On wealth, value, ownership and a thought-hike that started with a toll bridge.
It all started with a toll bridge.
A bridge that used to cost 12p to cross, now costs £1, and whose new payment system has apparently had considerable difficulty accepting money from people who are actually trying to pay it.
That got me thinking about who owns our infrastructure, who gets to charge us for using it, and how long they should be entitled to keep collecting money from something.
And then my brain went wandering.
A few hours later, I’d managed to cover private investment, intellectual property, pharmaceutical companies, inheritance tax, farmers, landlords, banking, the BBC, Mary Poppins and the usefulness of GDP as a measure of national success. Quite an achievement for a morning that started with reading an article about a bridge.
But there was a common thread running through it.
Who creates value, who owns it, who benefits from it, and who ultimately pays for it?
Money: It’s a Gas!
Money is a way of keeping score. It’s a means of exchanging goods and services, storing wealth and measuring value. But money itself is only worth what it can buy, and much of our monetary system depends on confidence.
If you’ve ever watched Mary Poppins, you’ll remember the scene where Michael Banks demands his tuppence back, inadvertently helping to trigger a run on the bank.
It’s played for comedy, but there’s something rather interesting underneath it. A bank can have considerable assets and still find itself in serious trouble if enough people demand their money back at the same time. The financial system depends on people believing it will continue to work.
And sometimes, the rules of the game seem rather odd.
Some people start with nothing. Others inherit a substantial lead. Some own the stadium, some write the rules, and some charge everyone else for the privilege of playing.
I’m not suggesting everybody should finish with the same score. People who work harder, take greater risks, develop valuable skills or create something useful should be able to earn more. But what happens when ownership itself becomes more rewarding than creating the thing being owned?
A Bridge Too Far?
Let’s go back to that toll bridge.
The Warburton Bridge crosses the Manchester Ship Canal and has been privately operated for generations. Changes to its statutory charging arrangements have allowed its toll to increase substantially.
The principle of charging for infrastructure isn’t unreasonable. Bridges need to be built, inspected, maintained and occasionally replaced. Those things cost money. Private companies can provide the investment and expertise to make that happen, and they should be entitled to recover their costs and earn a reasonable return.
But should the right to collect that return last forever?
And what happens when an infrastructure asset changes hands? Its new owners might have paid a substantial amount to acquire it, but that purchase hasn’t created another bridge or improved the existing one. They’ve purchased the right to receive future income.
That right may be valuable precisely because the public needs the infrastructure and has limited alternatives.
This isn’t a uniquely private-sector problem. Governments can impose charges too. The Dartford Crossing is an interesting example of charging continuing after the original construction costs were recovered, justified instead as a way of managing congestion. But if there are few practical alternatives, how much choice does a motorist really have?
There are also roads built under private finance arrangements where motorists don’t pay tolls directly. Instead, the government makes payments to the operator, sometimes linked to traffic volumes. The driver might not see a charge, but the taxpayer still pays.
Perhaps we ought to ask not simply who built the infrastructure, but how much it costs over its entire lifetime, where the money goes and when the original investment has been adequately rewarded.
The Right to Own Versus the Right to Earn
And this brings us to intellectual property.
Copyright and patents exist for good reasons. Someone who writes a book, composes music, develops a medicine or invents something useful should have an opportunity to benefit financially. But those rights can be bought, sold and inherited.
Sherlock Holmes first appeared in 1887. Yet more than 130 years later, the Conan Doyle estate was still pursuing legal claims concerning aspects of the character. The original stories have since entered the public domain.
Then there’s Peter Pan. J. M. Barrie gave his rights to Great Ormond Street Hospital, which still benefits from a special statutory right to royalties for certain uses of the play in the UK.
A very worthy beneficiary, certainly. But also an unusual example of how a financial right can continue long after its creator has died.
At what point does a fictional character become part of our shared cultural heritage? And how long should someone be able to benefit financially from something they didn’t personally create?
I’m not suggesting that creators shouldn’t leave something to their families, or that companies acquiring intellectual property contribute nothing. They may invest in new work, preservation, distribution and development.
But the original purpose of protecting creativity can become rather blurred when intellectual property becomes primarily a financial asset.
When Ownership Is Essential
Medicine makes this considerably more complicated.
Developing new treatments can involve enormous investment, years of research and countless unsuccessful experiments. Pharmaceutical companies need incentives to undertake that work. But there’s an important difference between developing a new medicine and acquiring the commercial rights to an existing treatment before dramatically increasing its price.
The UK has already had competition-law cases involving excessive pricing of established medicines, including hydrocortisone.
And unlike choosing whether to buy a book or watch a film, a patient may have no realistic choice about needing a particular treatment.
The people who most need something often have the least power to negotiate what they pay for it.
That applies to more than medicine. Housing, water, electricity, transport and other essential services can all place people in positions where walking away simply isn’t practical.
And the more dependable that demand becomes, the more attractive the resulting income stream can look to investors.
That’s not inherently wrong. But it does suggest that essential goods and services require a different level of accountability from entirely discretionary purchases.
Land, Inheritance and Actual Work
Land ownership introduces another set of complications.
Some families have accumulated substantial landholdings over generations, and those holdings can produce considerable income through rent, agriculture, development and increases in land value. An increase in land value might be caused partly by public infrastructure, nearby businesses or the work of an entire community, rather than anything the owner personally did.
But it would be equally wrong to assume every wealthy landowner is simply sitting around waiting for money to arrive. Some actively farm their land, invest in agriculture, maintain historic properties, protect wildlife habitats and employ significant numbers of people.
And that’s where we encounter the working farmer.
A family farm might be worth several million pounds on paper. But much of that value could be tied up in fields, buildings, machinery and equipment needed to keep the business operating.
Farming isn’t a nine-to-five occupation. Animals don’t stop needing attention at weekends, and harvesting doesn’t stop because it’s getting dark. Yet the income generated by a farm can be surprisingly modest compared with the market value of its assets.
Now imagine having to sell part of the land to meet an inheritance-tax liability.
It might sound straightforward. Sell a few acres, pay the tax, carry on.
Except those acres might be necessary to keep the entire operation economically viable. Losing them could reduce production, disrupt access or leave insufficient land to support the machinery and other fixed costs.
Compare that with someone holding a diversified investment portfolio worth billions. Losing a million or two could be financially significant, but might have relatively little impact on the portfolio’s continuing earning capacity.
Which brings me to one of the more important thoughts from this whole conversation.
There’s a fundamental difference between losing wealth and losing the ability to earn it.
Taxation should raise revenue fairly. But the consequences of taking assets away can differ enormously, even when their monetary value is identical.
Of course, this doesn’t mean every farm should automatically escape taxation. Agricultural land can be held as a passive investment, and wealthy investors can own farms too.
The distinction isn’t simply about how much someone owns. It’s about what that ownership actually does.
Large Organisations Can Do Good
I’ve written before about the Quaker industrialists behind Cadbury and their approach to business and social responsibility. They built successful enterprises while investing in workers and communities, demonstrating that making money and doing good aren’t mutually exclusive.
Large organisations and wealthy individuals can make enormous contributions to society. They can create employment, invest in infrastructure, support communities and improve people’s lives. Equally, being small or independent doesn’t automatically make someone virtuous.
A small landlord might provide excellent housing and maintain it conscientiously. Another might leave a property empty for years, simply waiting for its value to increase. A large property investor might build hundreds of new homes, while another might focus on extracting greater returns from an existing portfolio.
Size and ownership alone don’t tell us whether someone is making a useful contribution. Nor should doing good automatically exempt an organisation from scrutiny.
And, for the record, while Cadbury may have passed into different corporate hands, I’m not convinced the chocolate has benefited.
But perhaps that’s another argument for another day.
Who Makes the Rules?
There is another complication. Money doesn’t just buy goods, services and investments. It can also provide access, professional advice, financial resilience and influence.
A large organisation might have an entire team dedicated to understanding proposed legislation, responding to consultations and making its case to government. A small business owner might be trying to do much the same thing after finishing a twelve-hour working day.
Of course, smaller businesses have trade associations and representative bodies to speak on their behalf. But representing thousands of businesses doesn’t mean they all share the same opinions or priorities. Nor does it guarantee that those organisations will have the same influence as a major corporation with direct access to decision-makers.
Lobbying isn’t automatically improper. Governments need to understand how their decisions affect industries, employers, investors and the public. But access to decision-makers isn’t distributed equally, and those with the greatest resources often have more opportunities to make their voices heard.
What I would like to see is a more level playing field. One where the rules are transparent, applied consistently, and aren’t disproportionately influenced by those with the deepest pockets or the easiest access to decision-makers.
After all, if we’re all supposed to be playing the same economic game, shouldn’t we at least be playing by the same rules?
Are We Even Measuring the Right Things?
Which eventually brought my wandering thoughts to GDP.
Gross Domestic Product is a useful measure of economic output. It tells us something important about the amount of goods and services being produced. But does a growing GDP mean people are living better lives?
Suppose rents increase substantially without any corresponding improvement in the homes being rented. More money changes hands, but the tenant may have less disposable income.
Or consider somebody spending hours sitting in traffic. Their extra fuel consumption generates economic activity, but the additional expense and wasted time haven’t improved their life. Rebuilding after a disaster contributes to GDP, even though much of the work merely replaces things that previously existed.
GDP doesn’t directly measure happiness, security, health, fairness or the amount of time people have available to spend with their families. And simply increasing the market price of something doesn’t mean its underlying usefulness has increased.
A house isn’t better at providing shelter simply because its market value has doubled. A medicine doesn’t become more effective because its price increases. A toll bridge doesn’t become a better bridge because it generates greater revenue.
There’s a fundamental difference between increasing the price of something and increasing its value.
Perhaps economic success ought to be measured using more than financial output.
Are people healthier? Can they afford somewhere decent to live? Is their employment secure? Can they travel reliably? Do they have time to enjoy their lives? Are future generations inheriting something better than we did?
Those questions seem at least as important as how much money is changing hands.
Back to the Scoreboard
I’ve spent a considerable amount of time questioning ownership, wealth and the economic systems we’ve created. But I don’t think there’s a straightforward answer.
People need incentives to work, invest and innovate. Businesses need to make profits. Pension funds need returns. Governments need tax revenue to provide services and infrastructure. Public ownership isn’t automatically better than private ownership, and governments can make poor decisions just as businesses can.
Nor am I arguing that everyone should be paid the same amount, or that somebody who takes genuine risks shouldn’t be rewarded for doing so.
What bothers me is the possibility that we’ve become better at rewarding the accumulation and control of wealth than the creation of genuine value. And that sometimes the people who contribute most have the least financial security, while those with the greatest resources are best equipped to protect what they already possess.
Maybe we need to ask whether our economic rules reward the things we actually want to encourage. Productive work, innovation, responsible investment, good housing, reliable infrastructure, healthy communities and a reasonable degree of security for everyone.
Rather than treating an increasing financial score as proof that everything is going well.
Because a wealthy country isn’t necessarily a country where its people are doing well.
And perhaps that’s the real question behind the scoreboard.
Ownership isn’t inherently good or bad. What matters is how that ownership is used, who benefits from it, and who bears the costs.
And perhaps that’s what we sometimes forget. People are people. Some do good, some do harm, and most are capable of both.