Well that camel ain’t gonna fit there...

Over the last few weeks it seems like I’ve been discussing nothing but competition policy so I’ve decided to omit the two new stories about the OFT challenging tobacco companies and supermarkets, and cover something else a little more miscellaneous: the annual bitch about the UK’s super-rich.

The Sunday Times Rich List has been poking at our green-eyed beasts since 1989 and every year as the super-rich edges further and further away from us mere mortals, we complain about o the injustice of it all(!) A common argument against the wealthy is that it’s “immoral” to be amassing so much wealth. In fact, an Archbishop recently listed accumulating excessive wealth as a new seven deadly sin. Why yes, that is said by someone from the Vatican, one of the richest entities in the entire world.

Another argument is that in facing a recession, when people are being forced to tighten their belts, isn’t it a slap in the face to be so grossly rich? However, the rich are reputed to have a higher Marginal Propensity to Consume. That means that for every extra pound the rich earns, they are more likely to spend it on consumer products. This has a “trickle-down” effect which enriches those of us lower down the ladder, with further multiplier effects occurring. In times like these, we may in fact be relying on the super-rich to keep the economy buoyant.

Secondly, and much more disputably, the super-rich give back more than the rest of us. Now I’m unsure about the validity of that claim, since of course they give back more by quantity – they have the resources for it, but do they have a greater Marginal Propensity to Donate? This would vary greatly between each person but if the claim is in fact true, then their earning to give back is just another form of redistribution. In fact, this form of redistribution may even be more “noble” than the government’s “tax and spend” version, since it’s devoid of disincentive effects (beneficiaries do not calculate their cost-benefit analyses based on how much they would receive from charities) and is mutually voluntary in the primary transaction. For example, Bill Gates and Warren Buffett have made their money through supplying people with what they want, and then they have redistributed their riches back through the community, targeting the areas which they think need help the most.

The idea that the rich getting richer increases poverty is laughable. Relative poverty is calculated by median measures, anything else calculated by mean would not be a poverty measure, it would be inequality.

This year sees Lakshmi Mittal top the list once again, as shares in his steel company have risen by 44%(!) over the year as the global demand for steel ever increases. Philip Beresford, the compiler of the list, has said that “The 11 years of Labour have been absolutely fantastic for the super-rich.” It’s mostly because of the forgiving fiscal policies that foreign billionaires are selecting London to be their domicile of choice, though we’ll see how that goes when Darling’s non-dom tax takes effect.

RICH LIST TOP 10

1. Lakshmi Mittal, steel (£27.7bn)
2. Roman Abramovich, oil and industry (£11.7bn)
3. The Duke of Westminster, property (£7bn)
4. Sri and Gopi Hinduja, Industry and finance (£6.2bn)
5. Alisher Usmanov, Steel and mines (£5.7bn)
6. Ernesto and Kirsty Bertarelli, pharmaceuticals (£5.6bn)
7. Hans Rausing and family, packaging (£5.4bn)
8. John Fredriksen, shipping (£4.6bn)
9. Sir Philip and Lady Green, retailing (£4.3bn)
10. David and Simon Reuben, property (£4.3bn)