I was watching a fascinating program on TV this week on the lifestyle of Russian Billionaires in London. What caught my eye was a pair of ladies from a concierge service that had been sent to buy sound system loudspeakers for their Russian client. They purchased a couple of speakers. The cost was slightly less than my house is worth. The Salesman commented that “they are good value at that price”. I hate to think of what his idea of expensive looks like.
The purpose of this article is not to question the wealth of the Russian Billionaires. For the avoidance of doubt and in case any of the Russian’s “associates” or the FSB happens to be reading this: of course they earned their vast fortunes by hard work, great diligence and skill. No, it is to give some thought to inequalities of earnings and wealth.
How much is enough?
HMRC statistics show that an income of more than £160,000pa will put you in the top 1% of earners in the UK. The average income of a FTSE 100 CEO is something over £4 million. The richest 10% of people in the UK have 31% of the total income and 40% of the total wealth (I suspect that is a conservative estimate). The bottom 10% of the population has about 1% of the total wealth. The top 10% of households in the UK are 850 times more wealthy than the bottom 10%. About half of the UK households have just £400 in net cash at hand, compared to the £123,200 held in cash balances by the top 10%.
There are an estimate 1,426 US$ billionaires in the world (source Forbes). Of those about 100 live in the UK; mostly in London.
Questions of legitimacy
One of the Russian billionaires commented on TV that she had come to live in London because it was a safe environment, subject to the rule of law, with a low rate of crime and no social disorder. She then swept out the door with her five or six bodyguards in to her armour-plated Rolls Royce and her chauffeur drove the car out of the enormous steel gates of her mansion.
There are concerns over the extent of inequality of wealth and earnings in the UK. The growing sense of something more that unfairness filters through even the self-interested lens of the media. At some tipping point of inequality social hegemony starts to breakdown. The legitimacy of societal structures starts to be called in to question. This is amplified by the distrust and lack of legitimacy afforded to politicians, the police, (sadly), the NHS and other state institutions. It appears only the monarchy is untainted by the stench of corruption and self-serving behaviours.
If we do not learn from the lessons of history we are doomed to repeat them – so said George Santayana. Perhaps our Russian Billionaires are better able to reflect on this lesson; particularly in respect of the Russian revolution than we who live permanently in the UK. Our outbreaks of civil disobedience and disorder are, thankfully, limited. But how much longer will the population at large acquiesce in falling living standards, increases in poverty and rising homelessness while the “rich get richer”?
The questions for us are:
- Is inequality a simple result of a capitalist society?
- If not, then who has the role of tackling inequality?
- How much is “too much” inequality?
- What is the role of HR and particularly Reward in tackling unequal pay outcomes?
Russian Billionaires do feed large amounts of money in to the UK economy. Some are very generous donors to the arts and good causes. By the way; Господа, подайте бедному писателю! Кто сколько может… But they do represent perhaps the most obvious example of conspicuous consumption.
The question of inequality in society is one that should, at best, make us think a little and at worse have us lying in our beds at night worrying about how this story is going to play out.
I do hope the buyers of the nice loudspeakers costing more than a small house get a lot of enjoyment; I am afraid I shall carry on listening to my Russian folk music on my earphones on my MP3 player – at least until my lottery numbers come up.
Ian Davidson is an experienced reward manager, consultant, commentator and writer in the UK. He has over fifteen years senior level experience in the field; mostly in financial services covering investment banking and insurance. He specialises in executive pay, compensation and benefits, reward analytics & visualization together with reward risk and compliance. Ian has an MBA and is a Chartered Fellow of the Chartered Institute of Personnel and Development in the UK. He has a major interest in social media as a way of opening up communication and knowledge sharing.