Robert Verkaik - Why You Wont Get Rich: How Capitalism Broke its Contract with Hard Work

WHY YOU WONT GET RICH

How Capitalism Broke its
Contract with Hard Work

Robert Verkaik

I wish to dedicate this book to all the volunteers and staff working at Citizens Advice.

Last year more than 20,000 advisers from hundreds of communities gave up their time for free to help 2.8 million people.

In the midst of the 2020 pandemic, which cost many lives and stole so many livelihoods, Citizens Advice, which is a non-political charity, was often the only place people could turn to for help. Its work has never been more vital.

In particular, I wish to say a personal thank you to Ruth, Jan, Juliet, Anna, Cass and Sandra whose knowledge, patience and expertise never cease to amaze. Their work makes the community richer.

The names of some individuals referred to in this book have been changed. Some of the stories are composite case studies. The cases were all taken from interviews and encounters with the author since 2015.

My father-in-law loves to regale us about the time his friend Harry took him along to the FA Cup Final between Arsenal and Liverpool in 1971.

We worked together. I was an Arsenal fan and he supported Liverpool, the story always begins. Then he continues:

The week before the final he asked me if I wanted to go with him to Wembley. I had planned to watch the match on television, but it was the final so I said Yes, please. Unbelievably the score was 0-0 at full time so the game went into extra time. First they got one, then we did. When Charlie George scored the amazing winner and went flat on his back I was grinning from ear to ear, but I made sure to turn away from Harry because I could sense how upset he was. I think it was the greatest day of my life.

Were all Arsenal fans in our family and most of us have basic club (Red) membership. In 2017 Arsenal once again got through to the FA Cup Final at Wembley. I had never been to a Wembley final and thought it would be a once-in-a-lifetime treat for my two sons. So I tried to buy three tickets. Arsenal

Some of the tickets went to season-ticket holders, some to corporate sponsors and others found their way onto the black market where they were being sold for hundreds of pounds. Ordinary fans hoping for a once-in-a-lifetime experience didnt get a look in.

In 1971 the cost of an FA Cup Final ticket was just 1, which meant most fathers and mothers could afford to treat their children to a day out at Wembley. So nearly 50 years later why couldnt I, a reasonably well-off journalist? The casual arrangement of turning up at Wembley, as described by my father-in-law, is totally unrecognisable. Had inflation taken such a heavy toll on our spending power that in 2017 you needed 45 to watch the same fixture that half a century ago cost 1? Or was I genuinely worse off than my father-in-law when he was my age?

I had to find out.

According to the Office for National Statistics (ONS) composite price index, which takes account of inflation, the cost of living in 2017 was 1,243.63 percent higher than in 1971. that it actually is.)

In 2017 I wasnt the only one thinking football fans were being priced out of the sport. During the Champions League game between Arsenal and Bayern Munich in March of that Bayerns fans unfurled a banner which read Without Fans Football Is Not Worth A Penny before throwing toilet rolls onto the pitch, causing the referee to hold up play while they were removed. Arsenal fans all pointedly applauded.

Money doesnt just make the world go round; it also gives us a universal index by which we can measure our economic and social standing in society. My salary tells me how I match up to my friends, colleagues and even members of my own family. It also provides me with a personal perspective on history. Because what I can afford to buy with my money today is also indicative of how well my generation is doing compared with those that came before.

We crave it, borrow it, work hard for it, steal it and perish when we dont have enough of it. There is always the hope that if we dont have money today we will get some tomorrow. And for many of us, it is this eternal hope which gives all our lives a sense of purpose, if perhaps not meaning.

But what happens when the social contract between the citizen and the economic system fails to produce enough winners? What happens when we cant get rich anymore? And how do we know when this is happening?

We all apply personal litmus tests to measure our economic well-being. Mine happens to be football. But I soon discovered that football is not the only entertainment that is out of kilter with the cost of modern living. In 2020 the average price of a cinema ticket was 7.50 (34p in 1971 and 1.88 in 1988) and a West End musical was 49.25 (3.50 in 1971).one from somewhere like Radio Rentals or Rumbelows. These high-street electrical retailers also rented radios and hi-fi systems. If you had all three, then your home entertainment system was complete. A 1971 colour TV cost 289 (worth 3,700 in 2020) and a TV licence was 12 (170.74). I was still renting my television from Currys in 1997. In the past 50 years, televisions have become so affordable (98 for a 22-inch full HD LED from Amazon) that we own more tellies per household than ever before. Then again, we require so much more: an iPhone, tablet, laptop, broadband, subscriptions to Sky, Netflix, NOW TV, Spotify and Amazon Prime. An iPhone or a laptop is just as essential as a black-and-white telly was 50 years ago. Owning them is absolutely non-negotiable.

Much more sobering is the rising cost of property, which means millions of us have lost the chance of owning a home. The average house price in 1971 was 5,632. In May 2020 it had reached 235,673.

Everyone knows that house prices have sky-rocketed, but most people would still probably say that were better off overall than we were 50 years which is not far off what it is today. In 1971, a century after the invention of the telephone, only half of British households had one. Now there are more phones than there are people. And the cost of a household staple like a supermarket chicken is much cheaper than it was in 1971. So whats the problem?

This long view of the link between inflation and earnings masks what has happened since the 2008 financial crisis, when wages started to fall behind inflation so that in real terms the average wage is worth less now than it was during the crash.

Look more closely at these record employment figures and you will find that millions of those new jobs are low paid and insecure. When the coronavirus started laying waste to the economy, people employed in these jobs were the first to be let go. In 1971 a job meant a reliable salary and protected working conditions. Today many of these new jobs are zero-hours contracts, freelance or low-hour part-time work. The rise in the number of people taking these kinds of jobs has given birth to a new phenomenon in-work poverty such that eight million people currently living in poverty are part of a working family.

The number of hours we are working is no longer falling as it had been until the financial crash of 2008. According to the Resolution Foundation, those of us who are lucky enough to have salaries are working almost one hour per week more than they would have been if the post-1980s trend towards working fewer weekly hours had continued. And more of us are working well past our middle years. People over age 50 now make up about a third of the entire UK work force, up from around one in five in the early 1990s. Living costs are rising fast and meagre pensions or limited savings are forcing us to stay in work longer.