The trouble with billionaires (book review) by Linda McQuaig and Neil Brooks

Left Central Book Review 

Image© Andy Mitchel

I am indebted to the British Welfare state; the very one that Cameron would like to replace with charity handouts. When my life hit rock bottom, the safety net, threadbare though it had become under John Major`s government, was there to break the fall…J.K. Rowling… Cited in `the trouble with billionaires`

This book is a fusion of rigorous academic analysis and sharp, witty journalism. The humour a necessary antidote, given the unconscionable economic detail outlined. Facts linked to the rapacious appetite of the super elite, gorging on tax avoidance. Aided and abetted by supine legislators in the UK and USA. Linda McQuaig and Neil Brooks explain how the political right, adroitly undermined the post-war consensus of Beveridge and Keynes in the UK, the same result achieved in the USA with the gradual destruction of the New Deal consensus. Criticism articulated by Frederick Von Hayek who feared that benevolent government intervention would lead us down the road to serfdom. A ridiculous idea, predicated on the notion that social security; full employment, legal aid, economic growth and an NHS somehow reduced liberty. As this book points out, when Hayek required assistance from the social security system, he was not shy about utilising its collective provisions. It is indeed a strange sort of serfdom, which provides a hospital bed for the sick, a bizarre understanding of liberty that disregards the need of a safety net, when boom turns to inevitable bust. All those tens of thousands of post-war Higher Education students benefitting from free education in the UK or through the GI Bill in the States – hardly resemble serfs. But their counterparts today do; a bizarre twist on the Hayek model. The exchange of correspondence between Hayek and Charles Koch outlined in the text, makes for illuminating revisionist reading.

This book systematically undermines the economic orthodoxy that has dominated UK politics since 1979; a taken for granted assumption that high taxation is bad while low taxation is good – the opposite we discover is true. This issue painstakingly unravelled by a set of easily understood graphs (Thaddeus Hwong acknowledged). The diagrams combined to jargon free commentary. A host of variables are examined `poverty, gender equality, economic security, health, social well-being, environmental sustainability and income equality`. McQuaig/Brooks systematically unravel the misnomer of the free-market; they explain how the legal system protects the rich through stringent regulation (copyright laws in the case of super wealthy actors and artists). It seems the mega wealthy seek protection from the state when it coincides with their economic purpose but cry foul when society wishes to progressively tax their income. The text is particularly strong on visual imagery which helps convey a complex issue. And enhances the general readers understanding of the astonishing wealth involved, nestling in the hands of this miniscule group.

The book can be read and digested very quickly, which is remarkable given the depth of detail covered. So, while it`s pitched perfectly, it is paradoxically, difficult to read. This is because the injustice outlined is likely to induce much anger in the average tax payer, while frequently halting the reader in their tracks. This book forces you to question the details outlined, exclaiming surely this cannot be true? For example the Sunday Times Rich List illustrates that the combined wealth of a mere thousand `totals £414 billion an amount greater than a third of the UK GDP…David Cameron announced plans in early 2012 to send more their way by cutting the top marginal tax rate by 5%. This provides an average saving of £14,000 a week for 40,000 millionaires.` This is the same government making savage cuts to services and jobs despite the `IMF in October 2012 pointing out that austerity can be self defeating, causing sharp contractions in an economy.` The book outlines the damage this (self regulated) plutocracy is doing to our democracy. And if that doesn’t worry you, perhaps discovering the devastation inflicted on the world’s ecology will?

McQuaig/Brooks cleverly place the achievements of the super rich within the context of collective human endeavour, no super rich man or woman is an island. They have all made their money through innovations and discoveries involving others, or by virtue of government spending. As Martin Rosenberg states, `my wealth is not only a product of my own hard work. It also resulted from a strong economy and lots of public investment, both in others and in me. I received a good education, and used free libraries and museums paid for by others. `   

Whilst I was seeing red, reading this book, it is important to point out; it is not a Bolshevik manifesto for our times. The writers are merely demanding a more regulated capitalist system, founded on an equitable system of taxation. McQuaig/Brooks are not calling for revolution, merely a return to the ethos identified during `the Golden Age of Capitalism`, 1940-1980. The authors also appear to be influenced by the ideas associated with North-America during the Progressive Era, (although not stated). A broad based movement encompassing diverse figures, such as the writers Lincoln Steffens and Upton Sinclair. And Linda McQuaig and Neil Brooks sit easily in this company. The authors provide a detailed set of alternative policy measures at the end of the text. Calling for `progressive taxation, the closing of loop holes and removal of tax relief and allowances, support international efforts to clamp down on tax havens, support the international implementation of a financial transaction tax, repeal inheritance tax and set up educational trusts with money generated from a progressive inheritance tax`. This is not a socialist tract but the trouble with billionaires is the ragged trousered philanthropist for the modern age; Robert Noonan`s book helped shape a social democratic future. A legacy stolen and McQuaig/Brooks are demanding its return and providing the intellectual arguments to do so.

So, this is in a way a revolutionary book – appearing radical, given the decline in progressive measure since 1980, especially in relation to taxation policy. Though the demand for progressive taxation is perfectly in line with the precepts of Adam Smith, the doyen of the free-market, whose right wing supporters conveniently forget he supported progressive income tax, while Karl Marx did not. This is not a rant against the super rich; many wealthy people are commended and praised. For example when David Cameron undermined the French democratic process by provocatively inviting the French super rich to Britain after the election of Francois Hollande, some mooted they might leave France given the proposed introduction of a 75% top rate of tax. Those who threatened to depart were soundly criticised by Eduard de Rothschild, illustrating that the wealthy also have a social conscience. McQuaig/Brooks also remind us that multi-billionaire Warren E Buffet supported Obama`s effort to raise taxes and place Buffet`s tax status on a level playing field with his secretary. Other super rich people are also positively cited, namely Martin Rosenberg, JK Rowling (her comment at the top of the page illustrating her integrity and genuine sense of patriotism) and John C Boyle.

There is even praise for a wealthy banker, Marriner Eccles from Utah an advocate of embryonic Keynesianism, who stunned US Senate Finance Committee in 1933 with his far sighted proposals. The committee gripped by economic inertia, a hallmark of Herbert Hoover`s administration. Eccles (resembling a hero from a Frank Capra movie) eventually linked up with Lauchlin Currie a researcher who illustrated that governments could, during an economic downturn, `prime the pump`. Yes, austerity is not the only alternative available that much we all now know.

The trouble with billionaires is a manifesto for our times. If you can`t afford to purchase a copy then order it from your library (while you still have one). The preservation of our environment and democracy depend on progressives winning this argument. We are experiencing a dreadful recession and it`s clear that opportunists will encourage the less informed to search for blameless scapegoats. Recession, equates with scarcity, and scarcity induces panic. But as McQuaig/Brooks demonstrate there is no scarcity and we must utilise the democratic process to encourage fair and progressive taxation. And while doing so recall the words of Shelley, who reminded us long ago that we are many, they are very few.

The trouble with billionaires: How the Super-Rich Hijacked the World (and how We can Take it Back) Oneworld Publications available in the UK May 2.