It is almost impossible to open a newspaper these days and not see some story vilifying those terrible rich people who are painted as a drain on our society. The stories can only leave us thinking that the country would be much better off if they all left and went somewhere else. But, I wonder if that would be so -

Everyone depends for their wellbeing on a successful economy. Without an economy there are no jobs. Without jobs there are no wages, and without wages we have to go back to growing our own food. In addition, a thriving economy makes something else possible – taxes. Now we all hate paying our taxes, but some of those taxes go to paying for us to have roads, our bins emptied, security and justice. All of which we crave as a society.

So, if we accept that we need a thriving economy, it’s important to understand what makes an economy thrive. That can be answered in one word; Trade. When we trade things we have made for things that others have we start the essence of an economy. Now, some people are better than others at trade; perhaps they are more hardworking, perhaps they have more ingenuity, perhaps also they are prepared to take bigger risks, buying things that they believe, but don’t know for sure, they can sell to others.

These people tend to do a lot more trading than the rest of us. Well, it’s only natural – they are good at it. Because they are good at it, and they do more of it, they make more money from it, and eventually become rich.

Now, in getting rich they have done a lot of trade with many of us, allowing us to make some money for ourselves along the way; so that’s a good thing. They may well have employed some of us to help them with all the trading they have done, and paid us wages; and that’s a good thing. Finally, they will have paid taxes to the Government on their trades and that pays for us to have security, justice and empty bins; so that’s a good thing too. 

Now, the argument of many politicians is that we want to encourage the rich to keep trading so that we can all benefit from their efforts, but we want them to pay more taxes than the rest of us. And the justification? Because they are rich.  What these politicians fail to recognise is that these rich people have made us all richer along the way, and if they stop trading here we will all be a lot poorer. And, by the way, if a rich person were to pay only 20% of her income in taxes, she would pay a lot more than an ordinary person who pays 20%. So, most of the rich are already paying a lot more in taxes than the rest of us. That is especially true if you take account of the fact that they have already paid corporation tax on the earnings of their companies, and then are expected to pay again when they draw income from those profits that have already been taxed.

The rich bashers also miss a very important point in their argument; the rich are the most mobile among all of us. If they don’t like the regime in a particular country they can easily go elsewhere, and take their skills, expertise and money with them, as indeed some have already done. That just makes us a lot poorer still – and the answer to our increased poverty? Make the rich who are still here pay more to cover the loss caused by the other rich leaving the country. Can you see where that will get us?

So, instead of bashing the rich we should be encouraging them. Yes, we should be closing the loopholes that allow them to trade here and avoid paying their share of the taxes, but we shouldn’t treat them as pariahs, we should recognise the wealth and prosperity they bring to the country, and we should encourage more of them to come and trade here. That way we all benefit.

Footnote

By the way, the reason that I don't include the bankers among the rich that we should appreciate is as follows; banking provides a valuable and important service which allows an increase in the ability of many people to trade. As such, it helps the building of our economy, so that's a good thing. However, the position that banking holds in the trade cycle means that the bankers have an enormous amount of power - and, as we all know - power corrupts. Accordingly banking can only be a valuable service to our economy if it is tightly regulated.

If only Gordon Brown had known that!!