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Freedom, Security and the Wealth-Owning Democracy

Speech to the University of Chicago

Friday 12th April 2024

Thanks you very much for that kind introduction.

It is a huge honour for me to be here tonight.

On a campus, that’s long been home to economists who have changed the world

At a school where you believe that ‘Policy is not about feeling good..but is about doing good’.

In a city, where one of your greatest Presidents set out the speech which is the inspiration for this book.

It was one Saturday eighty years ago, in October 1944, that 110,000 people came together five miles from here, on Soldier Field to hear President Roosevelt spell out the truth that

“The well-being of the nation as a whole is synonymous with the well-being of each and everyone of its citizens”

Here was the speech that explained how long-cherished American ideals of freedom would need a new foundation for a new post-war world.

For freedom to be real in this new world, Roosevelt declared, it would need a new sentinel

A sentinel described in one word: ‘security’ -

Security that would be delivered by a new Economic Bill of Rights.

And yet 80 years from that extraordinary speech, we find ourselves in the West not in some elysium of liberty - but in lands where millions of our neighbours feel that feel that life is a lottery

That they live as prisoners of anxiety, trapped by a tyranny of poverty, fear and insecurity.

In an economy where the strong can dictate terms to the weak.

And where the rich buy influence denied to the poor at the ballot box.

So the question I want to explore tonight, in this 80th anniversary year of Roosevelt’s speech is how to do we renew the spirit of Roosevelt.

And the case I want to make is that it is time for us to rediscover an old ideal: the root of the radical tradition that inspired thinkers from Aristotle to Adam Smith - and revolutionaries from Thomas Paine to Thomas Jefferson.

My argument is simple:

It is not enough to see threat to freedom as the tyranny of dire states - and ignore the the tyranny of dire straits.

The monster which is misfortune.

Or the ogre that is private power.

Like Roosevelt, I believe there is no freedom without security; but there is no security without wealth.

And that is why we have to revive an old idea: the wealth owning democracy.

Now as a former Fulbright scholar I know that I will spend the rest of my life saying thank you to American taxpayers for the tremendous gift that allowed me to study here for two years.

But tonight I have further debts of thanks - not least of the extraordinary scholarship of Stephen Durlauf who I showcase in the book.

I know my debts will only increase over the course of this evening so I do not want to talk for very long. So I want to cover just three points:

1. What has happened to the inequality of wealth?

2. Why should we care about it?

3. And what do we do about it?

The inequality of wealth

Now we have actually been writing books about the wealth of nations for a long time.

About 248 years in fact since Adam Smith’s masterpiece.

But despite that long history of erudition in economics I'm not sure many people can actually tell us what the wealth of our nations actually is today.

Now I was born in the holy town of Warrington back in 1970, and I was born into a family that cared about these things.

Both of my parents were 60s radicals gave their life to public service because they like you here at the Harris school believe that feeling good was not enough if you weren't doing good.

But since I was born the wealth of our nation has multiplied a hundredfold – I don't think those two things are connected – to an extraordinary £12 trillion.

That's a number so big it's hard to get your head round. But it's basically enough to pay the path of gold bars from John O'Groats to lands end.

Here in the United States, your story has also been extraordinary.

The net worth of households and non-profits has multiplied from $4 trillion to $156 trillion

But as we knew the inconvenient truth is this.

For much of my life in my country wealth and equality was falling until 2010 - since when the wealth of the top 1% is multiplied by 31 times faster than everybody else.

These are patterns that you are all to familiar with here;

Today, here in America, after years of rising inequality the top 10% hold wealth that is 130 times the average wealth of the bottom 50%.   

In my country the result is an inequality that is almost Roman.

Walter Schneildel’s great long history of the inequality of wealth explains the Roman fortunes were 1 1/2 million times the size of average Roman wages. Well we're not far off that point today. The wealth of the Hinduja family is 1.3 million times medium wages.

But Schneildel is not optimistic about progress. His history tells us we don't reverse big levels of inequality without warm revolution. And let's face it we're not sure of advocates for both.

But if we want to avoid war or revolution, we're going to need a Reformation where good people come together to try and plan a way forward. A way forward that people won't simply ‘like’ on social media but vote for in an election.

Because what we now confront is a moral emergency.

On the one hand we have poverty like I've never seen it before.

But on the other we have record sales of super yachts and luxury cars like never before. We have not one but three men racing into it space.

It is what you might call the absurdity of affluence.

But what troubles me most is not the conspicuous consumption of things it's the inconspicuous consumption of power.

And this is why we should all care about what’s happening today.

Who cares about inequality?

Because as bad as this inequality is today it is about to get much worse.

Nothing is forever including the baby boomers and as the baby boomers shuffle off this mortal coil or about to see the biggest transfer of wealth in human history.

Here in America, the silent generation and baby boomers together will bequeath $70 trillion to their heirs.

But some will inherit fortunes while others inherit care bills.

Together with advances in wealth management techniques on the one hand but artificial intelligence on the other, we could be about to see Gen Z become the most unequal generation for half a century.

This will have huge political and economic effects.

Look around the world, and unequal countries have three things in common.

They are poor because so many of the rich avoid paying tax.

They are stagnant because social mobility collapses – research to which Professor Durlauf has made an outstanding contribution. Opportunity is bequeathed from those who have to their heirs.

And unequal societies become corrupt, because inevitably, inexorably the wealthy cannot resist devoting a chunk of their fortunes to politics. And all to often this money aims to spread opportunity but to defend privilege. And so it multiplies  the three deadly sins of neo-liberalism which were not predicted by thinkers like Milton Friedman:

- the extraordinary growth of rent-seeking by firms that sseek rules of the game that let them extract value rather than create value,

- the unchallenged rise of technopolies using tech spend, brand spend and data to destroy competition -

- and of course the sort of deregulation which allows bubbles in the financial market to grow, and which when they burst tend to hurt the poor far more than the rich, who recover quickly.

This is a recipe for politics that is unsafe and extreme.

In our country or a people now believe the top 1% holds more power the national government.

And what we can now see from the work of researchers like Ben Ansell is that wealth and equality is bad for stable politics.

The places that voted President Trump, Brexit and the far right in Europe are the places where the growth and wealth did not keep with national averages. But the implication is that wealth inequality gets worse then so populism will get worse too.

So what do we do about it?


The solutions you need in America are different to the Britain. But there’s one  framework devised by the British Nobel prize winner James Meade that might help us both.

Meade’s work isn’t the 1960s told us that if we care about fixing the inequality of wealth we have to worry about:

  • Earnings

  • The savings made from those earnings

  • The rate of return on those savings

  • And the taxes paid

That takes me to a five point for Britain that I think has similar application here:

First, we have to grow earnings everywhere. That requires us to remember the lesson of your history, both the Manhattan and Apollo programmes, which through state sponsorship of huge scale innovation helped create the modern world and with it, millions of better paid jobs. This insight that public action - in essence a creative state - can crowd in private investment is exactly the insight at the core of Bidenomics. It’s lesson the next Labour government will take to heart.

Second, if we want earnings to rise we have to take one step more. A systematic programme to rewrite the rules of our marketplace, to create a more civic capitalism of firms that race to the top, not drive labour standards as low as they possibly can. And here in both the United States and the UK we have a tremendous lever: the trillions in pension savings saved by workers themselves. Today, UK workers have invested £2 trillion in pension savings. But it’s impossible to invest in firms that aren’t dodging their taxes, poisoning the planet or screwing their workers. So, we need a radical reform of the 32,000 pension funds in our country into a handful of superfunds together with a transformation of company reporting so it becomes possible to actually invest in companies providing good work and doing the right thing by society. And workers on boards would help provide a fail safe.

Third, if earnings rise we have to help raise savings. Many have proposed a universal basic income but I think what’s really needed is a universal basic capital.

Universal savings account, linked to our auto-enrolment pensions and lifetime student loan accounts.

This gives us a foundation of which to render more progressive incentives to save. Right now, we spend some £70 billion a year on fiscal welfare. - tax breaks that almost all go to those with assets not those without. We should change that and provide one thing more for the young. A £10,000 one-off dividend to help them get a foot on the housing ladder.

Young people today face an economy that has been transformed by decades of easy money. In Britain, wealth - which reflects asset prices - is now ten times national labour income. It’s used to be three times. The implication is that millions of young people will never be able to afford a home to call their own unless we provide a little help.

And there is a way to do it: by creating a national Commonwealth fund to help ensure that young people have access to the sort of superior returns on capital that currently only the rich enjoy. Some 80 countries around the world have now created these funds. Their average return is about 8% a year - way ahead of the sort of returns that the poorest could ever hope to achieve. But by creating such funds and sharing the dividends as one off payments to the young, we ensure the next generation gets a foundation in life on which to build.

Now we can’t build these funds overnight - and we would need about £200 billion - will take time. But we could build these funds faster by restoring some fairness to our tax code. By creating a tax code that reflects our moral code. This century investment income in Britain has doubled to some £80 billion a year. But 60% of that fortune goes to the top 10%, who pay a rate of tax that’s half the rate of a top rate tax-payer. That simply isn’t fair. I don’t know how many people here have ever read Rishi Sunak’s tax return? It doesn’t take long. It’s just one page. But it’s a revelation. Mr Sunak earns about £2 million a year. But he pays 23% tax. That’s a incredible bonus for one of the nation’s richest men, at a time when one in five people - from senior nurses or headteachers or police officers - are paying 40%.

So here’s an agenda:

  • Creative states

  • Civic capitalism

  • Universal basic capital

  • Commonwealth funds to democratise access to the best returns, funded by

  • A tax code that reflects our moral code.

None of this will be easy. But each of these ideas can be found at work somewhere. They are not extreme. They are ideas that I think could win our vote - and would change our future.


I wanted to end on a note on optimism.

We do now live not in an era of change but in a change of era.

The changes that we see in the years ahead will be extraordinary because 90% of the scientist to ever lived are alive and at work today backed by $1.7 trillion in global science spending.

The changes they will author in - genetic medicine, artificial intelligence, global gigabit connectivity, green energy - means that the stuff of science fiction is already a reality in our lives today.

Their breakthroughs will mean that over the years to come, we could all have freedoms, autonomy, options, choices and control that we can only dream of today.

That means we could contemplate birth-rights far more ambitious than those proposed by Roosevelt eighty years ago.

Some rights are eternal.

But, if we want each of us to share in society’s progress, some rights must evolve.

The Magna Carta says a lot about the whys and wherefores of policing fish weirs but very little about digital literacy.

In the future it is possible to imagine a new settlement of rights to











But if we are to ensure everyday freedoms are stout, strong and sturdy, we need the collective force of society - otherwise known as government - to deliver both security to all and power to each.

Roosevelt knew that “true individual freedom cannot exist without economic security”.

But security for all comes not simply from self-reliance and independence but from our interdependence. That interdependence is called cooperation and when cooperation is enlarged wisely, so the reality of freedom is multiplied greatly.

Today, is we’re to rebuild a coherent amity that might let us all fairly share the future, I’d suggest there is now no greater task for us than to renew the way we cooperate to deliver an old ideal that once inspired thinkers on both left and right: not just a wealthy democracy. But a democracy of wealth.

I think that is an idea of which that Roosevelt would have approved.



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