As things fall apart, the super-rich spend $2 million on whiskey. We need a wealth tax | Owen Jones
Yesou might need a glass of alcohol to believe it. Last October, a new record was set: a cask of 1991 Macallan whiskey sold for the modest sum of $2.33 million. At least it was a whole cask of premium liquor: early last year a deluxe case of 30-year-old Irish malt with a golden Fabergé egg was sold to auctioned for $2 million, a little more than a single bottle of scotch at the end. of 2019.
Is whiskey really worth 2 million gross? As any economist will tell you, the value of something is determined by the price someone is willing to pay for it, and all that money hanging around at the top has to go somewhere. The crises of our time have been pro-rich: While British workers suffered an almost unprecedented squeeze on their wages, the richest 1,000 saw their fortunes double in the first seven years after the financial crash . Covid turned out to be little different: Britain produced a record number of new billionaires in the pandemic, while their American counterparts enjoyed an almost two-thirds increase in their wealth in the first 18 months of crisis. At $4.8 billion, the combined fortunes of American billionaires are nearly equivalent to the size of the entire Japanese economy.
It’s not just the expensive bottles of whiskey that are catching the wallets of the successful mega-rich. When Chinese billionaire Cheung Chung-kiu snatched up a 62,000 square foot mansion in Hyde Park for $275 million in 2020, he understandably wanted to make sure everything was perfect, so last year he began a renovation estimated to cost nearly as much as the original asking price. Last year, 11 Picassos were sold at auction in Las Vegas for $100 million, while a 1958 Ferrari found a new home for $6 million.
Perhaps such ridiculously expensive items will elicit bewildered shrugs. Of course, it’s a symptom of growing wealth inequality since the 1980s, spurred on by progressive tax cuts, financial deregulation, broken union power, watered-down antitrust laws, and the rise of large corporations. near-monopoly companies such as Facebook and Amazon. No, an overactive work ethic and searing entrepreneurial flair don’t explain the wealth explosion of billionaires during the pandemic: unconditional government handouts to businesses and quantitative easing policies that have driven up asset prices are more plausible explanations. And, yes, looking at the wealth produced collectively by the hard work of billions of people sucked in by the privileged few is undoubtedly a moral affront. But is it important?
The simple answer is yes. Buying whiskey for $2 million doesn’t just point to an inverse correlation between money and common sense among the super-rich: it represents the flashing red lights on the dashboard of an entire business model. Gary Stevenson should know: Citibank’s former most profitable trader, he made millions betting against the economic recovery after Lehman Brothers exploded into the heart of the financial sector. Among big finance bigwigs, the consensus was that near-zero interest rates were an extraordinary measure that would soon be reversed as the economy recovered.
But Stevenson was a dissenter: he believed that the dire state of the economy would halt any interest rate hikes. The reason? Because when ordinary people get money, they spend it, boosting the economy, while rich people tend to save it. But our economic model promotes the concentration of wealth among a privileged few to the detriment of the standard of living of everyone else. If working-class people don’t have money to spend, they won’t; and as they are thrust into debt simply to cover the cost of living for their families, consumer demand is sucked into an economy based on it. In an amusing paradox, Stevenson’s belief that inequality was crippling the economy literally made him millions.
As Stevenson pointed out, the super-rich tend not to invest all that accumulated wealth in the productive sectors of the economy: instead, they throw it into property or, yes, $2 million whiskey bottles. dollars, driving up asset prices. “The thing to understand is that saving is not synonymous with investing,” says chartered accountant Richard Murphy. “Investment is the creation of new capacity to undertake economic activity, which is almost universally financed by new bank loans. It is very rarely financed by social capital, except generally with very small micro-enterprises. The whole economy was designed to funnel the wealth generated by the team effort of millions into the bank accounts of a few, whose whims and hobbies have no social value. .
While many people have experienced grief, loneliness and insecurity during the pandemic, Covid-19 has proven to be the latest lucrative boon to billionaires’ wallets of wealth. And that’s why an economic argument – rather than just a moral one – for a wealth tax desperately needs to be made. All this wealth could play a central role in the post-Covid recovery. It could be used to dramatically increase NHS capacity, ventilate all schools and businesses and fund the transition to a green economy. Instead, a small elite are amassing far more billions just by sitting on their assets, squandering the wealth on $2 million whiskey bottles containing golden Fabergé eggs. It’s not just immoral: it’s totally irrational.