Robin Hood in a Time of Austerity
Myth is a story that can be retold by anyone, with infinite variation, and still be recognisable as itself. The outline of surviving myth is re-recognised in the lives of each generation. It’s an instrument by which people simplify, rationalise and retell social complexities. It’s a means to haul the abstract, the global and the relative into the realm of the concrete, the local and the absolute. It’s a way to lay claim to faith in certain values. If those who attempt to interpret the world do so only through the prism of professional thinkers, and ignore the persistence of myth in everyday thought and speech, the interpretations will be deficient.
This is the importance of the Robin Hood myth. It’s the first and often the only political-economic fable we learn. It’s not a children’s story, although it is childlike. It contains the three essential ingredients of grown-up narrative – love, death and money – without being a love story, a tragedy or a comedy. It doesn’t tell of the founding of a people. It’s not a fairy story or a religious myth; it has no monsters, gods or wizards in it, only human beings. It’s not a parable. In place of a moral, it has a plan of action. What does Robin Hood do? We all know. He takes from the rich to give to the poor.
A change has come over Robin Hood. On the surface, he’s the same: the notion of taking from the rich to give to the poor is as popular as ever. But in the deeper version of his legend, the behaviour-shaping myth, he’s become hard to recognise. The storytelling that makes up popular political discourse is crowded with tales of robbery, but the story has been cloven. I can no longer be sure that my Robin Hood is your Robin Hood, or that my rich and poor is your rich and poor, or who is taking and who is giving.
The old Robin Hood, embodiment of the generous outlaw of Sherwood Forest, still occasionally bubbles up, as when the actor-director Sean Penn called Joaquín El Chapo Guzmán, head of the world’s biggest supplier of banned narcotics, ‘a Robin Hood-like figure who provided much needed services in the Sinaloa mountains’. This is Robin Hood the ‘noble robber’, in Eric Hobsbawm’s characterisation. In the final edition of his much reworked book Bandits, Hobsbawm bids farewell to the type. ‘In a fully capitalist society,’ he writes,
the conditions in which social banditry on the old model can persist or revive are exceptional. They will remain exceptional, even when there is far more scope for brigandage than for centuries, in a millennium that begins with the weakening or even the disintegration of modern state power, and the general availability of portable, but highly lethal, means of destruction to unofficial groups of armed men. In fact, to no one’s surprise, in most ‘developed countries’ – even in their most traditionalist rural areas – Robin Hood is by now extinct.
Sinaloa state in Mexico, from where El Chapo carried on his business until his recent recapture by the combined forces of the entertainment world and the Mexican marines, is still fertile ground for belief in the existence of the noble robber in a way present-day Nottinghamshire, or Missouri, or Victoria, once homes to the mythical Robin Hood and the real Jesse James and Ned Kelly, no longer are.
Still, if we move out from Hobsbawm’s focus on the social bandit as actual individual, and consider the entire Robin Hood myth, the ideal remains familiar in our outlaw-free world. The myth requires a great mass of heavily taxed poor people who work terribly hard for little reward. The profits of their labour, and the taxes they pay, go to support a small number of lazy, arrogant rich people who live in big houses, wallow in luxury, and have no need to work. Any attempt to resist, let alone change, this unjust system is crushed by the weight of a vast private-public bureaucracy, encompassing the police, the courts, the prison system, the civil service, large property-owners and banks, all embodied in the ruthless figure of a bureaucrat-aristocrat, personification of the careerist-capitalist elite, the sheriff of Nottingham.
Two figures stand between the sheriff and the poor. One is the absent king. He carries a monarch’s title, but exists only to represent benign authority, order and justice, the kinder, fairer authority that existed before he went away, naively leaving the sheriff to govern in his name and pervert his wishes, the same authority he will restore when he returns. The other is Robin Hood, who defies the system, who stands up for the little people, who levels the playing field. He takes from the rich to give to the poor.
It’s a plan. Taking from the rich to give to the poor has been, is and should be the way forward for an exploited majority against remote, unaccountable concentrations of extreme wealth and power. One word for it is ‘redistribution’. Robin Hood is a programme of the left. Robin Hood is Jeremy Corbyn. He’s Russell Brand. He’s Hugo Chávez.
So it used to seem. But a change has come about. The wealthiest and most powerful in Europe, Australasia and North America have turned the myth to their advantage. In this version of Robin Hood the traditional poor – the unemployed, the disabled, refugees – have been put into the conceptual box where the rich used to be. It is they, the social category previously labelled ‘poor’, who are accused of living in big houses, wallowing in luxury and not needing to work, while those previously considered rich are redesignated as the ones who work terribly hard for fair reward or less, forced to support this new category of poor-who-are-considered-rich. In this version the sheriff of Nottingham runs a ruthless realm of plunder and political correctness, ransacking the homesteads of honest peasants for money to finance the conceptual rich – that is, the unemployed, the disabled, refugees, working-class single mothers, dodgers, scroungers, chavs, chisellers and cheats.
In this version of the myth, Robin Hood is a tax-cutter and a handout-denouncer. He’s Jeremy Clarkson. He’s Nigel Farage. He’s Margaret Thatcher and Ronald Reagan. He’s by your elbow in the pub, telling you he knows an immigrant who just waltzed into the social security office and walked out with a cheque for £1000. He’s in the pages of the Daily Mail, fingering a workshy good-for-nothing with 11 children, living in a luxury house on the public purse. He’s sabotaging the sheriff of Nottingham’s wicked tax-gathering devices – speed cameras and parking meters. He’s on talk radio, denouncing inheritance tax. He’s winning elections.
This is not a uniquely British phenomenon. The alternative version of the Robin Hood story is heard when left and right clash in Australia, Canada and the United States. An early version was the ‘welfare queen’ legend of America in the 1970s, popularised by Reagan. The ‘welfare queen’ was a mythical woman, usually portrayed as black and swathed in furs, who drove her Cadillac to the welfare office to pick up a dole from the government that amounted to $150,000 a year, tax-free.
Today, the key signifier is the phrase ‘hardworking people’. With this expression, right-wing politicians embrace the entire spectrum of employed people with property, from a struggling small-time café owner with a bank loan to Britain’s richest beneficiary of inherited wealth, the multibillionaire Duke of Westminster (who does have a job, looking after his money), and class them as peasants, put-upon smallholders clawing a living from the soil in the face of the sheriff’s cruel tax raids.
Here is the Conservative chancellor, George Osborne:
We choose aspiration. This budget backs the self-employed, the small business owner and the homebuyer. We choose families. This budget helps hardworking people keep more of the money they have earned.
His boss, David Cameron, criticising Labour in Parliament last month:
They met with a bunch of migrants in Calais, they said they could all come to Britain. The only people they never stand up for are the British people and hardworking taxpayers.
The former Conservative prime minister of Canada, Stephen Harper, in 2015:
The opposition will say, now, let’s spend and spend and spend. But, next year, we will use the fiscal room to do what we promised: cut taxes for hardworking Canadian families.
The US Republican Marco Rubio, who wants to be president, speaking at a debate in 2015:
Under my plan, no business, big or small, will pay more than 25 per cent flat rate on their business income. That is a dramatic tax decrease for hardworking people who run their own businesses.
As the Economist pointed out, whatever crumbs Rubio’s tax plans might offer low-earners, the great beneficiaries would be the mega-rich: the most wealthy 1 per cent of Americans would receive a tax cut worth an eighth of their income. That’s the way the ‘hardworking people’ shtick operates. You can be a hedge fund manager with a ten-figure salary. You can be a near full-time partygoer who dabbles in property development, living off the money your great-grandparents made. Once you would have been universally numbered among the rich. Now you are bracketed, through the formula of ‘hardworking people’, with the oppressed of the earth.
In characterising ‘hardworking people’ as the conceptual poor, no matter how technically rich they might be, right-wing polemicists evoke a class of people who are not hardworking. Why are they not hardworking? We are invited to speculate. Perhaps they are lazy. Perhaps they came from a poor country, attracted by the bounties and luxury houses the government offers foreigners. Perhaps they belong to a trade union, an organisation that exists, as Osborne likes to explain, to stop people working hard by badgering them to go on strike. Perhaps they are pretending to be ill, or bred improvidently, or failed to prepare for their retirement. Anyway, they don’t work hard enough, or didn’t when they were younger; but instead of being punished for this, they’re rewarded by the government with lavish benefits. They are idle, they are well-off, and they live off the hard work of others: thus are those who would once have been numbered among the poor transformed into the despised rich.
In 2010, in the wake of the financial crisis, a campaign was launched in Britain to get the government to introduce something called the Robin Hood Tax. The idea of the tax is, on the taking side, to discourage the reckless speed with which banks and funds shift vast, destabilising amounts of money from place to place around the globe, and, on the giving side, to raise money to combat poverty and climate change – all this to be achieved by levelling a tax on every financial transaction. It has been embraced by the shadow chancellor, John McDonnell, and 11 European countries plan to introduce something like it, called the Financial Transaction Tax. Britain will not be one of those countries while the Conservatives are in charge. Shifting vast, destabilising amounts of money from place to place around the globe is one of the areas where Britain is keen to help.
The Robin Hood Tax isn’t a bad idea. Introduced by enough wealthy countries, and with enough pressure put on the tax havens they protect, it could be a forerunner to the far more radical global tax on capital proposed by Thomas Piketty as a way to ease the extremes of inequality built into the capitalist system. The idea goes back at least to Keynes. But the fact modern supporters chose to name it after the legendary hero of Sherwood Forest is a marker of how popular thinking about taxation has changed. Isn’t all tax a Robin Hood tax? Isn’t tax, to put it another way, the form in which the Robin Hood myth finally crystallised into reality? If communities in the Sinaloa Mountains really do rely on the philanthropy of the narco-baron El Chapo for much needed services, surely the reason is to be found in the flaws of Mexico’s system of taxation and social spending? Maybe the solution to inequality and to austerity economics is not a Robin Hood tax. Maybe it’s just tax.
The entry level for national myth is high. It’s not that the mythical hero must have some basis in historical fact: that might actually be an obstacle. It’s that any individual must be able to interrogate their own memory to assemble their own version of the myth. When I try to conjure Robin Hood in this way, without looking anything up, just from pre-existing fragments, I produce a figure who is no longer young, yet lean and agile, almost acrobatic. Sometimes he’s scruffy, unshaven, morose, clad in leather and chain mail; at other times, oddly well groomed, smiling, fey, in a tight-fitting pantomime costume of bright green and a jaunty hat with a feather. He goes on foot, with a bow slung over his back, greets his compadres in a hearty manner, and is dogged by a stubborn sense of fairness. He has a girlfriend, Marian, but it’s hard to shake off the sense that she’s there as a kind of beard, to offset uncertainty among the socially conservative peasantry over what Robin and the merry men get up to in the woods when they aren’t out on the rob. There’s an obese cleric, a fight with staves on a bridge over a stream, a scene where Robin is captured, and an episode where Robin, in disguise, wins a silver arrow in a contest hosted by his arch-enemy.
All this revolves, however, around a single, eternal, core chapter. Here it is. We’re in the forest. Shafts of sunlight fall through the canopy and strike the golden leaves on the forest floor. A column on horseback rides in wary silence between the trees. First comes a soldier in chain mail; then a haughty gentleman, dressed in clothes that are at once ostentatious, expensive, and redolent of decadent fetishes; then a cart carrying an iron-bound strongbox, guarded by more soldiers; then the rearguard. A horse rears and whinnies. A feathered arrow is embedded, quivering, in the bark of a tree, just in front of the rich man’s arrogant nostrils. The soldiers draw their swords, but it’s too late; each finds himself with an outlaw’s arrow pointing at his head. The rich man, who turns out to be the sheriff of Nottingham, becomes a snivelling coward, begging his attackers to take the money and spare his life. The strongbox is taken and forced open. Silver coins spill out. The outlaws are about to fill their pockets, but Robin wards them off: this money is for the poor.
However abstract the Robin Hood myth has become in political terms, to retell it is to embed the central plan of taking from the rich to give to the poor in the specifics of the era when it first emerged, somewhere between the First Crusade and the Black Death, that is, somewhere between the beginning of the 11th century and the middle of the 14th. In the context of high medieval England, the modern right-wing notion of taxation as an oppressive burden on the great mass of people makes sense. The majority of the population were peasants working the land. They were obliged to pay three kinds of tax: one, indirectly, through customs duties and debasement of the coinage, to the king, to finance his wars; another to the church; and a third, the largest, to their feudal landlord. Most peasants were enserfed – that is, bound to the lord in the place where they were born – and paid taxes in kind, in the form of compulsory labour in the lord’s fields, with the family having to surrender their best beast to their lord when the head of the household died. At the same time they were subject to an intense system of local monopolies under the lord’s control – obliged to pay to use the lord’s mill to grind their corn, for instance, or the lord’s ovens to bake their bread – and to a complex web of prohibitions, fees and fines for everything from having a child out of wedlock to killing the lord’s doves. This flow of money, labour and goods from the slave poor to the landholding rich brought nothing to the poor in return except a vague, often broken promise of protection from external violence and the intangible pledge of relief in heaven. The rich were not hardworking; they would have been insulted to be described as such. They conspicuously spent the taxes they received on themselves: on luxuries, on display, on the aristocratic pastimes of war, poetry, fashion, music, dancing, hunting, romance and fornication. The medieval Robin Hood, then, was not taking from the rich to give to the poor so much as taking back from the rich to return to the poor, who would be doing all right if the rich hadn’t been so greedy.
It’s this medieval notion of taxation as robbery from a hardworking peasantry to fund the lifestyle of idle hedonists that maps directly onto the version of the Robin Hood myth that conservative and right-wing populist parties want to promote. This is what Osborne is getting at when he tweets with the hashtag #hardworkingpeople and says: ‘Where is the fairness, we ask, for the shift-worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next-door neighbour sleeping off a life on benefits?’ When he does this he’s positioning himself as Robin Hood; the welfare state and the unemployed as the rapacious Anglo-Norman aristocracy of 13th-century England; and all those who think they pay more in taxes than they get back, be they shift workers or billionaires, as the peasants who feed them. In Pity the Billionaire: The Unlikely Comeback of the American Right, Thomas Frank describes a similar process in America: ‘The conservative renaissance rewrites history according to the political demands of the moment, generates thick smokescreens of deliberate bewilderment, grabs for itself the nobility of the common toiler, and projects onto its rivals the arrogance of the aristocrat.’
A socialist Robin Hood – one whom the myth does not provide – would tell the sheriff he doesn’t want his money, but his power. He wouldn’t be fobbed off with a box of silver coins: he would demand control of the system. Rather than destroying taxation, he would shift the burden from the poor to the rich, and spend the revenue for the common good. But as Hobsbawm tells us, while the noble bandit may be generous and chivalrous, he’s a lousy socialist:
Insofar as bandits have a ‘programme’, it is the defence or restoration of the traditional order of things ‘as it should be’ (which in traditional societies means as it is believed to have been in some real or mythical past). They right wrongs, they correct and avenge cases of injustice, and in doing so apply a more general criterion of just and fair relations between men in general, and especially between the rich and the poor, the strong and the weak. This is a modest aim, which leaves the rich to exploit the poor [and] the strong to oppress the weak.
The Robin Hood myth may be copied over into political discourse, but the translation won’t go in the opposite direction. The core Robin Hood scene of taking from the rich to give to the poor is cathartic rather than curative.
The start of the great redistributive transformation, the moment when the medieval system of taxation began decisively to change into the modern system and the welfare state, only occurred when Robin Hood laid down his bow, came out of the forest and took over the sheriff’s office. In Britain, it’s hard to fix exactly when this happened. On the face of it, some of the arrangements made for the disabled, the unemployed, widows and orphans in the late 16th and early 17th centuries were enlightened – the Elizabethan Poor Law, for instance – and obliged the gentry to stump up to help the less fortunate. Yet the labouring classes themselves had no say, and were still subject to the economic orthodoxy of the time, which held that paying labourers anything more than subsistence wages would ruin the country. The more closely one looks at the poor laws of the Tudor era the less they look like the first signs of equality, or even an attempt to mimic the patriarchal obligations of the lord-serf system, and the more like an attempt by the better-off to suppress the dangerous habit the country’s former serfs had acquired of moving from place to place in search of a better life.
Robert Peel’s introduction of Britain’s first peacetime income tax in 1842 – just under 3 per cent on incomes above £150 a year – was, in retrospect, a breakthrough, if not one the protest movements of the era had demanded. For Peel, trying to marry laissez-faire economics with Tory paternalism, and for radical agitators, the tax was a technical and supposedly temporary detail that allowed the government to cancel onerous tariffs on essential goods, notably food. Income tax has been with us ever since.
The diverse, contradictory, overlapping groups of agitators of the time – the unemployed, starving Irish smallholders, excluded Catholics, the disenfranchised, exploited poor of the industrial cities – demanded that their rulers put right immediate grievances. They wanted an end to high duties on imported corn. They wanted cheap bread. But they also wanted the vote, and education for their children.
By the time the 20th century arrived, the successors to the constellation of idealists, organisers, polemicists and journalists who led the Chartists and the Anti-Corn Law League had moved on from the Robin Hood myth’s focus on the contents of the strongbox and the futile hope for the return of that wise, just ruler, the absent king. They understood that the silver coins were only a symbol of the power that was denied them, and that to achieve that power, they must become their own king. By 1908, when Britain, walking where Denmark and New Zealand had already trod, introduced a means-tested old-age pension – £13 a year for anyone over seventy who earned less than ten shillings a week and wasn’t a criminal, a lunatic or a recent pauper – Robin Hood was vanishing into the system by achieving oneness with it.
David Lloyd George, the chancellor, funded the pensions by tweaking the tax rate paid by the 12,000 richest Britons. The changes, Lloyd George’s biographer Roy Hattersley points out, were expressly designed to take from the rich in order to give to the poor: it was the moment, as Hattersley puts it, that taxes became ‘the engine of social policy’. ‘There are many in the country,’ Lloyd George said at the time, ‘blessed by Providence with great wealth and if there are amongst them men who grudge out of their riches a fair contribution towards the less fortunate then they are very shabby rich men.’
Since the welfare state and progressive taxation began to replace the medieval state and predatory taxation, income tax and other taxes on wealth have been used for other purposes, such as military spending and paying off government debt. Both Peel and Lloyd George, when they turned to income tax in their most famous budgets, had an eye on the country’s past borrowings. As Piketty points out in Capital in the 21st Century, the huge increase in income and wealth tax rates in industrialised countries after the First World War wasn’t just a consequence of universal suffrage and the clamour for better services; it was also a consequence of debts racked up in wartime. Between the 1920s and 1980s, the demands of the welfare state – the social state, in Piketty’s terms – and war-related debt kept progressive taxes high: progressive meaning that the poorest paid little, the middle classes paid a significant amount, and the richest paid a lot. Before the First World War, taxes in Europe and North America had made up less than 10 per cent of national income, not enough to pay for much more than pensions for the very old, an army, a fleet and a diplomatic service. When the war ended, they increased three or fourfold.
Tax rates on the rich were higher in Britain than in Continental Europe, and were highest of all in the United States. The line ‘There’s one for you, 19 for me,’ in George Harrison’s song ‘Taxman’, released by the Beatles in 1966, referred to the 95 per cent tax rate paid by the very richest fraction of the British population, which included George Harrison. At one point in Britain in the 1970s the super-rich were liable for 98 per cent tax on their investments. It was the US that led the way, inspired, Piketty says, by a belief that the rich were to blame for the Depression and by a fear that if measures weren’t taken to keep narrowing the gap between the richest and the poorest, America would become a class-bound society of aristocrats and peasants, like the old Europe from which the New World had always sought to distance itself. At one point during the Second World War the richest Americans were paying a top rate of 94 per cent. For almost fifty years in the middle of the 20th century, the era Americans commonly consider their golden age of prosperity and power, the wealthiest among them – fewer than 1 per cent – were paying federal income tax at an average rate of 81 cents on the dollar.
If the past were a guide, the wealthier part of British society would be paying much more in tax now than it does. Income taxes are lower than they were in mid-century – much lower for the well-off. And yet we’ve been through a damaging financial crisis that, as Martin Wolf of the Financial Times puts it, hurt the British and American public finances as much as a world war. Even critics of the present government’s economic course agree Britain has to make inroads into debt in the longer term. Rather than, as in the past, repairing the damage by some combination of tax increases and public spending cuts – and Keynesian economists maintain that cuts are more harmful than tax rises – we are being prescribed cuts, cuts, cuts.
In Britain, there are two mainstream political narratives about what has happened in the last 15 years. The first, more electorally successful, put about by the Conservatives, is that the Labour government went on a reckless public spending spree in the years running up to the crash of 2008, leaving Britain dangerously deep in government debt, in the same manner as Greece. This narrative, the austerity narrative, holds that as a consequence Britain, like a household with too big a mortgage, must cut its spending deeply and sell off its remaining national possessions in order to begin returning what it owes and pay its way in the world. But because the Conservatives also promote the medieval, Robin Hood-era model of taxation – that taxes are first stolen from hardworking people, and then wasted – they seek to eliminate taxes rather than to increase them. Hence cuts, and the consequent shrinking of the state.
The second narrative, favoured by Labour, often goes by the name ‘anti-austerity’. In this account, Gordon Brown didn’t borrow or spend excessively at all. The British economy faltered in 2008 not because of borrowing and spending by the state but because of borrowing and lending by a handful of bloated, arrogant British banks. A country with its own currency isn’t like a household, this story runs; it can’t become bankrupt through excessive spending. Britain’s debts, by historical standards, are easily manageable. This narrative holds that the Conservatives’ austerity programme has been spawned not by need, but by an ideological yearning to destroy the state and those it protects. According to this version, economic sense and historical experience demand that, in the short term, when borrowing costs are low, debt should be increased to stimulate the economy, and taxes on the richest should go up.
There are problems with each of these narratives. The problem with the austerity narrative is that it is false. Gordon Brown was not profligate with the public finances, and comparisons with Greece are wide of the mark. Britain’s national debt was lower when the crash hit than when Labour took over from the Conservatives in 1997, and its current account only just in the red. The British economy ran into trouble in 2007 for exactly the reasons the anti-austerity crowd say. What happened was that, all over the world, vast amounts of money that might have been spent was instead hoarded. Countries like China and Saudi Arabia, which exported more goods than they imported, hoarded foreign currency reserves against future rainy days. Large corporations hoarded cash instead of investing in better products. It became easier for individuals legally to suck wealth out of firms they owned, or ran, into their personal hoards.
The combined effect was a global savings glut. It didn’t, of course, find expression in warehouses packed with dollar bills. All these hoarders sought to park their hoards in places where they would earn the most interest. Countries like Britain and the US found themselves importing the ‘products’ of resource giants like Saudi Arabia and Russia, and of export giants like China and Germany, twice over: first as the products themselves (oil, gas, cars, phones) and second as the profits made from selling them, in the form of hoarded savings, looking for a return. The trouble was that with so much hoarded money looking for a comfy place to sit and grow fat, governments were offering meagre rates of interest. The industries of the old industrial world – places where the savings glut might once have been invested – were themselves more interested in saving than in spending on making themselves bigger and better. So American, British, Irish, Spanish and Icelandic banks found another way to help the hoarders: they parked the money in private loans, first and foremost in residential mortgages. Through sleight of hand and the use of impenetrable mumbo-jumbo the financial industry shuffled safe and risky loans together in huge interest-paying packets that promised the lenders, i.e. the hoard-parkers, that they were as safe as if the whole bundle were safe, yet paid as much interest as if the whole bundle were risky. In an incredibly short space of time the banks swelled to grotesque size, then popped.
The debt and deficit Gordon Brown bequeathed on leaving office, then, was not the result of crazy public spending before the financial crisis, but of spending during the crisis to repair the mess the financial industry had made, and spending afterwards to prevent demand in the economy collapsing in the way it did during the Depression. This rescue effort was successful. The austerity economics of his successor Osborne, by comparison, resulted in three years of unnecessary economic stagnation. The policy is still being pursued, leaving no doubt that the chancellor’s aim, like that of Republicans in the United States, is to shrink the state.
The austerity narrative is based on a lie. And yet it has been a popular enough lie for the people who tell it to have been elected to run the country. The anti-austerity camp believes it would have made a big difference in the 2015 election if Labour had made more effort to defend its record and expose the silliness of accusations that Brown was a spendthrift with the public purse. Perhaps. But not everyone makes a clear distinction between the Brown who managed the Treasury carefully – which he did – and the Brown who did not act to stop the banks pursuing the demented expansion of their balance sheets. Which he also did.
When, in 2007, Northern Rock had to be rescued by the Labour government after it suffered the first bank run in Britain since the 19th century, it turned out that the bank’s management had bundled together much of its future income stream from people making monthly mortgage repayments and used it as collateral to borrow £49 billion from around the world, with which it created more mortgages. It did this via a so-called charitable trust called Granite, based in the offshore tax haven of Jersey, which used, as its nominal charity, a tiny organisation from the North-East that helps those with Down’s syndrome. Northern Rock never bothered to tell the charity its name was being exploited in this way. It didn’t occur to the bank or the regulators that there was any problem with what they were doing. Why would it? There were pages on the Treasury’s own website explaining how it should be done.
Labour can’t pretend it didn’t know, or shouldn’t have known, what was going on. In the beginning, New Labour made a decision to trust Britain’s wizards of high finance, less, I suspect, because it thought them trustworthy, than because it feared the alternative would make the party unelectable – the alternative being to have imposed a completely different kind of austerity, one that would not only have reined in the banks but, as a consequence, made it harder for ordinary voters (I almost wrote ‘hardworking people’) to get mortgages and the other forms of credit to which we’ve become accustomed. Rather than cuts to public spending, there would have been cuts to private spending. Had it even suggested this, Labour would have been accused of planning to strangle the economy, choke growth and kill jobs.
Now Labour is redesigning its ideas. The divide between Corbyn and the Blairites has its echo in the divide on the liberal left in the United States between Bernie Sanders and Hillary Clinton. Might not – should not – anti-austerity actually be austerity for the rich, rather than for the poor? Might not the answer to public spending cuts be private spending cuts, that is, tax increases for the well-off?
The arrival of Piketty’s book promised much to those who don’t accept the market is the answer to all problems, and who value the institutionalisation of the Robin Hood principle in the workings of the social state. Its main conclusion was devastating to the populist discourse of the modern right. Drawing from a deep well of data Piketty found that for almost all recorded history, those who are rich enough to be sitting on a pile of cash and assets will get richer just from the returns on their capital at a faster rate than the economy can grow as a whole. In other words, if you don’t start with capital, you can never close the gap with the rich, no matter how hard you work; whereas if you do start with capital, you’ll get richer and richer whether you work or not. Over time this leads to greater and greater inequality. Piketty’s work came as a shock because he showed that the mid-20th century, when the average person could and often did become better off faster than those who lived off the return on their capital, was not some new normal, as many thought, but an aberration, and that, since then, we’ve reverted to the mean.
The detail of Piketty’s work, however, is less palatable for a left-liberal movement trying to operate on the single country level. The subtlety of his position is that he separates the issue of inequality from the practicalities of trying to run a modern state. For Piketty, taxing the mega-rich isn’t a means to plug holes in a country’s annual budget, but a means to prevent the extreme concentration of wealth in a very few hands, or, as he puts it, the ‘fiscal secession of the wealthiest citizens’. A high marginal tax rate on extremely large incomes is a good thing, he argues, but brings almost nothing into the state’s coffers.
Piketty writes with uncommon urgency about tax: ‘Without taxes,’ he says, ‘society has no common destiny, and collective action is impossible.’ And yet in terms of everyday national policies of tax and spend, his position is centrist. The state, he maintains, has never played a bigger role in people’s lives, and while there isn’t much support for shrinking it, there also isn’t much support for making it larger. ‘To be sure,’ he writes, ‘there are objectively growing needs in the education and health spheres, which may well justify slight tax increases in the future. But the citizens of wealthy countries also have a legitimate need for enough income to purchase all sorts of goods and services produced by the private sector.’
It’s easy to be distracted from the moderation of Piketty’s thoughts on what individual countries should do by the extreme radicalism of his solution to the problem of inequality: a progressive global tax on wealth. He even comes up with suggested numbers, from 0.1 per cent on fortunes of a million euros to as much as 10 per cent a year on billionaires. But, as he admits, ‘a truly global tax on capital is … a utopian ideal.’ It’s not going to happen.
Piketty hasn’t so much crunched the numbers on Britain and the US as ground them to a fine powder, but it seems worth remembering he’s writing from the perspective of France, where the state is so much more entrenched than on this side of the Channel. His confidence that there is little appetite to shrink the role of the state doesn’t seem so well founded in the Anglosphere. At one point he talks about the future consequences of rampant global inequality. ‘Individualism and selfishness would flourish,’ he writes. ‘Since the system as a whole would be unjust, why continue to pay for others?’ In describing an oligarchic global future, Piketty seems to describe Britain and other Anglophone countries today. Could this be the reason so many Britons appear prepared to accept the upside-down notion that the poor are in some way the idle rich – not because they are callous, but because the actual rich are so powerful and untouchable that they no longer seem to belong to the same world as the rest of us?
How like the Middle Ages, if it were so. Behind the twisted rhetoric of a hardworking majority oppressed by a welfare-mad government, a modern version of the medieval world has been constructed, one where the real poor are taxed more heavily than the rich; where most of those who are not rich are burdened by an onerous roster of fees and monopolies levied by remote, unaccountable private landlords; and where many of us live out our lives shackled to an endless chain of private debt.
Since the Thatcher revolution in 1979, British governments have boasted of how they’ve lowered taxes. And they have, except for one section of society: the poorest 20 per cent. In 1977, the least well-off fifth of households paid 37 per cent of their gross income in direct taxes (like income tax) and indirect taxes (like VAT), against 38 per cent for the richest fifth. In 2014, the tax take from the poorest group had gone up to 37.8 per cent, while the taxes paid by the richest had gone down to less than 35 per cent.
Not only does this understate the extent of tax cuts for the top 1 per cent; it shows only part of the burden borne by the least well off. Piketty writes that ‘modern redistribution does not consist in transferring income from the rich to the poor, at least not in so explicit a way. It consists rather in financing public services and replacement incomes that are more or less equal for everyone, especially in the areas of health, education and pensions.’ This is a very cautious definition of the modern social state. Health, education and social security make up the lion’s share of public spending, but they’re intimately linked to a wider set of networks that includes energy, water and transport and, some would argue, should include housing. What these networks have in common is that society has decided they’re essential, and therefore should be universal – that is, we think everyone should have access to them, all the time. The significance of this is that, on the one hand, society takes on itself the obligation to give its poorest members access to these networks, which they wouldn’t otherwise be able to afford; and, on the other, payment to use these networks, if it isn’t funded out of general taxation, becomes in itself a tax, particularly when that network is a monopoly. In Britain, many of these universal networks, such as electricity and water, have been privatised, often twice – once to put them on the stock market, once to put them into the hands of overseas owners. Bills for these services have increased faster than inflation, and take little account of people’s ability to pay. It is the poorest, then, who as well as paying the heaviest combination of indirect and direct taxation bear the brunt of such hybrid public-private taxes as the water tax and the electricity tax.
Other universal networks, such as health and education, haven’t been privatised, but have been through another process that makes them ripe for the introduction of flat fees for usage in future. This process really got going under Labour, and it is a sign of the liberal left’s failure to recognise what it has done that there isn’t a name for it. One word to describe it might be ‘autonomisation’ – the process by which state-run bodies continue to be funded by the state but are run autonomously on a non-profit basis. So state secondary schools become academies, NHS hospitals become NHS foundation trusts, and council estates are transferred to housing associations. The British state is in a condition of rolling abdication, leaving behind a partly privatised, partly autonomised set of universal networks, increasingly run by absentee landlords in the form of global companies and overseas corporate investors, that is disproportionately funded by the poorest payers of taxes, fees and duties, many of whom are also deep in debt.
There is a cynical view which says that as long as the majority of the population feel they’re doing all right, a democratically elected government is safe to squeeze the poor and pamper the rich. But cynicism is a risky thing to rely on when a government is simultaneously cutting spending and shedding control of the universal networks on which its entire population relies. As Hobsbawm writes in Bandits, ‘concentration of power in the modern territorial state is what eventually eliminated rural banditry, endemic or epidemic. At the end of the 20th century it looks as though this situation might be coming to an end, and the consequences of this regression of state power cannot yet be foreseen.’ We’re a long way from the return of the literal outlaw to Nottinghamshire. But we need to remember the insight given our ancestors when they saw through the illusion of the Robin Hood myth, when they saw that the strongbox of silver coins wasn’t just money stolen from each of them individually, but power robbed from them collectively, and that they needed to wield that power collectively as much as they needed their money back. For sure, freedom to choose is a grand thing, and the market will try to help you exercise it. With a bit of money in the bank, a middle-class family might choose to send their child to private school, provided by the market; but that same family can’t choose to build and maintain a universal education network by itself, and the market won’t provide it. With money, you can choose to buy a car, and the market will provide it; but you can’t choose, all by yourself, to build and maintain a universal road network, and the market won’t provide it. To make and keep universal networks requires the authority of the state, an authority that has been absent; and it’s hard to see where that authority might come from if the people don’t find a way to assert their kingship.