Hating the rich: a flash in the pan or a new mood in Britain?

Jun 26, 2012
Richard Ehrman

Once the economy improves, the rich are confident their reputation will pick up too. But what if they are wrong?

IT SEEMS like another era, but in fact it was as recently as 1998 that Peter Mandelson made his famous comment that Labour "was intensely relaxed about people getting filthy rich as long as they pay their taxes".
He wouldn't say that today, even with the tax rider. Bankers' bonuses, excessive executive pay, tax avoidance scams, non-doms, offshore trusts, rogue traders, ludicrous London house prices; the litany of complaints against the rich gets longer by the week.

Four years on from the biggest financial collapse in living memory – perhaps ever - and with no sign of recovery, it is hardly surprising that the public's attitude towards the ultra-wealthy has changed.

Footballers and entertainers have had to learn the hard way that clever tax wheezes are not acceptable. Yet many bankers and top executives still seem genuinely surprised that they are no longer treated with the deference they consider their due, even when it is clear that their high pay has more to do with rigging the system than outstanding performance.  

But it is not just the rich who have been caught on the hop by the change in the public mood. So have the politicians, and especially the Conservatives. It wasn't pasties that did for George Osborne's March budget; it was his maladroit decision to cut tax on high earners while raising it for nearly everybody else that did the real damage.

The question now for both groups, the rich and the politicians, is just how permanent this new mood will turn out to be?

Those who have acquired great wealth are rarely given to self-doubt. In private there is a tendency to put their reversal in public esteem down to envy of their success, rather than any shortcomings on their part. Once the economy picks up, they are confident their reputation will as well.
But what if they are wrong? Given just how egregious much of their behaviour has been, the sense of them and us may already be too deep to be easily reversed. If, as now, the rich continue to prosper while everybody else is squeezed relentlessly, the chances of it happening will be less than ever.

In a democracy, when the economic system does not deliver for the majority, the lesson of history is that eventually it will be reformed. These big changes do not happen often, but when they do those who did well out of the old dispensation are liable to fall into disfavour.

Following the slump of the 1930s, when Britain opted for a social market model after the war, the rich found their incomes squeezed. A generation later, as the post-war system ran out of steam and Thatcherism steered the country back to free market capitalism in the 1980s, it was the turn of the unions to feel the cold draft of public disapproval.
Put this to a rich person and he may well say that, if he is no longer welcome here, he will leave the country. But ask him where he will go, and the response is usually much less certain. There are not many places in Europe that still offer tax exiles an unreserved welcome. Even Switzerland is turning its back on them.

Further afield, America is choosy and Asia is culturally daunting. As for hiding your money in a foreign bank, forget it. The Revenue has disclosure deals with all the half-decent tax havens these days.

Being ingenious as well as self-confident, the rich will doubtless find ways to thrive even if they are more constricted. By the same token, however, politicians can afford to be bolder in dealing with them. Twenty or so years before Mandelson made his famous remark, Dennis Healey notoriously threatened to squeeze the rich till the pips squeaked. That is not the answer, but it must be made clear to them that they have to pay their taxes like everyone else, and give up on the tricks.
As for threats that they will go abroad en masse, they should be treated with the incredulity they deserve. The current public mood is not going to change any time soon. Yet the union barons found that life went on tolerably enough after they fell from public favour. This is not a vindictive country.

It would help their cause if some of the rich were not so shameless. But even if they have to pay their tax, and even if we no longer admire them as we used to, this will still be a good place for the very wealthy to live. They may not be popular, but they won't be persecuted.

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