大象传媒

Who is Hain to tell us anything. Never had a proper job in his life. A Mugabe promoter. A turncoat with an immoral pension.

This all reminds me of when Richard Branson sold his record company and avoided tax on the 60 Millions by creating an off shore trust. His response to the righteous outcry bewailing his not paying tax was something along the lines of 'would you prefer me to continue employing 1000's of people or give the money to the government to spend?'

The fact is that the alternative of government generated employment comes with a high price tag. Around a Trillion in unfunded pension liability with one of the effects being an ongoing impost of 30% of your Council Tax. This on top of the higher public sector median incomes than in the private sector and more days on the sick despite subsequent greater longevity in retirement.

Most people do not give a hoot about the plutocrats, their zillions and 'Hello' life styles. House owners do not complain vociferously about London house price inflation being driven by City bonuses, although clearly there is a downside. If the debate balanced how deserved Peter Hain's income and gold plated pension (impossible to replicate elsewhere and costing millions to fund)was compared to City incomes; many people would resent the politicians much more than the tycoons.

Will Peter Hain give up some of his wealth that has arisen due to his involvement in non-wealth generating activities? Of course he won't. Show me any political system that has existed that has genuinly equally divided the wealth among all individuals - it hasn't ever existed and never will. This is because not everyone is equal. Why should James Dyson give up his wealth to me. Why should some hot shot trader in Canary Wharf give up his wealth to me if he has made huge amounts of money for his firm and I haven't. Anyway Peter Hain would never have achieved his current level of monetary worth if he had stayed in Kenya or South Africa. The money these people earn eventually gets ploughed back into an economy somewhere.

There is a real possibility that we will reach a point beyond which the huge salaries paid to themselves by the "overclasss" will create so much resentment that government will have to do something about it, perhaps by forcing comanies to give individual shareholder votes on the pay packages of senior executives and making it illegal for them to pay salaries and bonuses through offshore vehicles.

But this will not even begin to be addressed while Blair is at No 10 - he seems to fawn on these overpaid greed-merchants.

And Peter Hain is not serious about this - as you point out, he is a contender for Labour DL. He is merely trying to get brownie points with more traditional Labour members.

Would it be possible to introduce the distinction between wealthy people who earn lots of money, and pay lots of tax, and those who earn lots of money and avoid lots of tax?
This, surely, would better than the pro-business versus anti-business tags, or the rich-people-are-good versus rich-people-are-bad ones that often float around in politics and the media.

Sounds like the politics of envy to me. Perhaps "New" Labour is not so "New" after all!

I think in the long term there is bound to be a reaction against the widening gap between rich and poor. I think this will actually be driven by the environment. In a more resource constrained world, it becomes less acceptable for some to consume vastly more resources than most. Of course we had a more resource constrained world before recent technology and we had a big gap, but then we didn't have democracy in those days.

The real problem is that wealth being created in the City by hedge fund managers et al is not trickling down through the system into investment in start-ups and spin-outs.

Rather than awarding huge bonuses I'd feel a lot more comfortable if some of that money was going into high risk venture funds to create the companies of the future.

I am not convinced that many of the gains have been merited. Globalisation and offshoring workers has led to a significant, and probably temporary, increase in companies' return on capital. Much of this return seems to have been captured by companies' executive management rather than being shared with shareholders and employees. On the contrary, increased job insecurity and lower pay rises has helped fill the coffers for executive management payouts at the expense of other employess.

So in response to your question 3 above, I believe that some of this wealth is being redistributed from the masses to the very rich. And much of the rest is a windfall which is unmerited.

Why didn't Hain include footballers and government "consultants" in this barrage of criticism? Or are they "good" millionaires?

If the rich are taxed more heavily they will leave and create jobs elsewhere.

If Hain wants to get popular, he could sort out the situation where middle-income earners pay 40% tax, while the super-rich move offshore. Tax simplification is the answer, not soaking the rich.

#3 James Dyson struggled for years to get where he is now and deserves every penny he's made.

City types on the other hand are playing with other people's money and in the case of my private pension fund value are doing a great job for themselve but a lousy one for me!

When we have a Government that sets a 40% tax limit on any earnings above 拢34,000 (roughly speaking) suggesting that this income is somehow HIGH, but doesn't impose a higher tax bracket on earnings above this it's no wonder people look at Footballers, City Execs and Entrepreneurs in amazement.

What we need is to reduce the tax burden on all us middle income earners so we can actually educate our kids and put a half decent roof over our families heads by introducing a scheme to ensure a bigger slice of the unearned mega millions is paid in taxes.

I was brought up in a one parent family in a rough area of Leeds. I have gone on to make millions in legal business activities and paid a lot of tax and employed a lot of people along the way. I know the sacrifices required to make a lot of money and object to Peter Hains ill-tought comments. By the way, I'm ot a hedge-fund manager, but I must point out that if we and our pension funds did not invest in hedge funds and hedge fund managers failed to perform and generate profits then they would not be getting multi-million pound bonuses. MP's are almost unique in being well paid irrespective of any performance targets, wealth creation or improvements whatsoever.

MP's are almost unique - they are well paid despite any performance measures whatsoever. 'Rich' people on the other hand have had to work for it

I doubt that most people care much about the super-rich because you generally compare yourself with your peers - I don't think I know many billionaires! Friction is likely to come further down the scale, e.g. teachers who went to university with lawyers, doctors and executives who now earn far more than them.

Also the change in house prices means that working-class people who've been living in a house for 30 years may have new neighbours with Mercedes' and BMWs because it now takes a much higher income to buy those houses.

On the point about private equity gains being made at the expense of pension funds, if that's true it's self-inflicted, pension funds have chosen to sell their shares on the cheap and move into over-priced bonds and you can hardly blame the buyers for taking advantage.

It appears to me that Peter H is grand-standing to the labour-heartlands.

If he is so interested in wealth re-distribution, maybe he could look at the unbelievably generous pensions afforded both himself and other MPs, which we are all paying for.

Alternatively, maybe we should think about awarding MPs bonuses based on the success or otherwise of their policies??? it might reduce the amount of time they waste spouting nonsense like this.

Typical old Labour. Attack those who generate wealth for not only themselves, but others. We NEED a large and prosperous private sector in order to survive in this global marketplace. Our current reliance on public sector jobs created through bureaucracy is extremely unhealthy. A large number of the super-rich generate huge numbers of jobs to the British economy - Mr Hain would obviously prefer them to move offshore and create jobs elsewhere. Perhaps he needs a simple economics lesson to realise that redistribution of wealth does not and will not work on such a large scale.

Question 1: The super-rich may not be responsible for the increase in criminality and anti-social behaviour but the way they flaunt their riches doesn't help social cohesion much.
Question 2: A true meritocracy would embrace today's underclass, can't see much of that happening around here, even under a Labour Government!
Question 3: Where's the trickle down effect in operation when they spend their millions at art sales? Cashing in one asset for another rich man's cast off. It's also pretty irresponsible the way they affect the housing market with their multi-buys, ratcheting up the price of property at the expense of ordinary souls who just need, or even want, one roof over their heads.

I work in the City and see that it is the Civil Service Pension funds that own the majority of the inflation linked UK Government Bonds. These are priced at about 拢250 per 100 Vs about 90 to 110 per 100 for the rest of us. So lets have a donation from all Civil Servants to those who have lost their pensions. How come the Civil Service never goes bust? It's always in Debt to all of us.
How hypocritical can they get -

City bonus boost for tax revenues

2004 大象传媒 Headlines
"The government is meeting its fiscal rules, Mr Brown says
Bonuses awarded to workers in the City are helping to boost the government's tax revenues, the chancellor has said.

"Tax revenues have started to rise because of bonuses in the City," Gordon Brown told a committee of MPs.

The government also remains on target to meet its fiscal rules, Mr Brown told the Treasury Select Committee.

The rules state that Mr Brown may only borrow to invest over the current economic cycle and that public debt must be kept below 40% of GDP."

So since they cannot borrow more they want to steal more from their citizens through taxes on travel and hard work. Didn't they learn from the brain drain of the 60's?

I really do not understand the comment:

"However, the spoils attaching to one section of the new elite, private equity, do to a significant extent represent a socially regressive distribution of valuable assets from the millions of us with our savings in UK pension funds to the already wealthy and the largely overseas backers of private equity"

1. Investors in private equity are usually large institutions - pension funds - who take the majority of the profits made from private equity. Those profits go to pay the pensions of working people. One of the biggest global investors in private equity is the California Public Employees Retirement Scheme (CALPERS)

2. UK pension funds have the same opportunity as overseas investors to invest in private equity. The fact that they choose not to is to the disadvantage of their investors.

2. Pension funds who sell their shares to private equity buyers generally do so voluntarily. If they sell too cheap, that again is to the disadvantage of the funds' investors.

To me that says a good deal more about how UK pension funds are being run than it does about regressive distribution of assets.

After a decade of "New Labour", it would appear that Socialist drivel such as this is still waiting in the wings. If Mr Hain had read the business section of a newspaper at some point since 1997, he may have realised that capital is rather more mobile that his facile comments would suggest.
The City is one of our genuinely world class industries, employing hundreds of thousands of people and paying 20% of the UK`s corporation tax. The ripple effect of this wealth is incalculable, but at the mercy of future legislation. Peter Hain as Deputy Prime Minister? We should be worried.

Typical old Labour. Attack those who generate wealth for not only themselves, but others. We NEED a large and prosperous private sector in order to survive in this global marketplace. Our current reliance on public sector jobs created through bureaucracy is extremely unhealthy. A large number of the super-rich generate huge numbers of jobs to the British economy - Mr Hain would obviously prefer them to move offshore and create jobs elsewhere. Perhaps he needs a simple economics lesson to realise that redistribution of wealth does not and will not work on such a large scale.

I remember reading Hain's comments on this subject in the paper on Sunday and felt genuinely surprised that people, nevermind politicians, still think like this.. I thought his type were long gone and had all been expelled from the post Foot era Labour party.It does make you wonder about the future of the 'New' Labour party..
If ever there was a need for change... , hold up and magnify bad thinking such as Hain's. Make him accountable for his divisive social liberal thinking.
Does thinking like this give us a true indication of what to expect for the country and anyone who it seems dare to succeed in life, under Mr Brown? Are we not already seeing the true consequences of a Brown administration - record real inflation, hidden unemployment, record taxation, lowest take home pay. Mr Hain and colleagues are the perfect recipe for a brain drain. Some real world, global perspective thinking much needed here.

That's a fascinating article. I would like to make 2 further points:-

1) I believe that the hollowing out of the "middle class" and the creation of a super-elite of hyper-wealthy is bad for society, not because it directly encourages crime, but through its indirect effects. By insulating a powerful and influential elite from the cares of the rest of us, it makes them indifferent to the pressures faced by most of society on whose wealth they ultimately depend, and increases the risk of poor decision-making and bad long term outcomes for all.

2) The current celebrity culture is bad because it provides a philosophical under-pinning to this corrosive inequality, and leads us to be too uncritical of the massive inequalities that are developing.

Sounds like Peter Hain is showing his 'true colours' and is posturing for a deputy leadership election. I believe Peter Hain has little understanding of what's keeping this country and his Government afloat.

"Availability of cheap capital... living in an age of extraordinary innovation in financial markets (for better or worse)."

All characteristics of FIAT currency...

"Wake up, you idiots! Whatever made you think paper was so valuable?"
Kurt Vonnegut, Galapagos, pp. 24-25

I think Alan Tayler maybe a bit confused about the financing on public sector pension schemes. Surely most council tax goes towards the local government pension scheme which is a funded scheme. Admittedly siome will go to the police and fire schemes, which are unfunded, but I would have thought the LGPS is the major beneficiary.

Secondly I am fairly certain that the assertion that 30% of council tax goes towards public sector pensions is wildly inaccurate. I can't remember the exact figure but I think it's nearer to 5%. If I remember rightly the actuaries Hymans Robertson got into hot water for making similarly inaccurate claims and were forced to state publicly that the cost was in the 5% region.

As to the super-rich question, I think typical left-wing 'tax the rich more' arguments are worthless. There simply aren't enough rich people to be able to tax them so much more we could significantly reduce our own tax burden. Shareholder activism doesn't seem to work (maybe because fund managers don't see the sums involved as particularly large).

I do think there is a problem. The idea that people who run our businesses and invest our money are so rich they barely come into contact with normal people has to be problematic in the longer term. In addition when you see people in the fund management business (as one example) coining it in you have to wonder how much they are charging us for the benefit.

As someone once wrote - Where Are The Clients' Yachts?

Hmmm Mr Preston, social mobility is not now what it was even 20 years ago. A diminishing percentage of the UK's population owns an increasing percentage of the UK's assets. Under Labour the poor have stayed poor (but they now have a lot more paperwork to prove it - cheers Gordon) and the rich have become very rich indeed.

Neither can I go along with your assertion that one man's billion is not a billion lost to the rest of us - you ignore the fact that this is "sell off Britain" and that the majority of the most profitable companies operating in the UK are foreign owned. The repatriation of those profits abroad to head office is very much a billion lost to the rest of us through tax spend by the government / councils. Getting more money out of the Square Mile might even give the rest of us some respite from Grasping Gordon and his stealth tax fantasyland.

Lets face it, the people who earn these mega bonuses don't work a million times harder than anyone else and the only reason they would complain if you halved their bonuses would be because of ego, not because they would be destitute. The rest of us pay through inflated house prices and retail prices brought about by people who have no concept of the value of money.

Another idiot, spouting nonsence, hoping to up his career a bit further by attempting to make some fire from some smoke...

If he wants to be fair, let him lobby for a standard tax rate across the board - why should you be penalised for having a good job!

I help manage a city based hedge fund, and while I found the article interesting, I disagree with some of the conclusions. Hain is clearly an unreconstituted and thoroughly dangerous old school socilaist.

1) Has the creation of a new super-wealthy elite fomented the crime and social unrest that Hain thinks he can see?

The jury is certainly not out on this. How farcicle to connect the 2, crime is actually falling. We have the most meritocratic society in our history - work hard and you get rewarded - simple.

2) Is the super-wealthy elite a meritocracy? Or are your chances of joining it close to zero if your beginnings are distinctly humble?

One example that certainly proves nothing but at least shows my experience: our CEO went to a very bad local comprehensive, he dropped out of university. He is now a wealthy individual - he worked hard and got rewarded for his hard work. I've met very many people within my industry with similar stories. Very few of our traders come from 'privileged' backgrounds. Today, more than any other time, you are rewarded for your skills and ability not your social background.

3) Is the wealth being accumulated by these individuals incremental wealth for the UK? Or is it a distribution of riches from the many to the few?

Even the question shows a lack of understanding of the way the economy functions. Of course rising incomes even at the very top trickles down. Indirectly and directly - through too many means to describe here. Even with offshore tax schemes, the 'rich' contribute massively to everyone.

RE taxation here's a fact that may sound counter intuitive but nevertheless has proven to be correct: increase (and complicate) the tax rate (e.g. higher bands / targetting tax avoidance etc) and tax revenues fall, lower (and simplify) the tax rate and tax revenues rise. Why, because more people pay the lower (simpler) tax rather than paying their accountants or simply moving abroad to avoid the higher tax. Lower (flat) taxes for the rich and for everyone.

the problem with the super-rich is that the old adage "you need money to make money" is true. So the poor have little option to get out of their poverty and the rich don't have to work hard to make their money grow.

When you add in the rich's access to politicians (and sometimes the rich access AS politicians) and the complexity and lack of oversight in law creation, the rich can make sure that they continue to get the privilege the "justly" deserve.

As to wealth-spreading, the poor spend more of their money on essentials, whereas the rich tend to accumulate wealth. A billion spread amongst a million people will be spent. A billion to one person will be "invested".

Note that your idea that wealth isn't a finite source ignores that the creation of more cash money is based on diluting the worth of the money already out there. If more cash is collected, the poor see little new influx but they see a bigger drop in the worth of their money. The rich see a bigger (though still less proportional: accessible wealth difference again) drop in the worth of their money but they see a big influx of new wealth they can garner.

Lastly, you say that the reason for greater wealth is a global market. Unfortunately, there is no global market for the worker. Can I move to India to follow the job that left me? No. Can I buy cheap DVD's from Asia (legit but 1/3 price) or jeans (grey imports)? No. So there is a free market for the powerful. None for the rest.

Ever notice that the C*O stay in the country, never outsourced? Notice that despite being able to operate for years without a CEO, an RIF removes workers and management but not the CEO?

Working in the city myself, there are a few points I would like to add.

To blindly say that people shouldn't earn millions and should be taxed at higher rates is incorrect. You need to look at the two seperately.

In the city there are certainly people that deserve the millions that they earn, in that they get a direct share of profits that they generate for shareholders. And there are certainly some that don't deserve the bonuses, but they generally exist in the mangement structures or outside the city running large businesses where they get rewarded for failure. And it is not the government that needs to address this, but the shareholders, who are generally the large institutions and pension funds that need to attack the overly generous pay packets of managements that haven't performed.

If we are concerned about the redistribution of wealth from the many to the few, then we shouldn't look at the city but footballers who exist off the gate receipts from the poor, TV presenters from license fees and local authority employees existing off council taxes (when I see heads of social services in local authorities being paid 拢130-150k whereas a financial director of a FTSE 250 company get 拢100k, I begin to wonder).

As for the tax issue, the question should not be the amount of tax but whether it is all being paid. Already taxes on bonuses are already ridculously high, if a company can afford to award 拢100k bonus to an employee, they first pay 拢12.8k in NI contribution, so the net that can be paid to the employee is 拢87.2k, on which the employee pays 40% tax and 1% NI so 拢35.8k, so the employee walks away with 拢51.4k and the government 拢48.6K. Seems like a great deal for the government.

Off course there are various legal ways to reduce your tax liability and whilst they are legal, you can not blame anyone from taking advantage of them, hence it should be governments priority to reduce all the loopholes. But then again, given that a lot of labour's major donors take advantage of these, it is unlikely to do so.

The key issue that people need to be aware of is how important the city is to the UK in terms of tax revenues (I have heard various estimates of up to 50% of personal tax) and how mobile a lot of its activities are. The job I do, I can do from virtually anywhere in the world, so could go to Singapore and pay 16% tax or to Dubai/Monte Carlo and pay virtually no tax. And I think that if any attack was made on the city, you could see a massive move of business that would never come back.

The hypocrisey of politics!
While discussing foxes the MPs voted themselves 2 pension increases.
GBrown has no accountancy qualifications and has driven UK further into debt and robs taxpayers pensions but has own large pension.
TBlair - Labour - runs with Republican hawks - wastes money bombing Iraq but has large pension fund!
FU Jack I'm alright is the motto of politicians- DO NOT VOTE for hypocrites!

I hope that Mr Hain will be further discredited by his current stance on wealth and its creation. However, there are simple rules which govern conduct in a civilised society and these apply to money too: abide by the rules of the society in which you wish to live. If that means paying tax, accept your responsibility to do so - if you don't, get out. If you wish to change things, vote and persuade others to vote with you. Theoretically, all this should work - assuming, that is, that the electorate are not stupid enough to vote for people like Peter Hain....

A thought provoking discussion. I'm not sure i agree with the conclusions, but that is the beauty of the society we live in. One comment however that has riled me was posted by James. Some drivel about Fiat currencies... wake up and smell the coffee mate. All currencies in the world this day and age are Fiat and there is nothing wrong with that. There is simply not enough Gold or precious metal in the world to back currencies 1:1... unless of course he would prefer that we limit economic growth to reach that of our precious metal supply. With our growing population that would mean in fact a falling income. Get an education.

I have to take issue with the 'Laffer curve' type argument at the end of comment 34.

It has NOT been proven that lower and/or flat tax rates increase tax revenue. Most recently a report for the IMF looked at the experience of flat taxes, and whether there was an Laffer curve type affect and judged there was little evidence for it (though it wasn't an entirely black and white assessment, but none are). The report concluded that the political trend is likely to be AWAY from flat taxes, not towards them.

3. Is the wealth being accumulated by these individuals incremental wealth for the UK? Or is it a distribution of riches from the many to the few?

I'd suggest that the large part of private equity investment is not in new areas of value-creation, but in businesses that have unnecessary costs that are fairly simply eradicated. It may appear, at first sight, that this is wealth-creational; the nett worth of the reformed businesses increases with their profit flows, and it is difficult to identify any quantifiable "losers".

But there are losers. The nett-cost employees and suppliers who have been deprived of their income-flows have lost the "wealth" that these income-flows represent. It can of course be argued that they are not entitled to this wealth, but are they, morally, any less entitled to it than those who have taken it away from them?

Does Peter Hain really believe that the exsistence of the super rich is promoting envy? Does he think that envy was somehow eradicated in the Soviet Block ? It wasn't. When Socialists legislate against enterprise and the opportunity to create personal wealth outside of the control of governments, they breed corruption and plenty of envy. I work as an art dealer. During my career I've enjoyed some success and it has always been because those who have personal wealth have bought from me. They haven't had to, but they did and I am grateful. In turn I have been able to pay artists, employ people and the money goes round and every day we get up and start again, without gaurantee of success. There are thousands of others like me who are self employed and are constructed around the concept of do and dare and this exsistence breeds an understanding of personal responsibility and an appreciation of the real value of money. However I do suffer from envy. There are times that I wish I had a gold plated pension, could sit on commitees and talk all day with no real accountability, without the sense that the decisions I make may very well have a direct consequence on my material comfort. Can I suggest that the sate sector breeding as it does so often an ugly sense of self-righteousness and entitlement ought to be dismantled so that I and those like me wouldn't feel so envious of it.

Tom (comment 40), in reply - my comment is meant to illustrate that many of the suggestions made on taxing the rich (closing 'loopholes', adding new higher bands, taxing profits or wealth) can well result in the opposite effect - falling tax revenue. Clever accountants love new tax rules 鈥� they often just provide more opportunities to create complex schemes to avoid taxes, also as previously stated the rich can just move on. I can't really write up a defence of the laffer curve here but personally I believe flat taxes are fairer, more effective and far far more efficient to collect and administer.

Will, I am surprised to have riled you with my comment about fiat currencies. Just because all currencies in this day and age are Fiat, this does not necessarily make it sound policy.

Perhaps you need to read up a little more.. try the Ludwig Von Mises institute for example. Currencies don't necessarily need to be backed by precious metals. The free market finds by itself other tradeable asset classes of value - be it oil, gas, food ,etc .....pretty much anything that requires labour / equipment to manufacture or mine it from the ground. You can still issue promissary notes on new asset classes (whatever they may be) which are equally tradeable because the free market would set the exchange rate.

Promissary notes (i.e. paper money as we know it) aren't bad per se. Rather the identifiable "evil" is actually fractional banking and the ability of bankers to create money out of thin air (by printing it)....as all central banks currently do.

Because the major fiat currencies of this world all support each other, you get an endless supply of printed money at low interest rates which allows those with easy access (or should I say first-users of this newly created money) the ability to spend it on buying tangible assets before its purchasing power is diluted as it circulates around to us lesser mortals....hence the ever-increasing gap between rich and poor.

You have clearly been "sold" the ideal that fiat currencies are the solution...probably by Greenspan and the private bankers that own the Fed.... For you to acknowledge otherwise would create too much conflict in your own internal world regarding the process of wealth creation.

I recommend you watch Aaron Russo's 2006 documentary "From Freedom to Fascism" and then we speak again. I leave you with one last comment from former Bank of England Director Sir Josiah Stamp in 1928:

鈥淏anking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money."

I think Josiah Stamp knew a lot more about money, banking and fiat currency than it seems you ever will.

For interest, wouild Mr Hain include premiership footballers in this equation? It seems to me that many earn in excess of most "City" people and at a young age and directly at the expense of the fans through turnstile takings and agressive marketing.
Perhaps he could also explain why so many Govt ministers have large proptery portfolios, much larger than their House of Commons earnings

As someone who works in the City, I would encourage anyone who is ambitious and who would like to work as hard as me, to venture here and earn themselves a good living.

For me to give 2/3rds of my earnings to those who don't deserve it and are merely jealous of achievement is unjust. I can honestly say I have earnt every penny of what I earn here - it is a very hard lifestyle.

If I wanted an easy life, I wouldn't be working in the City.

I do hope that Hain and his parliamentary friends will give up some of their absurd pension pots, to help out those who have lost all of their pension while his lot have been on watch. Any chance of this happening? No I thought not.

Hmm, wealth distribution. And the alternative is....Communism. This is just wild stabbing in the dark about several social and economic problems, some of which will never be solved. Many people are just jealous of the rich, and clearly have some sort of status anxiety. This doesn't cause things like crime. Crime happens because for many, this is a better bet than conventional routes. All jobs and companies fill a social need, even crime. The most detested are those who earn the most from fulfilling the smallest social needs such as ex-big brother contestants, and those who represent the bosses of big companies that are still years behind in paying employees what they deserve. Most of us are these employees, frustrated so we shoot around for scapegoats instead of trying to change our situation. If a person does a great deal of work, they should get paid more. I don't envy city boys and their bonuses because their quality of life and free time pale in comparison to mine. There's no point earning millions if you have no time to spend it and no friends and family to enjoy it with. It's all about balance. IF you don't like the rat race to become a consultant, dont. Do something more rewarding, like becoming a vet or anything you're interested in, or move to a company that values you, like Semco. As I am about to do.

Further to my last post, people are only annoyed at the bonuses paid to hedge fund managers because most of them don't see the benefit's and work they do. But these managers are fulfilling the needs and wants of companies and wealthy minorities. Nothing wrong with that. It's all about perception of the need that a person is fulfilling. Why are we more annoyed at someone in a Chelsea tractor we know nothing about, when there are still people on the JSA that should be taking low-paid jobs instead, and people who become unjustly famous and make fortunes.

I am not super rich infact im living on breadline in a council flat.

Am I jealous of the super rich? Certainly not!

I am actually studying them so I can achieve financial greatness also, not just for myself but my family, my children.

To be honest I used to blame the rich for all sorts of things until I realized these were excuses for not achieving anything in life.

As for avoiding taxes, can anyone honestly agree with the harder you work to create wealth the more you are penalised by our government. Yes the government want us to stay in poverty where they can control us. Taking the reins for ourselves causes fear.

In the good old days even a 10% tithe was considered a punitive tax!
Who can blame a Billionaire from protecting their money from Draconian tax laws that punish the entrepreneur that has worked 80hr weeks to build an empire that creates employment in Britain.

Mark (post 46), you claim to work extremely hard. While I do not doubt your hours are probably extremely long, I'd be interested to know your definition of "hard". Have you ever stopped to consider whether or not you actually create anything for society. I suspect that you are probably one of the many middlemen that either takes piggy-back commissions off of someone elses trade, or simply part of the insitutional gambling undertaken by so-called city "traders".

Trading = Gambling.
Broking = No risk return from the gambling of others.
M&A = Asset-stripping & job destruction of companies (profitable or otherwise).
Derivatives = Finding a bigger fool willing to take on the risk you don't want.

Is this what you call achievement? Your definition of "work" is actually more of a "game" when seen by others....and undoubtably fairly parasitic when you get down to brass tacks.

Before you give me the old adage of making companies and markets more efficient, you should consider the difference between one who bets on horses and one who bets on financial markets. There are very few...

Try being a farmer or a manufacturer. Now, that work is really hard.....and you are actually creating something for society as opposed to simply speculating as to whether the BoE are going to raise or hold rates.

Me...I'm not jealous of "true" achievement in the slightest... but, like society in general, I do actually abhor parasites and parasitical behaviour....

If the rich pay tax like I do then they can be as rich as they like.

Unfortunately, most of them don't because they send their money offshore. Therefore I think that the super-rich, especially those that make their money by gambling in the Square Mile, are having a corrosive effect on society.

Every time I drive through a council estate or a poor part of town, I notice dozens of "No ifs, no buts" posters targeting benefit thieves.

I've yet to see "No ifs, no buts, tax evaders we're after you" posters when I'm passing through Mayfair, Belgravia or Hampstead.

There has been and always will be rich and poor, but the gap is now just too wide. We are storing up major problems for the future.

Today's Times: page4 "Newly qualified nurses work for nothing or below the minimum wage"

page5 "The 450 partners of Freshfields Bruckhaus Dengar received an average salary of 拢830,000 each last year"

I may be old-fashioned, but market-forces don't seem to be working very well here.

Paul Smith (43) Thanks for the sensible reply. I think you have a fair point about complexity and avoidance. From memory that was one of the points in the IMF paper in favour of flat taxes - there did seem to be less avoidance.
However I'm not convinced by the lower rate/higher revenue type argument. It depends what sort of argument is being made, but the common one that high levels of tax reduce effort, and therefore economic activity, and therefore tax revenue is not proven. And the idea that, leading on from that, cutting tax provides a greater incentive, therefore greater economic activity, therefore more tax revenue depends a great deal on the level of tax you are talking about.
Clearly the truly punitive levels of tax in the 70s and 80s must have had an impact. But I can't see that cutting further now in the UK would do any good. The risk would be getting a lose-lose of no greater activity and much lower revenue.
I'm also generally skeptical about the behavioural impact of financial incentives outide the very small (as a % of total population) number of people who really understand them. It's very clear in the failure of people to take advantage of incentives to save. It strikes me that something similar is probably going on with income tax (ie it just doesn't have significant pull on most people's behaviour).

Edward (comment 53). Based on those figures, the treasury would have received well over 拢400,000 in tax on each of those salaries. That could pay for over 15 nurses. Who's really at fault here? As for comment 51, the less said the better, but I don't think that sort of attitude belonged in the 20th century, never mind the 21st.

I don't give a hoot about the super rich, as long as they pay plenty of taxes. I'll vote to milk them like cows.

If you need anything paying for, ask the super rich. Please don't come around here looking for money, I've got none. The toffs have plenty, so go after them first, and lay off me.

James, post 51, without derivatives, investors and the distribution of risk, it would be impossible for entrepreneurs to achieve anything.

Say you want to start a new business to sell shoes. You need to borrow money from a bank. If that bank lent money to every start-up that approached it and held the loan on its books, it would soon go bankrupt. However, through derivatives, and the global financial system, the risk can be distributed worldwide.

Different entities (hedge/pension/mutual funds) can then purchase this risk to get a return on their capital, thereby connecting the entrepreneur to the capital of the world.

Take the glue away (banks, traders etc) then you wouldn't be able to do anything bar borrow money from your family. The service that the traders provide is the risk the take on and guarantees they provide. A pension fund will not lend money directly to a start-up because it is too risky.

However if a bank packages that risk with other assets of varying classes, guarantees that the transaction will go through i.e. that the money will move from one account to another and the risk will move from one account to another, then the transaction can take place.

As an illustration, why are second hand cars more expensive at a dealership than on eBay or from a private investor? Assuming the cars are identical, it's because of the guarantee that the dealer provides. You are paying more because you do not want to take on the risk that the car on eBay will breakdown on day 1.

Banks provide the same service from a financial point of view. They connect people, ideas and capital. I refer you to the winner of the 2006 Nobel peace prize, it's a perfect example.

On the topic of renumeration, if banks could find people with the necessary skills and wanting to work the necessary amount of hours for less money, they would switch staff in a second. Why should someone work 90-120h a week in M&A if the salary was the same as working at the till of Tesco. Why should a financial modeller go through 7-12 years of higher education to work in retail? If you take away the incentives, you lose the intellectual drive.

If you believe that City staff are overpaid, then come and work in the City. I sincerely wish you the best of luck.

If salaries were lowered purposely by management/shareholders or arbitrarily by politicians, then the best staff would be poached by other companies in other countries and the country would be less competitive overall.

Have a look at the salaries in the US:

($230 million for CEO of Yahoo)

House prices are inflated because there is not enough supply. Build on the London Green Belt and prices will drop.

So let me get this right, Peter Hain MP, drawing an MP's salary and a spectacularly generous pension that most of us can only dream of, is complaining that people see a rich upper class that is too distant from them. And just what class does Mr Hain think he is seen to belong to?

Mr Hain may also have overlooked the fact that many very wealthy people do end up giving vast fortunes to charitable causes, albeit perhaps not according to his own preferred schedule.

James (post 51), I take it that you plan to gain an understanding of the markets and manage your own pension fund - you obviously consider it very easy to simply move a few million quid around and turn a guaranteed profit on it.

To anyone querying the notion of higher taxes resulting in reduced spending, take a moment to think how many people would bother working with 100% income tax. Answer: virtually none, therefore the total tax take is zero. With 0% taxes the total tax take is zero. Somewhere in the middle the curve of notional tax rate against total tax revenue flattens and declines. It really is that simple.

I take issue with Paul Smith (Comment 55) over his dismissal of James' Comment 51. It's a De Bono po of course, but it is surely a seriously debatable question whether the huge financial fortunes now being made are really a moral and justifiable reward for wealth creation. Or is it more the case that they are largely down to legal, but non-creational, looting of what others have already produced?

I think Peter Hain's comments are directed more by his bid for the deputy premiership than anything and will be quietly forgotten whether or not he gets it. They are designed to appeal to the grassroots, left wing, bash the rich fringe of the Labour party.

If city people who have earned large bonuses are being asked to give two thirds to those poorer than themselves who have not earned them, will Peter Hain voluntarily give two thirds of his index-linked, gold plated government pension to those who worked hard and put away money for their own pensions in company schemes, believing government assurances that they were safe, and then found they had gone up in smoke? Which group is the more deserving?

I think that the question here is one of coersion. There is no reason why people entering a lucrative profession should be coerced into giving people their 'hard-earned' money. However, if we are truly to enter a capitalist agenda, in which the accumulation of personal wealth is seen as the bedrock of society rather than collective effort, then this needs to be sustainable.

Whilst social mobility in this country is as poor as it is, I think that it should be recognised by these billionaires that there will be a class of people who have never had the opportunity to benefit from this 'freedom' that we have all embraced, who are going to resent it.

It is awful to watch these people spending more money in one evening than many people spend in a lifetime, merely because they have been given chances in life and, anecdotes aside, there are still plenty of people in the country who do not get these chances.

There are no rights without responsabilities, and if people do not want their actions regulated by the state (as I suspect they don't) then they need to show a bit more of their own initiative in pursuing a socially responsible agenda.

Given this, a little generosity wouldn't go amiss, and I've no objection to politicians occasionally pointing this out. If you don't like it - vote him out.

The rich will be rich and the poor will be poor.

They eat their cake and we fight their wars.

Ok, so there are roughly half a million, millionaires in this country. SO WHAT. Most of these people have to work bloody hard to get where they are. If you think the number in the UK is terrible, the number living in just the los angeles area of the California is around 300,000 - and that is excluding their property, just cash and other assets. If you take the US as a whole, its around 9 million people who are dollar millionaires excluding their property. This is the real super wealth, we in the UK are mere minnows. Im not saying the extreme wealth of many in the US is good, but im just saying take some perspective

I would add (from experience) that it is not just politicians who are overpaid, given their performance 'criteria' and the lack of risk involved, but many others in the UK Public Sector. Many people in the County Council, for example, are young, inexperienced and seriously overpaid - with an astonishingly low level of productivity, no performance targets whatsoever (although their management would go to great lengths to contradict this, the 'stick' is just not there) and a bullet-proof pension scheme which is far more generous than ours. However, at the end of the day, what kind of life is that? Not one that I want, any more...

In reply to Steve Morton, 拢34,000 is a high wage. Only 10% of the UK population earn more than 拢30,000.
So yes, you do have a responsibility to contribute to society (monetary or otherwise).

As a civil servant, i am on minumum wage but use my employment as a way of paying into society.

Private equity and hedge funds should be praised. The point of social/pay-INEQUALITY should be a distant second in importance compared to social/pay MOBILITY. The fact that some of the leaders of the UK's and Europes leading Private Equity firms and hedge funds originate from underprivileged backgrounds shows that Britain is a true land of opportunity. No longer does entrance to the upper echelons of society come only with an Oxbridge degree and expensive schooling from Eaton.

People shouldnt feel aggreived to see these super-rich prospering, they should see them as successful self-made men and give credit to their achievements. They are good role-models for the youth of today, and show that with resolute ambition anything is possible in this new land of opportunity.