If you want to be deeply unfashionable, just read on. If you want to enter terrain so wildly out of date that mere mention of it has become taboo, then you’ve come to the right place. Brace yourself. In October, two bankers strode into Umbaba, one of London’s most modish watering holes and asked the bartender to fix them a drink. Not any drink, you understand, but the most expensive cocktail he could concoct. He set to work, blending a Richard Hennessy cognac that sells at £3 000 (about R33 000) a bottle, Dom Perignon champagne, fresh lemongrass and lychees — all topped off with an extract of yohimbe bark, a West African import said to possess aphrodisiac powers. He called it the Magie Noir — and he charged £333 a glass. The bankers ordered two rounds for their table of eight. Their final bill for the night: £15 000.
Those same men, or their colleagues, may well have invested £200 000 in a Bentley or Aston Martin or they might have paid celebrity hairdresser Nicky Clarke £500 for what the salon describes as an “aspirational haircut”. They are the customers sought by the London estate agent who offers a three-bedroom flat in Kensington as a “starter home” for £2,25-million. They are the target reader of the newly launched Trader magazine, with its ads for private jets or five-storey yachts (complete with submarine).
This is the world of the super-rich, financiers pulling in salaries and bonuses in the millions, and sometimes tens of millions. They are partners in hedge funds and private-equity firms — buying, selling and gambling in jobs that most mortals barely comprehend. They spend money on vast estates or wild fancies. Sometimes the splashing out is literal: a favourite pastime is spraying champagne in the manner of a formula one winner. (In August one London banker fizzed away £41 000.)
Nothing new in all this, you might say. The rich, like the poor, are always with us. But that would be wrong. Robert Peston of the London Sunday Telegraph, estimates that this year no more than 200 to 300 hedge-fund managers in the United Kingdom will carve up $4,2-billion of pure profit between them. These sorts of payouts are on a scale unimaginable in the past, at least outside the handful of individuals who either invented a new product or owned a tangible resource: Bransons or Rockefellers. That they should come, as regular as a salary, to those who, by their own admission, create nothing is a new development. (And buying up once-public companies in their entirety is essentially a new field.)
It is the sharpest edge of a striking trend, one that shows the truth behind that lefty slogan about the rich getting richer. When Margaret Thatcher came to power in 1979, just under 6% of the UK national income went to the top 1%. That figure stood at 9% a decade later, but under Tony Blair it has risen to at least 13%: a tiny group taking nearly an eighth of Britain’s collective wealth.
Does it matter? Some will insist not; only envy could make one begrudge a young man spending five figures on a drinks bill. As long as the rest of us are getting by, who cares if Joe Banker can buy a Ferrari? In the years after Thatcherism and the fall of the Soviet Union, Britain is meant to have moved on from such concerns. Only the tragically retro, those trapped in a crypto-Socialist time warp still care about such things. When Blair was asked in 2001 whether it was possible for anyone to earn too much money, he caught the spirit of the age when he replied: “Not really, no. Why does that matter?”
I know it’s frightfully old-fashioned, but I beg to differ. For the story about the £333 cocktails emerged in the same week as the British homelessness charity Shelter reported that children were being forced to sleep in kitchens, dining rooms and hallways because of cramped housing affecting 500 000 families in England alone. Of these, three in four said that the lack of space was damaging their children’s education or development; many spoke of depression and anxiety. And the scale of the problem has remained unchanged since 1997.
To my mind, there is something wrong here. If one man can spend £15 000 plying his pals with a syrupy cocktail, while another lays out blankets for his child to sleep in the kitchen then we know the system is broken.
We imagine such gross inequalities to come tinged in sepia. They belong to the Dickensian dark ages, a cruelty so distant we render it now only as nostalgic entertainment: Oliver Twist at the cinema, Scrooge on the London stage.
But the truth is that the injustice of extraordinary wealth alongside desperate poverty is no museum piece. It is alive and present in the 21st century.
The United States got there first, of course. US economists and others have long been worried that their society is returning to the Great Gatsby days of the 1920s: they note that great mansions converted to public use, as nurses’ homes and the like, after 1945, are now reverting to private residences once more, as if the pre-1929 plutocrats are back. You can see the same process in Notting Hill in west London: huge structures that would have contained 10 flats a decade ago restored to the single homes of the Victorian age.
It’s not just lefty whingers, consumed with class envy, who are noticing all this. Leo Hindery, the multi-millionaire chairperson of HL Capital, told the BBC last year: “You’re setting up a class system the likes of which we’ve never seen in the world. The most obvious precedent is the French revolution, where the gap between the extremely wealthy and the middle class grew to be so acute that social unrest ensued.”
He may be on to something. Experts have long known that relative in-equality, not just poverty, adversely affects the health of those at the bottom: by seeing those so much better-off than themselves, people feel excluded, even blaming themselves for failure. Others wonder about the prospects for social mobility when those at the bottom cannot even see the top. The evidence also shows that the spending habits of the super-rich trickle down, so that those with little money feel pressured to spend cash they don’t have (a phenomenon reinforced by the Posh’n’Becks celebrity culture of constant, conspicuous consumption).
Talk to anyone in politics about this and they will look at you blankly: this is the deadest of dead letters. The British Labour Party won’t touch it for fear of seeming like anti-wealth, socialist dinosaurs. Few yearn for a Maoist-style cap on salaries, but there are other options. One would be for everybody who has a pension to realise that they are, through their pension funds, shareholders in big companies — and can therefore demand a change in the behaviour that currently sends cash flowing into the pockets of the Magie-Noir-swilling classes.
Another would be to raise the basic rate of tax on the very rich: not to the 80% or 90% that scared the Rolling Stones and their ilk abroad in the 1970s, but perhaps to 50%. If Labour can’t stomach that, it could simply crack down on tax evasion: some of the UK’s very richest of the super-rich don’t pay a bean in tax.
Above all, we need to start talking about it. Like wearing flares or tight tank tops, people will mock at first. But this issue’s coming back — just watch. — Â