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Tom asks the question: 'what damage is being done to you by Elon Musk being rich?'
He debates the topic with guests and callers who have strong opinions on millionaires.
00:00 | 'How rich is too rich?'
02:39 | Tom's in conversation with Priya Sanhi-Nicholas, Co-Executive Director of the Equality Trust - which campaigns against economic and social inequality.
07:21 | Tom facilities a debate between callers Nigel in Temple Fortune and Matt in Dorchester, and things get tense between the pair.
Listen to the full show on the all-new LBC App: https://app.af.lbc.co.uk/btnc/thenewlbcapp
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0:00
How rich is too rich? Is there such a thing as too rich? A moral societal economic failing
0:07
to have individuals worth more than some countries you think? Andy Burnham has been encouraged to
0:14
join a new global push to tackle wealth inequality. The academics behind the paper argue that Mr
0:20
Burnham's Makerfield test which aims to be fairer to places that have historically been seen as
0:27
been neglected by Westminster, that that test should apply abroad as well as at home. They say
0:33
by connecting the government's domestic programme to its foreign policy, a distinct Burnhamism could
0:37
form. Between 2000 and 2024, the richest one percent, and this is their word, not mine, so I'd
0:44
like the interesting verb choice, I think, here in describing this. I don't think this is a neutral
0:50
verb. God, it's only five past six. I've got neutral verbs. So this is the word they use
0:57
I think maybe displays the attitude of the people that wrote the piece. The richest 1% captured 41% of new global wealth. The poorest half received 1%
1:09
Britain mirrors this divide. Just pause on that language for a second again
1:15
the richest 1% captured 41% of new global wealth the poorest half received 1
1:24
the economist Gabriel Zuckerman says the UK's richest 0.001% about 200 families
1:32
held wealth worth 5% of GDP in 1989 today those same families command an astonishing 25
1:41
of the country's GDP. That is to say they command around 25% or actually upwards of 20% to spend
1:47
depending on your data set. Upwards of 20% of GDP means that if you added up the total net worth of
1:53
those 200-300 families, it equals roughly a quarter of everything the entire UK economy
1:59
produces in a single year. Should that mean there are limits on wealth? Should there be a limit on
2:08
how much someone could earn and I make a distinction here between earned wealth and unearned wealth
2:13
should there be a limit on how much unearned wealth someone could amass attain or in the case
2:21
of these writers capture. I spoke to Priasani Nicholas the other day starting off by talking
2:26
about the inheritance tax to be paid by Ricky Gervais a wealthy man on his £141 million
2:34
fortune, but then talked about whether some have too much wealth. Do you think anybody should be
2:40
able to amass that kind of money? He's got a fortune of 141 million quid, we're told. Should
2:46
people be allowed to earn that kind of money? I don't think. I think it's damaging for society
2:53
for people to have that level of money. Why? What's the level that we're permitted to earn
2:59
I don't, I haven't got the answer for what the level is we're permitted to earn, but there are lots of conversations about limitarianism
3:05
Ingrid Robbins has written a really fantastic book called Limitarianism looking at the harms of extreme wealth There work by other organisations New Economics Foundation ourselves at the Equality Trust looking at the damages of extreme wealth
3:20
The definition of extreme is so subjective. There will be people living in the subcontinent who would see what you earn, Priya, as extreme
3:29
Yeah, yeah. And what I earn, I think the slightly different thing about it is
3:37
what I earn isn't as damaging as millions and millions and millions
3:43
So there was some work by the New Economics Foundation that looked at the extreme wealth line and looked at
3:48
there is actually a point where wealth ceases to be something that's enjoyable
3:53
and it actually becomes something that's damaging, damaging the climate crisis, damaging the breakdown of democracy
4:00
I'd love to know what this line is. People are buying influence, but when you've got enough money
4:05
that you're buying influence and you're paying five million pounds but that's how you spend the
4:10
money but Priya that is how you spend the money and I totally understand that you know there are
4:14
rules around all of that for good reason because you shouldn't be able to do that that is how you
4:18
spend the money the idea that you should not be able to earn let's say five million quid is I mean
4:24
you might as well we might as well pack the economy up and go home it's just I find it I'd never be
4:29
able to understand it Priya I love having these conversations with you because I have no idea how
4:33
I would ever come round to your way of thinking on this. Because it's damaging. It is doing harm
4:39
To who? How? That level of wealth. The jobs that have been created by people who earn a lot of money
4:44
who set up businesses, who create wealth for other people, who get employed in roles that are able to fulfil
4:50
the business proposition of the person that started it. How is that hoarding wealth
4:54
Do you know how many people on the Sunday Times Rich List
4:59
actually are job creators? Because it's not what you think. Most of them earn their money from property, investments. It's an extractive set of wealth rather than creating wealth. Extractive
5:16
What does it extract? By me investing in stocks and shares, what have I extracted? What do I take away from people
5:23
well if you're investing in things like property and putting rents up so you know the nightclub
5:30
scene in london is and and i'm sure in other places around the country it's it's falling apart
5:34
there's the you know the live music scene because rents are just getting pushed up beyond what what
5:41
businesses can pay and that's that's extracting wealth rather than providing wealth there's a
5:48
difference between extractive wealth and community wealth and there are you know places around the
5:53
country where they're building community wealth building schemes in the local area to try and
5:57
keep the wealth in rather than going out and sitting in people's bank accounts and it's not
6:01
flourishing the economy it's it's being hoarded and extracted and sitting in assets rather than
6:09
circulating priya sani nicholas is the co-executive director of the equality trust that campaigns
6:16
against economic and social inequality andy burnham being lobbied by these um economists to
6:22
join in this task force to end this kind of wealth inequality suggesting that there is an enormous growing wealth inequality too many people earn too few people earn too much too many people don earn enough
6:36
and whether or not you feel that the response to that is therefore to what? To limit how much
6:41
someone can earn? To put a barrier up against someone who has excessive wealth? As Priya
6:48
suggests there what i earn i.e what she earns isn't as damaging as millions and millions and
6:55
millions and i'd like to talk to you about where the damage is what is damaging you about ricky
7:04
gervais having a 141 million pound fortune what damage what damage are you done by elon musk being
7:12
valued or his companies being valued currently or recently anyway at a trillion dollars what
7:19
damage is that doing to you nigel's in temple fortune nigel good afternoon to you sir well i
7:27
think your uh uh guest is speaking about the politics of envy and jealousy and i'd like to
7:35
talk about this in a quick line if i can about electricity prices i think we have to appreciate
7:39
that we live in a society where we are competitive. So I don't know what you earn
7:46
but if one of your competitors said to you, Tom, I'd like to offer you a 24% pay run
7:51
if you came and joined our radio station, I think you would seriously consider it
7:55
and quite rightly so. And I think that, let's not forget, people who earn lots of money also spend lots of money
8:02
Spend lots of money in taxation, spend lots of money in shops and travel, what have you
8:07
And I mentioned to the young lady who took my telephone call, there's a very important economic tip here, or lesson, should we say
8:15
If anybody here listens to your show, and I don't think you're old enough to remember, called Jewhurst the Butchers
8:21
Well, Jewhurst the Butchers was a Vesti family who made millions and millions and millions of pounds
8:28
by their business and paid very little tax. So it's not a meta thing going back years
8:32
This started off decades ago. OK, so, Nigel, hold that thought so if you don't mind
8:38
Stay on the line. Matt is in Dorchester. Matt. Hello. Your thoughts on millions and millions and millions being earned
8:46
by someone being damaging. Yeah, so, well, I'm glad I was listening to the last caller
8:53
because he said that people that earn more money, spend more money
8:58
that's not the case. If you had 20,000 people that earn 100 grand a year, they'd spend a lot of that
9:08
If you had one person and the same amount, they would take that money, put it into some kind of passive investment, and it would sit there and accumulate
9:16
And tell me why that's damaging. Okay, let's take the housing market, for example
9:22
In the last 25 years, we've built about 5 million homes. in that same amount of time the amount of private homes that are belonging to private landlords
9:31
has gone up by three and a half million that has fueled two things a massive rise in house prices
9:38
and a massive rise in rent prices obviously they related this means yes nigel talk yes talk to matt okay i Matt I think Matt you making a fundamental mistake and I tell you why The housing market at the moment is depressed
9:51
The housing market crashed in 2008, if you remember that. It climbed
9:55
and it's got very, very depressed. If you took 100,000 private landlords out of
10:01
this country, and they sold their houses, where are people going to live
10:06
I love that point, because it's such a badly made point. And if you had..
10:10
Where are they going to live? Well, let me explain. If you had the, let's say, five million houses that suddenly went on the market
10:17
because all of the landlords have decided to sell up and move, you've got a couple of possibilities
10:23
Either they don't all get sold because the people aren't there to buy them
10:27
which means the landlords retain their houses, or house prices drop to an affordable level
10:32
where the people living in those houses that are renting can afford to buy those houses
10:37
in which case we have a much better society where we have the poorer 20 odd percent of people
10:43
living in those houses, paying a smaller amount in a mortgage than they do in rent each month
10:48
being able to contribute to the economy more. So the idea that if all landlords would leave..
10:53
I'll tell you why you're wrong. I'll tell you why you're wrong. If you're earning, let's say
10:58
let's say on average, let's say someone earns £45,000 a year as a gross income
11:03
What mortgage are they going to get when average house price in London are circa £500,000 or £600,000
11:09
So how are they going to get a mortgage to afford that? Exactly, that is my point
11:14
People can't afford mortgages. Well, they can't, can they? No, but if you listen to what I'm saying
11:18
people can't afford mortgages because house prices are so high. If they can't afford those mortgages
11:23
and every single landlord decides they don't want to be a landlord anymore, either house prices drop to where they can afford those houses
11:29
or no one buys the houses and they still have ownership of those houses
11:33
Well, man, let me tell you something. What is the alternative that I'm missing
11:38
I'll come back to you. Many people can afford houses and flats or whatever they want to live in
11:44
but not necessarily in the area they want to live in. So, an example, if you move 45 or 50 miles out of London
11:53
the property median prices are considerably less expensive than they are in London
11:58
It's never been more difficult to buy a house. It's never been more difficult. Thank you, Tom
12:01
The price of housing is now something like eight times the average salary
12:06
I don't think it's been that high since Queen Victoria was on the throne. So in housing, I think Matt is absolutely right
12:14
But I think part of the answer, Matt, is to build more homes. Tom, can I answer that
12:19
Yeah. I've seen this argument with housing a lot that we just need to build more
12:24
And the Labour government said, we're going to build 1.5 million houses in the five years that we're in power
12:29
that kind of tracks with the last 25 years I believe we built about 5 million houses
12:34
so it's not that much more if you look at the number of adults in this country
12:38
and divide that number by two we have more houses than that
12:43
so we don't really have a housing crisis what we have is a system
12:47
where housing is now an investment rather than something that working and middle class people own
12:52
Matt I have to leave it there for time reasons thank you to you Nigel, appreciate your input
12:58
thank you as well
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