The conservatives are out of touch with the renewed politics of redistribution

Posted: 12 Mar 2013 01:00 AM PDT

Bart Cammaerts argues that we have entered an era in which the politics of redistribution is reasserting itself, borne out of the 2008 financial crisis and the moral indignation stirred by massive tax-payer bailouts. The Tories have been caught flat-footed by this development, promoting austerity and breaking down social protections, and will suffer the electoral consequences if they do not pay heed to popular sentiment.

George Osborne’s isolation in relation to (amongst others) the capping of corporate bonuses to one year salary is indicative of how both the UK government and the Conservative Party are out of touch with what more and more people increasingly think and believe across Europe. What the Conservatives fail to understand or rather do not want to hear is that we have now entered an era in which the politics of redistribution is reasserting itself more forcefully and this will, I suspect, manifest itself even more in the years to come.

This renewed politics of redistribution asserts itself in somewhat different ways than in the post-second world war period when the welfare state was massively extended. It is  still taking shape, but it has been given impetus by a financial and economic disaster  comparable in size to the 1930s crash. What this renewed politics of redistribution also draws inspiration from is a deep sense of indignation or outrage, to use the core-concept of the recently deceased activist Stéphane Hessel.

This moral indignation is borne out of the 2008 financial crisis whereby citizens – or taxpayers if you like – effectively bailed out the bankers and by extension capitalism. Subsequently, ‘the market’ moved on to take fright and denounce high sovereign debt rates and forced states to ‘reform’ – i.e. reduce – their welfare states and the rights linked to it, to break down social protections, and to limit the provision of public services. More and more citizens across Europe, but also in the UK, feel that the invisible hand is showing us the finger, so to speak, and they are increasingly unwilling to accept this state of affairs any longer.

The main focus of the renewed politics of redistribution is different from the previous one. This time, the welfare state needs to be protected and/or re-instated rather than still to be built, but like before it is also preoccupied with issues relating to taxation, and is concerned with the out of control wage inequality (the proposals regarding capping bank bonuses are certainly part of this). What is my evidence for these claims in terms of longer-term trends? It is up until now dispersed but conclusive:

  • At the end of 2011 an OECD study revealed that the top 10% in the UK was earning an income on average 12 times higher than the bottom 10%. Moreover, the share of total income of the 1% had more than doubled over the last couple decades. All this, the report concludes, greatly weakened the state’s ability to spread wealth across the population.
  • Last year, Paul De Grauwe, top economist and professor at the LSE, outdid François Hollande by arguing for a 100% tax on salaries above 1 million €. I agree – is there any job that justifies a salary above that amount? I don’t think so.
  • For some years, UK Uncut has been targeting a wide variety of high-street companies such as Top Shop and Vodaphone for dodging taxes and not contributing their fair share to society.
  • Executives of US-based, but in effect transnational, companies such as Amazon, Starbucks, and Google were grilled by the UK Parliament over their aggressive tax avoidance schemes.
  • According to a very recent study conducted by ComRes, 80% of British people feel angry at tax avoidance strategies of companies. One in three people boycott companies that they feel do not pay adequate amount of tax in the UK and a further 10% claim that they are considering doing so.
  • Almost 68% Swiss citizens voted in favour of the “abusive remuneration” initiative, denouncing high bonuses, golden handshakes and parachutes, etc.
  • Although still contested, a Tobin Tax on speculative financial transactions is moving higher and higher upon the political agenda in many European countries, with an expected yield of about 35 Billion. In a way this signals that the time for a payback has come.

Whether the conservatives like it or not, democratic majorities, internationally and here in the UK, are beginning to support the view that back to business ‘as normal’ is no longer tenable; that corporate responsibility towards society has got to start to mean something tangible rather than be a fancy marketing tactic; that a just and proportional taxation system is an important facet of a just society, enabling the re-establishment of social cohesion and solidarity; and that profit should not be the be-all and end-all of our collective life.

Note: This article gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics.

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