The Sylvan wealth redistribution debate considered the following motion:
This house believes Britain needs a fundamental redistribution of wealth.
The debate took place on Monday, 1st August. David Kerry proposed the motion and John Akers opposed it.
The proposition supporting a fundamental redistribution of wealth for Britain
The proposer evoked the rich in castles and the poor begging at the gates. As an ordinary person rather than an economist, the imbalance of wealth harms people and the economy. Living standards have stagnated and the economy faces significant challenges. Households worry about bills, with dear food and fuel prices. The current orthodoxy holds that the wealthy must increase their wealth, for the broader good. Yet strikers seek a bit bigger share of the economy. The UK is a low-wage, low-strike economy, and the government asks us to put up with what we have. Business investment has declined, so what are the wealthy doing with their cash?
Sri Lanka and Iraq have recently seen uprisings against the wealthy elites. The UK has avoided revolution by doing just enough for the proletariat. Now more people are joining unions – a first step towards stronger action? FTSE 100 CEOs earn huge multiples of their employees, with the boss of M&S’s ratio at 117 times the average worker. Wealth is not taxed appropriately and the rich are getting richer.
The opposition against the wealth redistribution debate motion
The opposer argued that in practice this motion means high capital gains taxes or 100% inheritance tax. This would cause harm. Huge wealth can have a bad impact, but not the disparity of wealth itself. Yes, some don’t have enough, but we have a sufficient tax take to assist those with less. What more should we do? Housing subsidies, a well-funded NHS, a higher minimum wage and an effective education system. These would provide a path for people to lift themselves out of poverty. Perhaps we don’t have quite enough funds, but how much gets wasted? We have the funds to stop people falling below a decent living standard. I’m relaxed about the filthy rich given this.
The incentive for building wealth centres on establishing families and passing it on to children. Punitive taxation would encourage spending on fripperies, resulting in lower government funds. It would destroy society as we know it and foster resentment of the rich. Behind every fortune lies not a crime. We need subsidies for domestic investment. Wealth confers political power. We should change this so that political parties primarily receive funding from the state. Ban corporate donations and limit individuals to £100.
Floor speeches from the audience of the wealth redistribution debate
Floor speakers pointed out that in the 1970s the UK had among the most equitable distribution of wealth in the world. This changed with Thatcher and continued during the New Labour governments – the UK now approaches US levels of inequality. The wealthy avoid tax by taking dividends and capital gains, and we need to tax this flow of wealth. Also tighten the rules on offshore companies. Several speakers referenced Thomas Piketty’s book Capital, with capitalism leading to unfair distribution without a global tax on capital. We have returned to a sort of new Gilded Age, partly driven by the concentration of services in the southeast. Yet some argued that wealth is created by effort, and that higher taxes will result in a lower relative take.
Redistribution prevents societal breakdown in the form of revolution. If your father wasn’t an entrepreneur, there’s a very low chance you will be one. New Labour did use wealth to create economic opportunity and empowerment. Thatcher’s reforms allowed those on council estates to aspire to home ownership and a stake in the economy. The UK’s tax share is 32.8%, much lower than in the Nordics and France, with a Gini Coefficient of 0.37. Fortunes are created by exploiting labour and in some cases by concentration of firms within industries (particularly in the US). We can solve this by either taxation or regulation of markets. The idea that higher tax rates reduce receipts (the Laffer Curve) has been disproved – our receipt maximising tax rate would be 74%.
On the other hand, all of this does not take into account the vision and risk taking of entrepreneurs and early investors. Union bosses cash in regularly. Workers could share in wealth creation if they agreed to be paid in shares. Scandinavian countries have high taxes, but do not subsidise layabouts. If on benefits, they can’t take holiday and need to volunteer, collect litter, take courses.
The Second World War generation fought together and believed in equality, yet we’ve collectively forgotten this. ‘If there is wealth, there is evil!’ ‘We need to redistribute through revolution!’
The opposer’s rebuttal
In rebuttal, the opposer framed his argument in terms of opposing punitive taxes, rather than redistribution itself. Even with subsidies for investment in industry, there’s no guarantee. Banks paid bonuses after bail outs – I would have nationalised them. More scope exists for taxation of corporate profits. We need to stop wasting money, because taxes are counterproductive, making the proposition a gimmick.
The proposer’s closing speech
In closing, the proposer made no apology for omitting to outline how to redistribute wealth. The UK faced significant vulnerabilities through Brexit, covid and the Ukraine war. People face using food banks and not heating their homes. On penalising those setting up businesses – they did take risk, but had no interest in the workers. Employees have no way to become shareholders. We cannot allow an increasing widening of the haves versus the have nots. We don’t want a revolution, and so need to work out how to redisribute wealth.
Result: in the final vote, the wealth redistribution debate motion carried
The Sylvans concluded through the wealth redistribution debate that Britain needs a fundamental redistribution of wealth.
See information on other Sylvan debates here.