is largely theoretical anyway.) This keeps everybody’s wealth lower than it would be if the wealth was more evenly distributed.

But I still think reduction in trust and collaboration are more important problems. I remember in Jaques Peretti's excellent BBC documentary on the super rich that a woman polo player was suggesting that concern about inequality in society is all down to envy and lack of understanding of how hard rich people work. Well it’s true that there is envy. We are human and part of what it means to be human is that we don’t always think positively about each other. We should try to improve this. But envy isn’t going to go away, it’s real, it exists and we need to manage society in a way that recognises this. Huge inequality leads to many people being envious which isn’t a healthy or productive state. We can’t tackle envy and therefore we need to reduce inequality. The point about hard working rich people simply isn’t worth responding to.

In terms of how we respond to the issue, I support proposals made by Thomas Pikety and others to increase tax on wealth rather than just incomes. However we are still left with the problems that many of the the rich don’t want to pay eg Griff Rees Jones threatening to move out of the UK if his pad in Fitzrovia becomes subject to a mansion tax. The most repugnant thing I’ve seen on this was Lord Bell on Channel 4 News complaining that proceeds from higher taxation just ‘get wasted’ (waste presumably being anything that isn’t spent on him.) This, together with the control that wealthy people have over society, means that no government, at least in the UK, is going to do much to change the status quo.

This leaves individual philanthropy which has obviously got to be encouraged. The most important initiative in this area is the Giving Pledge, founded by Bill Gates and Warren Buffet and requiring wealthy individuals to commit to giving more than half their wealth away during their lifetime or in their will. Some do even more eg Buffet has committed to giving away 99% of his wealth but he still uses an expensive private plane. Gates does amazing work in philanthropy but still has a $150m house on Lake Washington named Xanadu 2.0 and owns a private island in Belize. So whilst initiatives like this will have an impact they’re limited and long-term.

How then do create a fairer society - and do so before more people start to take up their pitchforks?

Well, the only way of making a difference that I can think of is to show the rich the way forward by demonstrating that we don’t value what they have and the way they’re living. At the moment they hold onto their money because they think we’re envious of what they have and aspire to be like them. No wonder they keep on doing what they’re doing.

Speaking personally for a moment, I have no desire at all to be super wealthy. I see no advantage at all in having millions of pounds when other people are sleeping on the streets. In fact some years back I committed with my wife that if I ever become a much more successful consultant or speaker than I am now, or my daughter becomes a pop star, or marries a football player, or we just win the lottery etc, that the first thing we’ll do is give away the excess amounts we don’t need (which we’ve set at the future equivalent of £5m in 2013 terms).

Given that wealth inequality is becoming ever greater and the issue therefore more and more important and also topical, with Barack Obama focusing on it in his State of the Union address; Mark Carney promoting inclusive capitalism; Justin Welby linking to to abuse and corruption; etc; etc; I thought it would be a good time to encourage other people - including you - to agree to follow the same approach.

I’ve therefore set this up as a change.org petition.

I somehow suspect this idea may not become massively popular - the current celebrity culture is just too strong for that. But it would be nice if it could be more than just me and my wife!

So if you’re willing to, please go over there to and sign up to commit to give anything you generate over £10m (to give you a little leeway) to a better cause than just yourself. It won't cost most of you anything, at least not yet!, and could potentially play a role in creating a more equal planet - and productive organisations too.