tisdag 11 september 2007

Britain's growing wealth gap

The TUC conference has prompted a lot of comment, for example an article by Polly Toynbee on the growing wealth gap. There is talk of a commission, and giving the unions more power.

A commission will not solve anything. And the unions can only exert power in economic circumstances that are favourable to them. In harsh conditions they are irrelevant. And if work is plentiful they are superfluous.

What we are seeing is a re-run of what happened in the early part of the nineteenth century. During this period, an enormous increase in productivity following the Industrial Revolution had, paradoxically, produced a small class of wealthy people and a huge class of the wretchedly poor. The extra wealth had not been distributed.

Marx tried to analyse what had happened and his view remains generally accepted even though it will not stand up to close examination. But an American economist Henry George, who also looked at the problem, came up with an altogether more convincing explanation. This was explained in his book called "Progress and Poverty", published in 1880 and still in print. George proposed some simple and liberal measures to ensure that wealth was fairly distributed. No bloody revolutions were required, or even great upheavals to the system.

Unfortunately, the Marxist analysis prevailed. This was defective, but because it was widely followed throughout the twentieth century, the result was megadeaths, tyranny and no progress.

The past forty years have seen further increases in the productive power of labour, due to, first, the electronics revolution, then information technology and most recently, the communications revolution. These far outstrip the increases due to the industrial revolution.

In the absence of the measures proposed by George, it was inevitable that there would be a widening in the wealth gap, one indicator being the huge increases in land values that occurred in the nineteenth century and has happened again in the past 15 years.

So if anyone is seriously interested in addressing the problem, they need to start with Henry George.

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