Obviously, these claims are controversial, so before proceeding with a fresh set of arguments, this is a good point to pause and address objections. There are two kinds of objection that I want to deal with here: first those voiced regularly in the media and in everyday life, and then some more technical counter-arguments from mainstream economists.

Don’t the rich create jobs?

‘When did you last get a job from a poor person?’ So goes my favourite American Tea Party slogan. The Americans are good at slogans but the Tea Party specialises in discombobulatingly daft ones. Of course you won’t get a job from a poor person, we wearily concede, but it doesn’t follow that the rich create jobs, as if they have special powers that turn their gains into a gift of jobs to the rest of us. US billionaire Nick Hanauer is refreshingly honest about this: ‘If it was true that lower taxes for the rich and more wealth for the wealthy led to job creation, today we would be drowning in jobs.’ So why hasn’t the spectacular shift in income and financial wealth to the rich over the last four decades led to unprecedented jobs growth?

First of all, we need to ask what the rich and super-rich do with their spare money. They generally use it to try to get even more, through either real investment or financial ‘investment’. In the latter case, whether by betting on market movements or buying income-yielding assets, or the many other ways unearned income can be extracted, their actions are unlikely to result in net job creation. Some ‘investment’ is used to buy up firms in order to sell off parts of them – to asset-strip them, in other words. This is likely to result in job losses, and indeed may reduce the ability of the firm to produce in the long run. Many companies have boosted their profits by cutting jobs. In the US, Scott Thompson, the CEO of Yahoo!, on a salary package of $27 million per year, axed 2,000 jobs in April 2012 – about 14% of the company’s workforce – following six major lay-offs in the preceding four years.