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Friday, 13 August 2010

13 August 2010

Did you see that someone has apparently just paid £140 million for a flat in London? The identity of the buyer isn’t known, but somehow I suspect it isn’t one of the 40 American billionaires who promised the other day to give away at last half of their fortunes.

Mind you, if you’re a multi-billionaire, £140 million isn’t such a huge amount to pay for a nice penthouse apartment with a decent view.

The problem with these numbers is that the words “million” and “billion” are so similar. They disguise the fact that for, say, Bill Gates (total wealth estimated at $53 billion), buying that London pied-à-terre would represent an outlay of less than half of one per cent of his total fortune.

(Someone in the BBC newsroom wrote in a headline a couple of days ago that a Whitehall department was planning to cut two billion pounds from its nine million pound budget. It’s an easy mistake to make …)

So let’s talk numbers. How does someone amass so much money that they can afford to give away tens of billions and still have more than the rest of us can even dream of?

I’ve done a rough analysis of those 40 “philanthro-capitalists”. Sixteen of them are bankers, investors or financiers – in other words, they have made their money from money. Five of them (including Bill Gates and Paul Allen of Microsoft, Irwin Jacobs of the wireless technology company Qualcomm, and Jeff Skoll of eBay) got rich from computing and information technology. There’s a sprinkling of property tycoons and a handful of media barons (Michael Bloomberg and Ted Turner, for example).

In most cases, their wealth stems largely from the value of the shares they own – or owned – in the companies they have created. They haven’t stolen it from anyone; you could argue that they have created the wealth by their own ingenuity and acumen – and our pensions probably depend at least in part on the aggregate value of the shares in their companies.

Even so, some commentators feel uneasy about the fact that it is possible for these billionaires to become so unimaginably wealthy. Writing in the New Yorker, James Surowiecki wrote: “Between 2002 and 2007 … the bottom ninety-nine per cent of incomes grew 1.3 per cent a year in real terms -- while the incomes of the top one per cent grew ten per cent a year. That one per cent accounted for two-thirds of all income growth in those years.”

And Peter Wilby in The Guardian expressed concern that very rich people could now be having a hugely disproportionate impact on which good causes are adequately funded and which are not. “If the rich really wish to create a better world, they can sign another pledge: to pay their taxes on time and in full; to stop lobbying against taxation and regulation; to avoid creating monopolies; to give their employees better wages, pensions, job protection and working conditions …”

I suspect most people would argue that billionaires who are generous are far better than ungenerous ones. The instinct to share one’s good fortune is surely preferable to miserliness. (After all, all the major religions emphasise the importance of charitable giving.)

The American dream tradition depends on a belief that anyone, no matter how humble or disadvantaged their origins, can aspire to wealth and happiness. The question that’s being asked – and I take no position on this – is whether at some point too much wealth becomes somehow undesirable rather than desirable.

Is the distribution of wealth as important to the well-being of a society as its accumulation? What’s preferable: to allow a handful of very rich people to decide what should be done with that wealth, or for them to pay more in taxes to government, so that governments can make the decisions about redistribution, poverty alleviation, medical research and so on?

As always, I’d be interested in your thoughts.

Friday, 6 August 2010

6 August 2010

Once upon a time, not such a long time ago, Asif Ali Zardari was known to his fellow-countrymen as Mr 10 per cent.

He was in jail, facing corruption charges, relating to allegations that he had skimmed huge commission payments off government contracts while his wife, Benazir Bhutto, was prime minister.

Then, in December 2007, she was assassinated. Within a year, he had been elected President. Last night, as Pakistan faced what the UN is now calling a “major catastrophe” – the devastating floods that are laying waste to huge swathes of the country – he was dining at Chequers with David Cameron.

Over the past three years, I have written on this blog more often about Pakistan than almost any other country.

After the assassination of Benazir Bhutto, I wrote: “Pakistan now becomes the most dangerous of all current global flash-points. It is a nuclear power; and it harbours jihadists who in the past have played a major role in the disintegration of neighbouring Afghanistan and have offered finance, training and organisational infrastructure to bombers in the UK and elsewhere in Europe.”

Less than two years later, after another spate of violence, I wrote: “Pakistan is in a permanent state of crisis. It is used to weak government, rampant corruption and insecurity. I've lost count of the number of times I've read - or even written - that Pakistan is teetering on the brink of collapse.”

This week, The Economist writes: “Pakistan is lurching from crisis to crisis, with an anaemic economy, religious extremism and an uncertain political dispensation.”

How’s this for a litany of disaster? Pakistan’s worst ever air crash, 152 people killed. The worst floods for 80 years, at least 1,600 people killed, four million people affected. Three days of violence in Karachi, the country’s business centre and largest city, at least 80 dead.

That’s just in the past nine days. Oh, and did I mention the Taliban insurgency along Pakistan’s border with Afghanistan? The 12,000-plus people who were killed in political or sectarian violence last year alone?

And as if all that wasn’t enough, along comes David Cameron and chooses – in India, Pakistan’s giant neighbour and rival – to accuse it of “looking two ways” on terrorism.

Regional analysts have been arguing for quite a while now that Pakistan may well turn out to be a much bigger international security threat than Afghanistan. (We hear so much more about Afghanistan becuse that’s where US and British soldiers are dying. This week New Zealand suffered its first fatality there.)

When suspected jihadi terrorists are arrested in the UK, they’re far more likely to have links to Pakistan than to Afghanistan. Even Osama bin Laden, if he’s still alive, is more likely to be in Pakistan than in Afghanistan. At our counter-terrorism conference at Chatham House last month, Pakistan was the word on nearly everyone’s lips.

But bear this in mind: to the Pashtuns who live along the Afghan-Pakistani border, there is no border. The Durand Line, drawn up by the British colonial diplomat Henry Mortimer Durand in the 1890s, slices through the Pashtun tribal area – and it exists more in the imagination of cartographers than on the ground.

On the Afghan side, the Afghan Taliban fight to remove foreign troops from their land and avoid domination by Tajiks (who make up more than half of the Afghan National Army) and other non-Pashtuns. On the Pakistani side, the Pakistani Taliban fight to preserve their rule over the border areas and keep the central government weak.

When President Zardari insists that Pakistan is fighting terrorism with all its might, he’s thinking of the Pakistani, not the Afghan, Taliban. And when David Cameron says he’s not doing enough, he’s thinking of the other lot.

It’s a mess – and it’s dangerous.