0:00:04 > 0:00:07'The super-rich are taking over.
0:00:07 > 0:00:11'85 people now own the same as half the world's population.'
0:00:11 > 0:00:14You don't get this stuff at Ikea, do you?!
0:00:16 > 0:00:19'Never before has money been so polarised.'
0:00:21 > 0:00:24People are struggling to pay their mortgages, pay their rent,
0:00:24 > 0:00:26to eat, to pay utility bills.
0:00:26 > 0:00:30The 21st century will be the most unequal period in human history.
0:00:32 > 0:00:34'My name's Jacques Peretti and last time
0:00:34 > 0:00:37'I revealed how billionaires were wooed to this country.'
0:00:39 > 0:00:42Explain how important Britain is as a tax haven for the super-rich.
0:00:42 > 0:00:44It's very important,
0:00:44 > 0:00:47it's the most attractive location now on the planet.
0:00:47 > 0:00:50'But the plan to bring them here was flawed.'
0:00:50 > 0:00:52A model which is based on a top 1%
0:00:52 > 0:00:57generating and consuming all of the growth simply isn't sustainable.
0:00:57 > 0:01:01'This time we'll see how, far from happening by chance,
0:01:01 > 0:01:04'soaring inequality was a business opportunity
0:01:04 > 0:01:08'for the wealthy to make money out of us.'
0:01:08 > 0:01:11You would invest a lot in the super-rich
0:01:11 > 0:01:14and you would invest also in companies that serve the super-poor.
0:01:14 > 0:01:17What you see during that period is a series of...
0:01:17 > 0:01:20fairly intentional policies
0:01:20 > 0:01:24designed to guarantee that most people are in debt.
0:01:25 > 0:01:28Britain's inequality has risen every year this century.
0:01:28 > 0:01:31It's driving society apart
0:01:31 > 0:01:34and now even the super-rich could be in trouble.
0:01:34 > 0:01:36So are the pitchforks coming?
0:01:36 > 0:01:39If things keep going the way they are, for sure they're going to come.
0:01:39 > 0:01:41- ALL CHANT:- ..united will never be defeated!
0:01:50 > 0:01:52This is London Fashion Week -
0:01:52 > 0:01:54part of the super-rich social calendar.
0:01:57 > 0:02:00But this isn't simply an invite-only fashion event.
0:02:00 > 0:02:02It's a glimpse into a world that wouldn't exist without
0:02:02 > 0:02:04the new extremes of wealth.
0:02:09 > 0:02:13A dress can cost £100,000 at one of these shows.
0:02:15 > 0:02:19That's five years' worth of income for an average British household.
0:02:21 > 0:02:22Is that really right,
0:02:22 > 0:02:26that people should be spending £100,000 on a dress?
0:02:26 > 0:02:29If you can afford it, why not?
0:02:29 > 0:02:31They can only charge these prices
0:02:31 > 0:02:34because of the soaring wealth of their customers.
0:02:35 > 0:02:38The super-rich inhabit their own independent state.
0:02:38 > 0:02:40It's a bubble - an exclusive bubble.
0:02:45 > 0:02:49Nowhere is this exclusivity more apparent than on the polo circuit.
0:02:54 > 0:02:58This is Cirencester Park in Gloucestershire.
0:03:00 > 0:03:03You need to be a multimillionaire to be a member of this elite.
0:03:03 > 0:03:05You've got to have a certain amount of talent
0:03:05 > 0:03:08but the horse is a really important part of the job.
0:03:08 > 0:03:12The cost of the horses, they vary from, you know, 5,000
0:03:12 > 0:03:14up to 250,000.
0:03:14 > 0:03:16You need a lot, don't you? because they get knackered.
0:03:16 > 0:03:19Yeah, so today I've brought six horses.
0:03:20 > 0:03:22And that's a goal.
0:03:22 > 0:03:25Ladies and gentlemen, big round of applause for that.
0:03:26 > 0:03:29A full team of polo ponies can cost £10 million.
0:03:29 > 0:03:32And that's before you've flown the professional riders in
0:03:32 > 0:03:33from Argentina.
0:03:35 > 0:03:39It's this kind of exclusivity which reinforces the growing separation
0:03:39 > 0:03:41between the wealthy and the rest of us.
0:03:43 > 0:03:45I wanted to know what the people here thought
0:03:45 > 0:03:49about the growing inequality in Britain.
0:03:49 > 0:03:50This is Countess Bathurst,
0:03:50 > 0:03:53who owns the land on which this event is taking place.
0:03:54 > 0:03:58There's an increasing concern about the polarisation of wealth.
0:03:58 > 0:04:00- Yeah.- What do you feel about it?
0:04:00 > 0:04:04I think that human nature,
0:04:04 > 0:04:06BY human nature,
0:04:06 > 0:04:08will always be a little envious
0:04:08 > 0:04:12of those who have more than they do.
0:04:13 > 0:04:16And I think that there is an element of envy,
0:04:16 > 0:04:19and I think that there is also an element of, shall we say,
0:04:19 > 0:04:25not realising what it means to be somebody like us.
0:04:25 > 0:04:28You know, we do work incredibly hard.
0:04:28 > 0:04:31I think that people don't realise what a responsibility it is,
0:04:31 > 0:04:34they don't realise sometimes what a worry it can be.
0:04:37 > 0:04:41The people on this march also have worries.
0:04:41 > 0:04:44They're worrying about how to pay their bills.
0:04:45 > 0:04:47The phrase that comes up again and again
0:04:47 > 0:04:51when you talk to people here is the 1%.
0:04:51 > 0:04:55What have the 1% done to the rest of Britain,
0:04:55 > 0:04:57in terms of their wealth escalating
0:04:57 > 0:05:01and the lives and living conditions of everyone else stagnating?
0:05:03 > 0:05:07We're going backwards, very quickly. Back to Victorian times.
0:05:07 > 0:05:10I think really before long it'll be pulling your forelock
0:05:10 > 0:05:12and, "Please, sir, I want some more."
0:05:15 > 0:05:17People are incensed.
0:05:17 > 0:05:18But they'd be more incensed still
0:05:18 > 0:05:22if they realised that this inequality wasn't an accident.
0:05:27 > 0:05:29The inequality that's made so many people angry
0:05:29 > 0:05:32didn't happen by chance.
0:05:32 > 0:05:33It was a plan.
0:05:33 > 0:05:38The growing prosperity of the super-rich is directly linked
0:05:38 > 0:05:42to the austerity we've been suffering for the last five years.
0:05:45 > 0:05:49The plan began ten years ago here in New York,
0:05:49 > 0:05:54at what was then the biggest bank in the world - Citigroup.
0:05:54 > 0:05:57Years before we all started to become concerned
0:05:57 > 0:05:59and critical of growing inequality,
0:05:59 > 0:06:02the people in this building had worked out
0:06:02 > 0:06:05how to turn it into a business opportunity.
0:06:06 > 0:06:08It was set out in this document for investors.
0:06:10 > 0:06:14Tobias Levkovich was a key strategist at the bank.
0:06:15 > 0:06:18Could you tell me what the report said?
0:06:18 > 0:06:21Basically it suggested that wealth was concentrated
0:06:21 > 0:06:24amongst upper-income Americans, and particularly the top 1%,
0:06:24 > 0:06:27and, if you really want to get technical, the top 0.1%.
0:06:27 > 0:06:30There's always been the haves and the have-nots,
0:06:30 > 0:06:33but today you have the haves, the have-nots and the have-yachts.
0:06:33 > 0:06:36The report told investors that massive inequality
0:06:36 > 0:06:39was THE cash cow of the 21st century.
0:06:39 > 0:06:43At the top end they were to put their money into industries
0:06:43 > 0:06:47that serve the new global elite, like jewellery and yachts.
0:06:48 > 0:06:51It was unapologetic economic opportunism.
0:06:52 > 0:06:55Right at the beginning it says, "This imbalance in inequality..."
0:06:55 > 0:06:59talking about what's coming... "expresses itself to the public
0:06:59 > 0:07:01"in the standard scary global imbalances,"
0:07:01 > 0:07:05you know, basically inequality, and it says, "We worry less."
0:07:05 > 0:07:07If you're telling people in 2005,
0:07:07 > 0:07:09"This trend is going to be continuing,
0:07:09 > 0:07:13"and we worry less about social unrest or backlash issues,
0:07:13 > 0:07:15"here you can buy these things
0:07:15 > 0:07:18"and be in pretty good shape for the next five to ten years,"
0:07:18 > 0:07:20investors kind of like those long calls.
0:07:20 > 0:07:22You can put it away, sleep at night
0:07:22 > 0:07:25and know that at the end of it you'll have money.
0:07:25 > 0:07:28Selling to the super-rich was no surprise.
0:07:28 > 0:07:32But their analysis went on to deliver a more shocking revelation.
0:07:33 > 0:07:36Citigroup realised that there was a huge opportunity
0:07:36 > 0:07:38at the bottom of society.
0:07:38 > 0:07:41A chance to make billions from poor people.
0:07:44 > 0:07:49Financial analyst Chrystia Freeland has followed the strategy closely.
0:07:49 > 0:07:53What the Citigroup analysts observed was that the economy
0:07:53 > 0:07:56was dividing into two sectors,
0:07:56 > 0:07:58and their investing thesis was,
0:07:58 > 0:08:02in the part of the economy that this 1% was active in,
0:08:02 > 0:08:04you were going to see tremendous growth.
0:08:04 > 0:08:07And you would also see growth in the part of the economy
0:08:07 > 0:08:09that caters to poor people, because, basically,
0:08:09 > 0:08:14they saw society being divided into the 1% and everybody else.
0:08:14 > 0:08:18And so, on this investing thesis, you would invest a lot
0:08:18 > 0:08:22in any sectors of the economy that served the super-rich,
0:08:22 > 0:08:25in luxury-goods companies, in super-high-end real estate,
0:08:25 > 0:08:27that kind of thing,
0:08:27 > 0:08:29and you would invest also in companies
0:08:29 > 0:08:32that served the super-poor, so maybe in a Walmart.
0:08:34 > 0:08:38In this new world, there was someone left out of the equation -
0:08:38 > 0:08:42the middle class, who'd be broke.
0:08:42 > 0:08:45You had a theory which was called the hourglass theory.
0:08:45 > 0:08:47Could you tell me what that theory is?
0:08:47 > 0:08:49That the middle class would get squeezed the most.
0:08:49 > 0:08:52In other words, the lower end of the income spectrum
0:08:52 > 0:08:55would still get opportunities.
0:08:55 > 0:08:57On the other side, you would have the wealthier ones
0:08:57 > 0:09:00continue to invest and be able to take advantage of opportunities
0:09:00 > 0:09:02because they had the capital to risk.
0:09:02 > 0:09:04Do you not feel, though, Tobias,
0:09:04 > 0:09:07any kind of responsibility or guilt for the fact
0:09:07 > 0:09:11that you identified not just rich people but poor people to make money
0:09:11 > 0:09:14out of inequality and then gave that advice to your clients?
0:09:14 > 0:09:16You can sit there and say,
0:09:16 > 0:09:20"Well, you know, this may not meet everybody's
0:09:20 > 0:09:24"social happiness criteria but I have to deliver results
0:09:24 > 0:09:25"or they're going to take that money
0:09:25 > 0:09:27"and give it to somebody else for the results."
0:09:27 > 0:09:30So it's not cynical, it's very practical. That is our job.
0:09:30 > 0:09:33We're supposed to try to help them make money.
0:09:33 > 0:09:35MUSIC: La Vie En Rose by Louis Armstrong
0:09:39 > 0:09:42The most extraordinary thing about the Citigroup report
0:09:42 > 0:09:45is just how accurate it proved to be.
0:09:45 > 0:09:48Ten years later, the hourglass society is here.
0:09:50 > 0:09:53And this is one of the best cities in the world to see it in action.
0:09:53 > 0:09:54London.
0:09:56 > 0:09:58This is Mount Street in Mayfair,
0:09:58 > 0:10:01the most exclusive high street in the country.
0:10:01 > 0:10:05And at the Christmas party they're celebrating a bumper year.
0:10:07 > 0:10:09You're like the modern family butcher, aren't you?
0:10:09 > 0:10:11Like, the old family butcher would be on a high street
0:10:11 > 0:10:13and you're on a high street
0:10:13 > 0:10:15but you're, like, Russian oligarchs and...
0:10:15 > 0:10:17You know, we do the stats every year,
0:10:17 > 0:10:19we look through the rich list, and we do...
0:10:19 > 0:10:21I think last year we did 50%
0:10:21 > 0:10:23of the top 100 of the rich list.
0:10:23 > 0:10:26- Really?- It's insane.- Wow. - It's absolutely insane.
0:10:26 > 0:10:28You know, Kensington Palace Gardens,
0:10:28 > 0:10:30which is the most expensive street in the world -
0:10:30 > 0:10:32residential street in the world -
0:10:32 > 0:10:34we supply half the houses down there.
0:10:36 > 0:10:39And the next stop - a cigar shop where rich clients
0:10:39 > 0:10:42are allowed to sample the wares INSIDE.
0:10:42 > 0:10:46A lot of people, especially at the high end of the luxury-goods market,
0:10:46 > 0:10:49have said things have actually really picked up.
0:10:49 > 0:10:50We've got some very select customers
0:10:50 > 0:10:52from all over the world -
0:10:52 > 0:10:55from the Americas, from Russia, from China -
0:10:55 > 0:10:57that haven't really been affected.
0:10:58 > 0:11:01So, gentlemen, when you're not smoking cigars, what do you do?
0:11:01 > 0:11:05Commodity trading and mining, and the brandy business.
0:11:05 > 0:11:06What about you, my friend?
0:11:06 > 0:11:08I own a telecoms company.
0:11:08 > 0:11:10- You own a telecoms company?- Yes.
0:11:19 > 0:11:23Just three miles away from the exclusivity of Mount Street
0:11:23 > 0:11:25is the other end of the hourglass.
0:11:25 > 0:11:26This is Brixton.
0:11:30 > 0:11:32The last ten years have been a bonanza
0:11:32 > 0:11:35for industries that target the poor.
0:11:35 > 0:11:38Gambling, discounters and payday loans.
0:11:38 > 0:11:41Money borrowed to make ends meet.
0:11:42 > 0:11:45Deborah Hargreaves from the High Pay Centre
0:11:45 > 0:11:49has examined how the hourglass has changed our landscape.
0:11:49 > 0:11:52The vast majority of people haven't had a pay rise for ten years,
0:11:52 > 0:11:56so their pay has not kept up with inflation.
0:11:56 > 0:11:59We've channelled all the rewards to those at the very top.
0:11:59 > 0:12:03And this has given us a whole range of different industries
0:12:03 > 0:12:07associated with... almost with poverty, really.
0:12:07 > 0:12:11But to find out how this unequal society was created,
0:12:11 > 0:12:14you need to go back to the 1970s.
0:12:14 > 0:12:16MUSIC: 20th Century Boy by T.Rex
0:12:19 > 0:12:21It was the high watermark of economic equality.
0:12:21 > 0:12:24The most egalitarian decade in history.
0:12:26 > 0:12:30The wealthiest 1% earned less than 6% of the national income -
0:12:30 > 0:12:32its lowest recorded level.
0:12:37 > 0:12:40Bankers' pay was on a par with teachers' and GPs'.
0:12:40 > 0:12:43Aspiration was shared across society.
0:12:44 > 0:12:48Power to the people!
0:12:48 > 0:12:51Utopianism was in the air.
0:12:51 > 0:12:55Citizen Smith believed revolution was just around the corner.
0:12:56 > 0:12:58You, the survivors of the Tooting Popular Front,
0:12:58 > 0:13:01shall inherit my fiery legacy.
0:13:01 > 0:13:06You will be lifted into the hearts of the proletariat!
0:13:06 > 0:13:10Eh, theirs will be the airy excesses of power!
0:13:12 > 0:13:15But there wasn't a utopia just around the corner.
0:13:17 > 0:13:20Cracks in society were already showing.
0:13:22 > 0:13:25The 1970s brought us strikes and inflation.
0:13:29 > 0:13:32It began with the oil crisis of 1973.
0:13:32 > 0:13:35As energy prices rose, Britain endured blackouts
0:13:35 > 0:13:38and the three-day week.
0:13:38 > 0:13:39The night before last
0:13:39 > 0:13:41I spent the evening with candles and a lovely fire.
0:13:41 > 0:13:44Really, it's the sort of evening I'd like to spend more often,
0:13:44 > 0:13:46I shall do it even when we have the electricity back.
0:13:46 > 0:13:48The post-war boom was over.
0:13:48 > 0:13:51Raw capitalism was on its way back,
0:13:51 > 0:13:54and it was to start with the asset strippers,
0:13:54 > 0:13:56dismantling companies for profit.
0:13:56 > 0:13:58Men like Sir James Goldsmith.
0:13:58 > 0:13:59..Sir James, you've made your reputation
0:13:59 > 0:14:02- as a buyer and seller of companies. - That is your impression.
0:14:02 > 0:14:05- Not only is it your impression... - Within the food industry.
0:14:05 > 0:14:07..no-one, not even you, not even our worst enemies,
0:14:07 > 0:14:08could suggest we're unsuccessful.
0:14:11 > 0:14:13What had been a stable and egalitarian society
0:14:13 > 0:14:17at the start of the decade was unravelling fast.
0:14:17 > 0:14:20The post-war certainties of full employment
0:14:20 > 0:14:22and rising prosperity were gone.
0:14:22 > 0:14:27This insecurity was about to be harnessed into a new ideology.
0:14:33 > 0:14:36New York - the money capital of the planet.
0:14:38 > 0:14:43In the 1970s, a new kind of capitalism was about to emerge here.
0:14:43 > 0:14:45One which would exploit this volatile world.
0:14:47 > 0:14:50It was formulated by two economists,
0:14:50 > 0:14:54Fischer Black and Myron Scholes.
0:14:56 > 0:14:59It was known as the Black-Scholes equation.
0:15:07 > 0:15:09Not many things that we say change the world
0:15:09 > 0:15:11actually do change the world.
0:15:11 > 0:15:13But this formula did.
0:15:15 > 0:15:18It created that over there - that city.
0:15:18 > 0:15:21Created the financial world that we live in today.
0:15:25 > 0:15:28What the Black-Scholes equation did was to give traders
0:15:28 > 0:15:31a formula for predicting what a stock would be worth in the future.
0:15:33 > 0:15:35It was gambling - with a system.
0:15:38 > 0:15:40But to win big, you needed to bet big.
0:15:43 > 0:15:47They said that you need not to be afraid of risk,
0:15:47 > 0:15:48but to embrace it.
0:15:49 > 0:15:52They said the more you risk, the more you win.
0:15:53 > 0:15:57The equation gave Wall Street a new model for trading.
0:15:57 > 0:15:58With this information,
0:15:58 > 0:16:03traders could bet billions of dollars on what were called options,
0:16:03 > 0:16:05the right to buy an item in the future.
0:16:06 > 0:16:08These were very brilliant mathematicians,
0:16:08 > 0:16:11maths professors, who were able to build this structure.
0:16:11 > 0:16:15It assumes certain things about the cost of capital,
0:16:15 > 0:16:19the changes in price of the product that you've optioned to buy.
0:16:20 > 0:16:23Within a few years, new financial markets for options
0:16:23 > 0:16:28and derivatives boomed, powered by the algebra of Black and Scholes.
0:16:29 > 0:16:32Today the market for derivatives alone
0:16:32 > 0:16:34is worth one quadrillion dollars,
0:16:34 > 0:16:37equivalent to ten times the value of all the goods
0:16:37 > 0:16:39produced across the planet.
0:16:39 > 0:16:42The higher the risk, the higher the reward.
0:16:42 > 0:16:44But you have to be able to take the risk.
0:16:44 > 0:16:46You have to be able to take the chance
0:16:46 > 0:16:48that you might lose the money.
0:16:48 > 0:16:50Getting to greater and greater wealth,
0:16:50 > 0:16:52you have the ability to take on more risk.
0:16:52 > 0:16:56The Black-Scholes equation had triggered an economic revolution.
0:16:56 > 0:17:01And it was all based on the idea that risk was good.
0:17:02 > 0:17:05But Black and Scholes was only the beginning.
0:17:05 > 0:17:09Risk was about to be rolled out beyond the financial markets
0:17:09 > 0:17:11and into our lives,
0:17:11 > 0:17:14affecting the future of everyone in the world.
0:17:16 > 0:17:21It was down to one man, rooted in the Wall Street of his time.
0:17:21 > 0:17:25I was the guy that drank hard and smoked hard
0:17:25 > 0:17:28and...did everything hard, you know?
0:17:28 > 0:17:31Robert Dall was a trader at Salomon Brothers -
0:17:31 > 0:17:34one of the largest brokers in New York.
0:17:34 > 0:17:37He was an expert in the mortgage market,
0:17:37 > 0:17:40which in the 1970s was expanding hugely.
0:17:40 > 0:17:43The politicians in this country at this time
0:17:43 > 0:17:49were screaming to everybody, "A house for every American".
0:17:49 > 0:17:52It's not true, it's not right,
0:17:52 > 0:17:56but it was a great thing for politicians to say.
0:17:57 > 0:18:02Traders were looking for a way to exploit the burgeoning market.
0:18:02 > 0:18:04And mortgages were attractive to them
0:18:04 > 0:18:06because they brought in a regular monthly payment.
0:18:10 > 0:18:15In 1977, Dall had the idea to bundle 100 million worth
0:18:15 > 0:18:17of these mortgages together,
0:18:17 > 0:18:21to make a huge income stream, which could be traded on the market.
0:18:26 > 0:18:28- When you bundled it all up... - That's right.
0:18:28 > 0:18:30..it suddenly has huge potential.
0:18:30 > 0:18:32At the time it was...
0:18:34 > 0:18:39..pretty much beyond comprehension that it grew so fast.
0:18:39 > 0:18:44The rate of growth was pretty incredible.
0:18:44 > 0:18:46They were known as securities,
0:18:46 > 0:18:51and what Dall had invented was something called securitisation.
0:18:51 > 0:18:55I actually have had people come up to me in restaurants
0:18:55 > 0:18:59and things like that and say, "Thank you for the idea."
0:18:59 > 0:19:00JACQUES LAUGHS
0:19:02 > 0:19:05Robert Dall's invention was to have profound consequences
0:19:05 > 0:19:07that would affect all our lives.
0:19:09 > 0:19:12The Black and Scholes formula and securitisation
0:19:12 > 0:19:14were the building blocks of a new world -
0:19:14 > 0:19:18one in which taking risks drove profit.
0:19:18 > 0:19:19But what few of us realised
0:19:19 > 0:19:23was that the risks being taken were with OUR debts.
0:19:23 > 0:19:26MUSIC: Stand And Deliver by Adam & The Ants
0:19:33 > 0:19:36By the mid-'80s, Britain was ready to join the party.
0:19:36 > 0:19:40American banks arrived in London, bringing the mantra
0:19:40 > 0:19:43that had transformed Wall Street - risk was good.
0:19:47 > 0:19:50The rules of Wall Street apply in London -
0:19:50 > 0:19:53if you're good you get very, very high rewards,
0:19:53 > 0:19:55if you're not, get on your bike.
0:20:01 > 0:20:04In 1986, the City was transformed by the Big Bang,
0:20:04 > 0:20:06which deregulated its activities.
0:20:08 > 0:20:12Nicola Horlick was one of the new breed of City superstars,
0:20:12 > 0:20:14earning £1 million a year.
0:20:15 > 0:20:18Big Bang was very, very significant,
0:20:18 > 0:20:21but it was significant in the sense that it moved everything
0:20:21 > 0:20:26away from being partnerships and family enterprises to being...huge.
0:20:26 > 0:20:31You book me a client, I will sell you half a million at 673.
0:20:31 > 0:20:35Small firms built on trust and tradition
0:20:35 > 0:20:37gave way to international banking groups
0:20:37 > 0:20:41ruthlessly using risk to maximise profits.
0:20:41 > 0:20:43Things changed, and all these clever people
0:20:43 > 0:20:47started going and working at banks and doing rinky-dink wild things.
0:20:47 > 0:20:50The multiples changed and started to zoom up,
0:20:50 > 0:20:52and suddenly everybody wanted to be in banks
0:20:52 > 0:20:55and they were suddenly the best thing since sliced bread
0:20:55 > 0:20:58and they were on 18-times earnings, not three-times earnings.
0:20:58 > 0:21:00Just as in America,
0:21:00 > 0:21:04securitisation was a big part of the new financial machine.
0:21:04 > 0:21:10What that machine needed were debts, and we were about to oblige.
0:21:10 > 0:21:13The British were about to get hooked on debt.
0:21:20 > 0:21:22To afford the '80s lifestyle,
0:21:22 > 0:21:25you needed credit cards and newly available bank loans.
0:21:26 > 0:21:28The way you made people feel better
0:21:28 > 0:21:30is allowing them to borrow a lot of money,
0:21:30 > 0:21:32take on consumer debt.
0:21:32 > 0:21:34And that worked for a while,
0:21:34 > 0:21:38and I think that was part of the reason why people felt so good.
0:21:38 > 0:21:43Britain was experiencing the illusion of unprecedented prosperity
0:21:43 > 0:21:45and we paid a price.
0:21:45 > 0:21:51Household debt was running at nearly £350 billion by the late '80s.
0:21:55 > 0:21:58David Graeber is an economist at the London School of Economics
0:21:58 > 0:22:01who takes a critical view of our growing debt during the '80s.
0:22:03 > 0:22:06What you see during that period is a series of...
0:22:06 > 0:22:10fairly intentional government policies
0:22:10 > 0:22:12which are designed to guarantee
0:22:12 > 0:22:15that most people are in debt.
0:22:15 > 0:22:18If you have a mortgage, you can't go on strike.
0:22:18 > 0:22:21So it was quite intentional policy - get people in debt,
0:22:21 > 0:22:24it'll reduce the amount of industrial action,
0:22:24 > 0:22:26it'll hold down wages, it'll control inflation.
0:22:26 > 0:22:28How important is debt
0:22:28 > 0:22:32to the extraction of wealth from us, the 99%, to the 1%?
0:22:32 > 0:22:34I think it's the key to the whole thing.
0:22:34 > 0:22:37The finance industry and the debt industry are really the same thing.
0:22:37 > 0:22:41To a large degree, finance just means other people's debts.
0:22:41 > 0:22:43They're trading our debts with each other.
0:22:45 > 0:22:48The growing addiction of consumers to debt
0:22:48 > 0:22:50helped fund the growing wealth of the financial centres
0:22:50 > 0:22:53of London and New York.
0:22:53 > 0:22:56And a new attitude appeared to celebrate this.
0:22:56 > 0:23:00But evolution in corporate America seems to be...
0:23:00 > 0:23:01survival of the unfittest.
0:23:03 > 0:23:05Well, in my book, you either do it right...
0:23:05 > 0:23:07or you get eliminated.
0:23:08 > 0:23:10In Oliver Stone's Wall Street,
0:23:10 > 0:23:14these aren't economic choices, but a Darwinist imperative.
0:23:14 > 0:23:17The point is, ladies and gentlemen,
0:23:17 > 0:23:20that greed, for lack of a better word,
0:23:20 > 0:23:22is good.
0:23:22 > 0:23:24Greed is right.
0:23:24 > 0:23:26Greed works.
0:23:26 > 0:23:29Greed clarifies, cuts through and captures
0:23:29 > 0:23:33the essence of evolutionary spirit.
0:23:35 > 0:23:38Wall Street introduced us to a new species,
0:23:38 > 0:23:41an alpha elite who were going to change our lives.
0:23:41 > 0:23:44They were called the Masters of the Universe.
0:23:44 > 0:23:46And they were coming here, to Britain.
0:23:49 > 0:23:51These were the superstars of the business world -
0:23:51 > 0:23:53the CEOs.
0:23:57 > 0:24:01Parachuted in to cut costs, and paid handsomely for doing it.
0:24:03 > 0:24:05Richard Giordano was the first.
0:24:05 > 0:24:08Throughout the 1980s he was the boss of BOC,
0:24:08 > 0:24:11one of Britain's largest companies.
0:24:11 > 0:24:13I came to work at a pay level
0:24:13 > 0:24:16that was equal to what I was earning in the United States.
0:24:16 > 0:24:20Might have been the equivalent of £250,000 per annum.
0:24:22 > 0:24:28That was an...enormously large sum in the landscape of that time.
0:24:28 > 0:24:31You were referred to as Britain's highest-paid businessman.
0:24:31 > 0:24:33That was probably true at the time,
0:24:33 > 0:24:35although I was soon eclipsed by many others.
0:24:35 > 0:24:39And do you think that the amount of money you were being paid
0:24:39 > 0:24:42was seen as very un-British in a way?
0:24:42 > 0:24:45I think it was regarded as coming from another planet.
0:24:45 > 0:24:47This was a business revolution, wasn't it?
0:24:47 > 0:24:50It was a revolution that...
0:24:52 > 0:24:55..enshrined the idea of...business success,
0:24:55 > 0:24:59entrepreneurship, which had not been true in the 1970s.
0:25:01 > 0:25:04It was thought wonderful to be an entrepreneur,
0:25:04 > 0:25:07wonderful to be successful...
0:25:07 > 0:25:09I guess, wonderful to make more money.
0:25:09 > 0:25:13And that was something that I think was a big change.
0:25:16 > 0:25:20In the 1980s, we faced a ruthless business culture.
0:25:20 > 0:25:25The winners were the top 1%, who saw their incomes rise steeply.
0:25:25 > 0:25:27But what about the rest of us?
0:25:27 > 0:25:31We were about to undergo our own workplace revolution.
0:25:31 > 0:25:34And, once again, it came from America.
0:25:37 > 0:25:39It was driven by the thinking of these two men,
0:25:39 > 0:25:42Tom Peters and Robert Waterman,
0:25:42 > 0:25:45analysts whose book In Search Of Excellence from 1982
0:25:45 > 0:25:47extolled a stripped-down workplace
0:25:47 > 0:25:50in which only the fittest would survive.
0:25:52 > 0:25:54'Nikil Saval is a historian
0:25:54 > 0:25:57'who's studied how this new theory of management
0:25:57 > 0:26:01'was designed to create fierce competition for jobs.'
0:26:01 > 0:26:03The move was to make people...
0:26:03 > 0:26:06put them on their toes, in a way. That was the idea.
0:26:06 > 0:26:08And so there was an atmosphere
0:26:08 > 0:26:13and a mood in which precariousness was seen as the path to prosperity.
0:26:14 > 0:26:17This new cut-throat workplace was satirised
0:26:17 > 0:26:19in the '80s film Working Girl.
0:26:20 > 0:26:24One of the early scenes, you see Melanie Griffith, the main actress,
0:26:24 > 0:26:28showing up at her new job with a box of her stuff.
0:26:31 > 0:26:33Griffith's character even has the book
0:26:33 > 0:26:35by Peters and Waterman in her box
0:26:35 > 0:26:38when she arrives at the office.
0:26:40 > 0:26:43You know that she's somehow going to succeed in this new workplace,
0:26:43 > 0:26:45despite all the obstacles, because she knows...
0:26:45 > 0:26:49she knows the model, she knows the business, she knows how to act.
0:26:50 > 0:26:54The fictional working girl faced a new kind of insecurity
0:26:54 > 0:26:57that was about to confront us all.
0:26:57 > 0:26:59Work was being destabilised.
0:27:01 > 0:27:05By the time of the second recession at the end of the 1980s,
0:27:05 > 0:27:08an even harsher economic reality was emerging.
0:27:10 > 0:27:13- Gaz, who's going to buy a rusty girder?- Come on.
0:27:13 > 0:27:17And it was a change reflected in films like The Full Monty.
0:27:17 > 0:27:19Gaz, hang on!
0:27:21 > 0:27:24Ten years we worked in here. Now look.
0:27:24 > 0:27:28Anyone not part of the 1% was expendable.
0:27:28 > 0:27:31Even middle management were out in the cold.
0:27:31 > 0:27:33Button it, you lot. Some of us are trying to get a job.
0:27:33 > 0:27:35Hey, and it says no smoking in here.
0:27:35 > 0:27:38You forget, Gerald, you're not our foreman any more.
0:27:38 > 0:27:40You're just like the rest of us.
0:27:40 > 0:27:42Scrap.
0:27:42 > 0:27:43Shut it, right?
0:27:43 > 0:27:46MUSIC: Parklife by Blur
0:27:49 > 0:27:53By the mid 1990s, Britain was a changed society.
0:27:56 > 0:28:00The top 1% now earned a tenth of national income -
0:28:00 > 0:28:03nearly double its level in the 1970s.
0:28:03 > 0:28:07Bankers were no longer paid the same as GPs or teachers.
0:28:07 > 0:28:11A two-tier society was just beginning to take off.
0:28:12 > 0:28:14Right across the developed world,
0:28:14 > 0:28:18the old paternalistic company with a duty to its workers
0:28:18 > 0:28:19was disappearing.
0:28:19 > 0:28:23You invested in a business and this business is dead.
0:28:23 > 0:28:27Let's have the intelligence, let's have the decency,
0:28:27 > 0:28:30to sign the death certificate, collect the insurance
0:28:30 > 0:28:32and invest in something with a future!
0:28:32 > 0:28:35Ahh, but we can't.
0:28:35 > 0:28:38We can't, because we have a responsibility.
0:28:38 > 0:28:43A responsibility to our employees, to our community.
0:28:43 > 0:28:46I got two words for that.
0:28:46 > 0:28:47Who cares?
0:28:48 > 0:28:52In the '90s film Other People's Money, the would-be boss
0:28:52 > 0:28:55takes for granted that the company is just there to be bled for profit.
0:28:56 > 0:28:58I'm not your best friend.
0:28:59 > 0:29:01I'm your only friend.
0:29:03 > 0:29:07I don't make anything... I'm making you money.
0:29:07 > 0:29:10And lest we forget, that's the only reason
0:29:10 > 0:29:13any of you became stockholders in the first place.
0:29:13 > 0:29:15You want to make money.
0:29:18 > 0:29:23In 1994, Cedric Brown, the boss of the recently privatised British Gas,
0:29:23 > 0:29:26became, briefly, public enemy one.
0:29:28 > 0:29:33His salary more than doubled overnight to £475,000.
0:29:35 > 0:29:39The country was outraged, driven by the then Leader of the Opposition.
0:29:40 > 0:29:43Yesterday the president of the board of trade
0:29:43 > 0:29:46justified the grotesque increase of £200,000
0:29:46 > 0:29:48to the chief of British Gas.
0:29:48 > 0:29:51Sir, you do have a responsibility to explain to us
0:29:51 > 0:29:55why you're worth 25 times what your staff are.
0:29:55 > 0:29:59CEOs were reported to have their "snouts in the trough"
0:29:59 > 0:30:02and government needed to be seen to be doing something.
0:30:04 > 0:30:07Sir Richard Greenbury, the head of Marks & Spencer,
0:30:07 > 0:30:09was given the job of heading a committee
0:30:09 > 0:30:11to look into executive salaries.
0:30:11 > 0:30:15A committee of 11, of whom 8 were chairmen or chief executives.
0:30:17 > 0:30:19Do you think it was OK what he was getting?
0:30:19 > 0:30:20Well...
0:30:20 > 0:30:22Yes, of course it was.
0:30:22 > 0:30:25But we had to come up with a formula
0:30:25 > 0:30:27of best practice.
0:30:27 > 0:30:30What best practice meant
0:30:30 > 0:30:33was creating a new publicly acceptable formula
0:30:33 > 0:30:34for executive pay.
0:30:35 > 0:30:40And Greenbury was adamant that his committee of CEOs was up to the job.
0:30:41 > 0:30:48Nobody was earning more than about £500,000 to £700,000 a year.
0:30:48 > 0:30:52I don't think anybody could have fairly described us
0:30:52 > 0:30:54as being biased.
0:30:57 > 0:31:02£500,000 a year was 30 times the average salary
0:31:02 > 0:31:04in Britain at the time.
0:31:04 > 0:31:06Greenbury's committee said the solution
0:31:06 > 0:31:08to big rewards for executives was to tie bonuses
0:31:08 > 0:31:10to performance and shares.
0:31:11 > 0:31:14It was a fateful decision -
0:31:14 > 0:31:15executive pay soared.
0:31:17 > 0:31:19The proof of the pudding is in the eating,
0:31:19 > 0:31:23and between '95 and 2010,
0:31:23 > 0:31:29the whole issue of wages and salaries went off the Richter scale.
0:31:31 > 0:31:35If you're a chief executive of a big company,
0:31:35 > 0:31:39your remuneration will be tied to the share price of your company.
0:31:39 > 0:31:42So you will have a very strong interest
0:31:42 > 0:31:44in getting that share price up.
0:31:44 > 0:31:46And one of the ways to do that, of course,
0:31:46 > 0:31:48is to cut costs.
0:31:48 > 0:31:50One of the biggest costs is wage cost.
0:31:50 > 0:31:53You could have a direct interest in holding wages down.
0:31:56 > 0:32:00The report did the complete opposite of what was intended.
0:32:00 > 0:32:03While the lid was kept on our wages,
0:32:03 > 0:32:06in the 15 years following Greenbury, executive pay quadrupled.
0:32:12 > 0:32:16But what do chief executives themselves think about this?
0:32:17 > 0:32:19Sir Martin Sorrell was one of the CEO titans
0:32:19 > 0:32:23who came to the fore in the 1990s, as the chief executive
0:32:23 > 0:32:26of the world's biggest advertising group, WPP.
0:32:26 > 0:32:29He is now one of Britain's highest paid executives,
0:32:29 > 0:32:33on £29.8 million last year -
0:32:33 > 0:32:37the majority as part of a long-term incentive scheme.
0:32:37 > 0:32:40Martin, do you think your wealth separates you from ordinary people?
0:32:41 > 0:32:45- Well, when you say my wealth...- Mm. - ..my wealth is tied up.
0:32:45 > 0:32:47All my net worth,
0:32:47 > 0:32:50bar a little bit, is tied up in the success of WPP.
0:32:50 > 0:32:52How much are you worth?
0:32:52 > 0:32:53Well, according to...
0:32:53 > 0:32:56Well, look at the Sunday Times Rich List -
0:32:56 > 0:32:59I think it puts it at around £250 million.
0:32:59 > 0:33:04There's no doubt that the debate around the pay to CEOs,
0:33:04 > 0:33:07pay however you term it, is the issue of the time.
0:33:07 > 0:33:11You yourself are paid 780 times your average employee.
0:33:11 > 0:33:12780 times.
0:33:12 > 0:33:15No, that's not true, actually. That's not true.
0:33:15 > 0:33:17Is it significantly greater than the average?
0:33:17 > 0:33:18The answer is yes.
0:33:18 > 0:33:22- Do you think that that's right for a CEO to be paid that?- But again...
0:33:22 > 0:33:25But again, you're looking at compensation...
0:33:25 > 0:33:27- JACQUES LAUGHS - It's a handy get-out clause, Martin.
0:33:27 > 0:33:29- No, no, it is not a handy get-out clause.- Well, it is!
0:33:29 > 0:33:32Do you think people are right to be upset about CEO pay?
0:33:32 > 0:33:36Well, it depends on whether it's pay for performance or not.
0:33:36 > 0:33:42If it's pay just for being there and then failing,
0:33:42 > 0:33:43I would agree with you.
0:33:43 > 0:33:46As long as it's based on success and it is pay for performance,
0:33:46 > 0:33:48I don't see anything wrong in that.
0:33:48 > 0:33:53By the 2000s, our society was unrecognisable
0:33:53 > 0:33:55from the relatively equal one of the 1970s.
0:34:03 > 0:34:05Our debt had been used to turn the markets
0:34:05 > 0:34:07into a huge money-making machine.
0:34:09 > 0:34:13And the machine depended on sucking ever more debt from new sources.
0:34:19 > 0:34:23In the 1970s, securities had been sold on solid mortgages.
0:34:23 > 0:34:26But by the early 2000s,
0:34:26 > 0:34:29the debt machine required bundling safe mortgages
0:34:29 > 0:34:31with risky ones.
0:34:34 > 0:34:38The problem was, those people did not know
0:34:38 > 0:34:42that those mortgages were different.
0:34:42 > 0:34:48They didn't understand that there are certain mortgages
0:34:48 > 0:34:51that are real mortgages,
0:34:51 > 0:34:54there are others that are phoney.
0:34:56 > 0:34:59After the millennium, millions of ordinary mortgages
0:34:59 > 0:35:03were bundled with those that would never be paid back.
0:35:03 > 0:35:05They were called sub-prime.
0:35:05 > 0:35:09It was the fatal outcome of Robert Dall's invention.
0:35:09 > 0:35:13The logic of what you created would lead inevitably to sub-prime,
0:35:13 > 0:35:18to bundled loans, to an inability for the financial system
0:35:18 > 0:35:19to deal with this level of debt.
0:35:19 > 0:35:21You yourself didn't bring about the crash,
0:35:21 > 0:35:24but you created the mechanics for it to happen.
0:35:24 > 0:35:26Now, that's true.
0:35:26 > 0:35:29That I am the first to admit to.
0:35:30 > 0:35:35In 2007, as sub-prime homeowners in America defaulted on their loans,
0:35:35 > 0:35:37the whole edifice began to collapse.
0:35:37 > 0:35:41First in America then in the UK.
0:35:41 > 0:35:44Thousands of customers have been queuing up outside
0:35:44 > 0:35:47branches of the troubled mortgage lender Northern Rock.
0:35:47 > 0:35:51Nobody's given an absolute guarantee that the money is safe in this bank.
0:35:52 > 0:35:55Share prices have continued to tumble around the world
0:35:55 > 0:35:58following the collapse of Lehman Brothers.
0:35:58 > 0:36:01The system built on risk had come crashing down.
0:36:02 > 0:36:05The markets had failed and the state needed to step in
0:36:05 > 0:36:07to bail out the banks.
0:36:07 > 0:36:10Every country in the world, around the globe,
0:36:10 > 0:36:13are facing the same problems at the same time.
0:36:13 > 0:36:17What had seemed like science was now in tatters.
0:36:17 > 0:36:21CLAMOURING
0:36:21 > 0:36:23It's just very difficult. All the markets are all over the place.
0:36:23 > 0:36:27Nobody knows exactly what they're doing, so it's a bit panicky.
0:36:29 > 0:36:33The Government eventually spent £375 billion
0:36:33 > 0:36:35to prop up the banking system.
0:36:35 > 0:36:38The same money given to British households
0:36:38 > 0:36:43would have meant a cheque for £24,000 on every doorstep.
0:36:45 > 0:36:47But it didn't happen.
0:36:47 > 0:36:51Instead of putting money in our pockets to fuel a consumer recovery,
0:36:51 > 0:36:54the profit from the bailout went to the super-rich.
0:36:54 > 0:36:57MUSIC: Sing, Sing, Sing by Benny Goodman
0:37:00 > 0:37:02This is an auction of classic cars -
0:37:02 > 0:37:05an occasion for the wealthy to splash out on luxury assets.
0:37:07 > 0:37:12Straight in, at lower estimate, at £90,000.
0:37:14 > 0:37:18£1,550,000, yes.
0:37:20 > 0:37:25The classic car market is booming thanks to taxpayer money.
0:37:25 > 0:37:31The hammer is up for £1,650,000.
0:37:31 > 0:37:33All done?
0:37:33 > 0:37:35Congratulations.
0:37:37 > 0:37:39So why did the bailout help these people
0:37:39 > 0:37:41more than the rest of us?
0:37:41 > 0:37:44The answer is embarrassingly simple -
0:37:44 > 0:37:46the public money used to bail out the banks
0:37:46 > 0:37:49actually fuelled a boom for those with financial assets.
0:37:51 > 0:37:53And who would they be?
0:37:53 > 0:37:56Yep, the super-rich.
0:37:56 > 0:37:58The classic car market has exploded in the last five years.
0:37:58 > 0:38:01Really since central banks have been printing money.
0:38:01 > 0:38:05It's really as a consequence of the financial crisis,
0:38:05 > 0:38:08of the credit crunch, that our market has done so well.
0:38:08 > 0:38:10I thought they printed money to help everyone
0:38:10 > 0:38:12try and get back on their feet,
0:38:12 > 0:38:14but it seems that the printing of money
0:38:14 > 0:38:16has actually really exacerbated the divide in Britain.
0:38:16 > 0:38:20the money has poured into the super-rich market
0:38:20 > 0:38:23and that's really where it's gone - because that's exploded, hasn't it?
0:38:23 > 0:38:25There is certainly some truth to the statement
0:38:25 > 0:38:27that the rich have become richer.
0:38:27 > 0:38:31The irony is that 95% of the gains from the bailout
0:38:31 > 0:38:33ended up with the super-rich,
0:38:33 > 0:38:36taking them even further away from the rest of us.
0:38:36 > 0:38:39£1.95 million. All done?
0:38:41 > 0:38:44Among the celebrity quota, Chris Evans,
0:38:44 > 0:38:47with big money for a 1971 Ferrari.
0:38:47 > 0:38:51At £1.98 million...
0:38:53 > 0:38:55- GAVEL SOUNDS - Congratulations.
0:38:59 > 0:39:02The bailout created this.
0:39:02 > 0:39:05Cars being sold for £1.9 million
0:39:05 > 0:39:08to a room full of the super-rich.
0:39:12 > 0:39:15So the crash worked for the super-rich.
0:39:15 > 0:39:18While the vast majority are still struggling to make ends meet,
0:39:18 > 0:39:21the very wealthy have come out of the global downturn,
0:39:21 > 0:39:23not just unscathed, but smiling.
0:39:25 > 0:39:26I have a thing for portraiture.
0:39:26 > 0:39:30I find it far more interesting than seascapes or landscapes.
0:39:30 > 0:39:32'David Leppan is a multimillionaire
0:39:32 > 0:39:37'who analyses the luxury spending patterns of the global elite'.
0:39:37 > 0:39:40I'm told that this is only the third building in London
0:39:40 > 0:39:43that has two full-length van Dyck portraits on the same wall.
0:39:43 > 0:39:45- Van Dyck?- Yes.- Are you serious?
0:39:45 > 0:39:47Yes, absolutely.
0:39:47 > 0:39:50Old masters are underappreciated,
0:39:50 > 0:39:53which in my mind makes them a great investment.
0:39:56 > 0:39:59'David holds to the established super-rich view
0:39:59 > 0:40:02'that their wealth benefits us all.'
0:40:02 > 0:40:04We've gone about creating wealth within our society.
0:40:04 > 0:40:09Wealth has been attributed to shares, to products,
0:40:09 > 0:40:11to art for example.
0:40:11 > 0:40:15This is not money that's been taken from somebody else.
0:40:15 > 0:40:19So, our economies are growing - wealth is not finite.
0:40:19 > 0:40:21There is more and more of it.
0:40:25 > 0:40:27This is Wakefield.
0:40:27 > 0:40:30While the super-rich have seen their share of wealth increase
0:40:30 > 0:40:33since the crash, in places like this,
0:40:33 > 0:40:35there have been six years of stagnation,
0:40:35 > 0:40:39with living standards still below pre-crisis levels.
0:40:41 > 0:40:43I've come to meet Louis Kasatkin,
0:40:43 > 0:40:46who used to have a full-time job at a distribution centre.
0:40:51 > 0:40:53- Louis, I'm Jacques. - Hi. Good to see you.
0:40:53 > 0:40:54Thanks for your time.
0:40:56 > 0:40:58So what did the crash do to your life?
0:41:00 > 0:41:03It was just like an earthquake.
0:41:03 > 0:41:06It opened up this great hole and everything fell in.
0:41:07 > 0:41:10'Louis has been trying to find a full-time job,
0:41:10 > 0:41:14'but the little work he gets are zero hours contracts,
0:41:14 > 0:41:16'with no guaranteed income.'
0:41:16 > 0:41:19So how does it work? You sign up with an agency...
0:41:19 > 0:41:22That's right. You get a text on a morning saying,
0:41:22 > 0:41:25"This is to confirm that you will be working tonight,"
0:41:25 > 0:41:29or "This is to let you know that due to low..."
0:41:29 > 0:41:31They always say "low business volumes."
0:41:31 > 0:41:33"..your shift has been cancelled."
0:41:33 > 0:41:35Louis, that sounds very hand to mouth.
0:41:35 > 0:41:37It sounds very precarious, your existence.
0:41:37 > 0:41:39Hand to mouth would actually be an improvement
0:41:39 > 0:41:41on my current circumstances.
0:41:41 > 0:41:44I mean, it is brutal.
0:41:44 > 0:41:47Is there any money left at the end of the week?
0:41:47 > 0:41:48No, not really.
0:41:48 > 0:41:51These zero hour agencies that you talk about,
0:41:51 > 0:41:53this seems like an incredible growth industry.
0:41:53 > 0:41:54Oh, it is. It's like cancer.
0:41:54 > 0:41:57It starts off as one little dark spot
0:41:57 > 0:42:01and the next thing you know, you've tumours all over the place.
0:42:03 > 0:42:06Since the crisis, the job insecurity prefigured
0:42:06 > 0:42:10by Peters and Waterman in the 1980s has become a reality.
0:42:11 > 0:42:13It's early morning in the heart of the City of London
0:42:13 > 0:42:15and it's freezing.
0:42:15 > 0:42:19And I'm standing here with some men
0:42:19 > 0:42:24who are sitting on a wall and hoping that a van will drive by
0:42:24 > 0:42:26and offer them some work in construction.
0:42:30 > 0:42:34The government parades improving job statistics.
0:42:34 > 0:42:38In reality, two thirds of the new jobs created since the crash
0:42:38 > 0:42:42are self-employed, meaning that pay levels stay low.
0:42:46 > 0:42:49Whatever they get, they'll take because they've got nothing.
0:42:49 > 0:42:51Obviously they can't sign on or anything.
0:42:51 > 0:42:53So whatever they get, they'll take.
0:42:53 > 0:42:55If they're given 30 or 40 a day, they'll probably take it.
0:42:55 > 0:42:57If we go in there now, we could be sent home.
0:42:57 > 0:42:59And that's it, we're finished.
0:42:59 > 0:43:01We got to go somewhere else and look elsewhere.
0:43:01 > 0:43:03So we've got no rights at all.
0:43:10 > 0:43:13Since the crash, inequality has worked for the rich
0:43:13 > 0:43:16and produced more insecurity for the rest of us.
0:43:18 > 0:43:21Britain is becoming a nation of freelancers.
0:43:21 > 0:43:23There's nearly two million of us,
0:43:23 > 0:43:27and the epitome of this new world is micro-jobbing -
0:43:27 > 0:43:31finding websites that offer jobs for a day or an even just an hour,
0:43:31 > 0:43:34and with as little as £5 at the end of it.
0:43:34 > 0:43:37You bid for the privilege of the odd job
0:43:37 > 0:43:40without any guarantee of security or hours.
0:43:40 > 0:43:42This is a new and highly precarious world.
0:43:45 > 0:43:48These websites link skilled people - graphic designers,
0:43:48 > 0:43:50animators, writers -
0:43:50 > 0:43:54with any job that needs doing at a price that has no lower limit.
0:43:54 > 0:43:57There's a couple of different ways you can hire a freelancer,
0:43:57 > 0:43:59but the most common way is you post a job.
0:43:59 > 0:44:00It's free to post.
0:44:01 > 0:44:04'Xenios Thrasyvoulou is the founder of the website
0:44:04 > 0:44:10'PeoplePerHour, which has nearly 300,000 active users signed up.'
0:44:10 > 0:44:12Basically, this is how the site works.
0:44:12 > 0:44:14You start very quickly by saying what you need to do.
0:44:14 > 0:44:20Typically, within minutes you'll start getting the first proposals.
0:44:20 > 0:44:24This has sold 204 times. It's an amazing impersonation.
0:44:24 > 0:44:25Look at this.
0:44:25 > 0:44:27Hi, thanks for stopping by.
0:44:27 > 0:44:31As you can see, I look and sound a lot like Mr T.
0:44:31 > 0:44:33If you would like a personalised message...
0:44:33 > 0:44:36'He launched the site in 2007
0:44:36 > 0:44:40'and has become a cheerleader for this entirely new way of working.'
0:44:42 > 0:44:44Employment, as we know it traditionally,
0:44:44 > 0:44:47has made people, unfortunately, quite lazy in many ways.
0:44:47 > 0:44:51You have stable income and you have a pension
0:44:51 > 0:44:52and so on and so forth.
0:44:52 > 0:44:54You don't have to fight for anything.
0:44:54 > 0:44:57In my dad's generation, people were in lifetime employment,
0:44:57 > 0:44:58and they were miserable.
0:44:58 > 0:45:02The world we are moving towards, which I think is a better world,
0:45:02 > 0:45:05keeps people on their toes, accountable,
0:45:05 > 0:45:07they need to fight for it,
0:45:07 > 0:45:10and the ones that do are essentially much better off
0:45:10 > 0:45:11than they were before.
0:45:11 > 0:45:15A lot of American billionaires and economists
0:45:15 > 0:45:17have said there should be no lower limit,
0:45:17 > 0:45:20we shouldn't be thinking about minimum wages.
0:45:20 > 0:45:22I would support that, personally.
0:45:22 > 0:45:26People are just not incentivised to go and find a job,
0:45:26 > 0:45:30because they are just living an OK life
0:45:30 > 0:45:31on unemployment benefits.
0:45:31 > 0:45:34What you're talking about is Darwinism.
0:45:34 > 0:45:36You're just talking about survival of the fittest
0:45:36 > 0:45:38and no safety net for the people who can't be
0:45:38 > 0:45:40entrepreneurs and go-getters.
0:45:40 > 0:45:43Well, actually Darwinism is survival of the most adaptable.
0:45:43 > 0:45:44And I think that is the key here.
0:45:44 > 0:45:47We're moving to a different kind of world
0:45:47 > 0:45:51where the ones that do really, really well are more adaptable,
0:45:51 > 0:45:54are fighters, and the upside is definitely worth it.
0:45:58 > 0:46:00What Xenios seems to be saying is we live and work
0:46:00 > 0:46:03in a world of survival of the fittest.
0:46:03 > 0:46:06No minimum wage, no safety net.
0:46:06 > 0:46:07This is what it should be.
0:46:11 > 0:46:14I want to see how I would get on in this new insecure world.
0:46:14 > 0:46:16How much can I earn in a day?
0:46:20 > 0:46:21Haircut, madam?
0:46:22 > 0:46:24Haircut, sir?
0:46:24 > 0:46:25Haircut, sir?
0:46:25 > 0:46:26Haircut, sir?
0:46:26 > 0:46:28Haircut, madam?
0:46:28 > 0:46:30Look interesting to you?
0:46:31 > 0:46:33Haircut, sir?
0:46:33 > 0:46:34HE GROANS
0:46:35 > 0:46:37Haircut, madam?
0:46:41 > 0:46:43How much are you getting for this?
0:46:43 > 0:46:44I'm getting £5 an hour.
0:46:44 > 0:46:46- Can you get by with what you are earning?- Um...
0:46:46 > 0:46:48Not really.
0:46:48 > 0:46:50Haircut, sir?
0:46:50 > 0:46:51Haircut, madam?
0:46:51 > 0:46:55'There are nearly 2 million freelance workers in Britain.
0:46:55 > 0:46:57'Not all like this, but at the most insecure end,
0:46:57 > 0:46:59'they share a sense of desperation.'
0:47:02 > 0:47:04Please, God. Please, someone take one.
0:47:10 > 0:47:11Thank you very much.
0:47:11 > 0:47:13- Here you go, my friend. - Thank you, Sanjay.
0:47:13 > 0:47:15- Thanks so much.- See you soon again. - I appreciate that.
0:47:17 > 0:47:20'I've done two hours' work and earned £20.
0:47:20 > 0:47:24'Not bad - but they only want somebody for the lunchtime rush.
0:47:26 > 0:47:29'It takes time to find work and when I spot a job,
0:47:29 > 0:47:31'it's not exactly merchant banking.'
0:47:36 > 0:47:38What do you think? Do you think a fiver for that?
0:47:38 > 0:47:41- A fiver, yeah.- Yeah?- Yeah, cheers.
0:47:41 > 0:47:44- There you go, thanks very much. Well done.- Cheers.
0:47:46 > 0:47:48'There's still a few hours left in the day.
0:47:48 > 0:47:50'Next - gardening.
0:47:50 > 0:47:52'I've agreed £15 for a big clear-up.'
0:48:03 > 0:48:05OK, no problem.
0:48:05 > 0:48:07I think I'm done.
0:48:08 > 0:48:13So at the end of the day, I have made £45 pounds.
0:48:13 > 0:48:1745 quid and I'm knackered.
0:48:17 > 0:48:19I've had enough. I want to go home.
0:48:19 > 0:48:22People do this every single day.
0:48:22 > 0:48:27With these micro-jobs, there's no guarantee of work,
0:48:27 > 0:48:30there's no guarantee that I could make that tomorrow.
0:48:30 > 0:48:31I could make nothing tomorrow.
0:48:31 > 0:48:34I could sit there all day waiting for a job to come through,
0:48:34 > 0:48:35be lucky to make 20 quid.
0:48:35 > 0:48:38It's so precarious, it's frightening.
0:48:41 > 0:48:44Over the last five years, the insecure nature of our lives
0:48:44 > 0:48:46and the growing inequality it's created
0:48:46 > 0:48:49have become the subject of intense debate.
0:48:53 > 0:48:56In Paris, one of the world's most influential economists,
0:48:56 > 0:49:01Thomas Piketty, believes inequality is fundamentally changing society.
0:49:04 > 0:49:06Inequality is not a problem in itself,
0:49:06 > 0:49:09up to a point it can actually be useful for incentives for growth,
0:49:09 > 0:49:12but when inequality gets too extreme,
0:49:12 > 0:49:15what historical evidence suggests
0:49:15 > 0:49:17is that this is not useful any more for growth.
0:49:18 > 0:49:21Piketty thinks the extreme wealth of the super-rich
0:49:21 > 0:49:23will profoundly alter our future.
0:49:24 > 0:49:28We can say is that the share of national wealth
0:49:28 > 0:49:33going to the top is of the order of 60% to 70%.
0:49:33 > 0:49:37The bottom half of society has very little net wealth, you know,
0:49:37 > 0:49:43less than 5%. The very fact that we don't know how far this can go
0:49:43 > 0:49:45is in itself a problem.
0:49:45 > 0:49:48You know, if we don't do coordination
0:49:48 > 0:49:53in favour of fiscal transparency and fiscal justice,
0:49:53 > 0:49:57I think the long run looks a bit frightening.
0:50:03 > 0:50:07The growing sense of injustice is being felt by more and more of us.
0:50:11 > 0:50:16And with no end in sight to rampant inequality...
0:50:16 > 0:50:19tension within the 99% is rising.
0:50:19 > 0:50:21This is a peaceful camp.
0:50:21 > 0:50:24It is the City of London that is violent,
0:50:24 > 0:50:26it is capitalism that is violent.
0:50:29 > 0:50:33Many believe that the seeds of future violence are being sown.
0:50:35 > 0:50:39This is the historian Yuval Harari.
0:50:39 > 0:50:41He believes our attitudes to inequality
0:50:41 > 0:50:43have fundamentally changed.
0:50:43 > 0:50:45In the Middle Ages, as far as we know,
0:50:45 > 0:50:47inequality did not cause people
0:50:47 > 0:50:50to be very dissatisfied with their condition.
0:50:50 > 0:50:55You're brought up from birth expecting the world to be unequal.
0:50:55 > 0:50:58Because you knew from birth - "I'm a peasant, he's a king,
0:50:58 > 0:51:00"that's the way the world works."
0:51:00 > 0:51:04But when you live in a modern capitalist culture,
0:51:04 > 0:51:07which encourages everybody, all the time,
0:51:07 > 0:51:12to want more and to believe that you can be as good as everybody else,
0:51:12 > 0:51:15then inequality becomes a much bigger problem,
0:51:15 > 0:51:19because then you always look at what other people have
0:51:19 > 0:51:21and you want that.
0:51:21 > 0:51:24And this is a great cause for dissatisfaction.
0:51:27 > 0:51:31In America, a country with higher inequality even than Britain,
0:51:31 > 0:51:34these concerns are being taken very seriously.
0:51:36 > 0:51:39Since Occupy Wall Street in 2011,
0:51:39 > 0:51:41inequality has become a call to action...
0:51:45 > 0:51:49..and the super-rich are the focus of anger.
0:51:49 > 0:51:52The police are actually protecting the wrong people.
0:51:52 > 0:51:56They're arresting the wrong people, they're all wrong.
0:51:56 > 0:51:59What is clear is that some of the 99%
0:51:59 > 0:52:02believe that it's time to confront inequality.
0:52:03 > 0:52:06There is now a political tide for change.
0:52:06 > 0:52:10Powerful Americans, from President Obama downwards,
0:52:10 > 0:52:12are talking about the threat to society
0:52:12 > 0:52:17if they do not address what he calls the "Great Divergence."
0:52:17 > 0:52:20That is a dangerous and growing inequality
0:52:20 > 0:52:22and lack of upward mobility
0:52:22 > 0:52:27that has jeopardised middle class America's basic bargain -
0:52:27 > 0:52:29that if you work hard, you have a chance to get ahead.
0:52:31 > 0:52:34I believe this is the defining challenge of our time.
0:52:36 > 0:52:40And even the super-rich themselves are taking it seriously.
0:52:40 > 0:52:44- THEY CHANT:- The people united will never be defeated!
0:52:45 > 0:52:47You show me a highly unequal society,
0:52:47 > 0:52:50I will show you either a revolution or a police state.
0:52:50 > 0:52:54Nick Hanauer was one of the first investors in Amazon,
0:52:54 > 0:52:58and sold his company to Microsoft for 6 billion.
0:53:00 > 0:53:02'Somebody like me
0:53:02 > 0:53:06earns 10,000, 20,000 an hour.
0:53:08 > 0:53:11That creates a very different life
0:53:11 > 0:53:15from the life that ordinary people have to live.
0:53:15 > 0:53:20That gap isn't just an economic gap, it's a social gap.
0:53:20 > 0:53:23That gap is very, very corrosive
0:53:23 > 0:53:25because it decreases the amount of empathy
0:53:25 > 0:53:28that the people at the top have for everyone else.
0:53:29 > 0:53:33A sentiment that was echoed at a fair pay demo in Boston last year.
0:53:37 > 0:53:41The pay protestors have formed a national movement in the US.
0:53:41 > 0:53:46In city after city, demonstrations have sprung up attacking inequality.
0:53:48 > 0:53:50I think we have to flip around the idea.
0:53:50 > 0:53:52We generate the money for them.
0:53:52 > 0:53:54They don't give us jobs.
0:53:54 > 0:53:57We're generating the richness of the wealthy people.
0:54:01 > 0:54:04The norm in this country today is for CEOs
0:54:04 > 0:54:09to make massive amounts of money in an immoral level.
0:54:09 > 0:54:11We need to bring money back to the workers.
0:54:14 > 0:54:17We're not going to get the 1% to change their mind,
0:54:17 > 0:54:19we're going to get the 99% to realise
0:54:19 > 0:54:21that if they all stand up collectively,
0:54:21 > 0:54:22this is over with tomorrow.
0:54:26 > 0:54:29HANAUER: History shows us that if you make a society
0:54:29 > 0:54:34unequal enough, it is going to turn bad for everybody.
0:54:34 > 0:54:36Particularly people like me.
0:54:42 > 0:54:44So are the pitchforks coming?
0:54:44 > 0:54:46Well, maybe not tomorrow.
0:54:46 > 0:54:48But if things keep going the way they are,
0:54:48 > 0:54:50for sure they are going to come.
0:54:51 > 0:54:55And these predictions are as true for the UK as they are for America.
0:54:59 > 0:55:02The cracks are already showing in our own hourglass society.
0:55:03 > 0:55:07When rioting broke out four years ago across the UK,
0:55:07 > 0:55:09for some it was an illegal shopping trip.
0:55:09 > 0:55:12But for others it was about inequality and injustice.
0:55:24 > 0:55:27And the establishment are taking note.
0:55:30 > 0:55:34Remarkably, riots had been predicted in a strategic report
0:55:34 > 0:55:38written by a secretive think-tank at the Ministry of Defence.
0:55:40 > 0:55:44It stated that inequality could lead to violence,
0:55:44 > 0:55:47if the excluded began to take the law into their own hands.
0:55:49 > 0:55:53Rear Admiral Chris Parry commissioned the report.
0:55:53 > 0:55:55I think in modern complex societies,
0:55:55 > 0:55:58if you don't address the issues of economic inequality
0:55:58 > 0:56:01and social cohesion, you are going to get unrest.
0:56:01 > 0:56:04You're going to get people who reject the capitalist system,
0:56:04 > 0:56:06they reject the market. They'll reject democracy.
0:56:06 > 0:56:09They'll take action outside our democratic institutions.
0:56:09 > 0:56:11And we won't like that.
0:56:12 > 0:56:14'This is not a politician talking
0:56:14 > 0:56:17'but a high ranking member of the armed services.
0:56:17 > 0:56:18'His warning is stark -
0:56:18 > 0:56:21'the potential danger is clear and present.'
0:56:21 > 0:56:24I think there comes a point where people say,
0:56:24 > 0:56:26"Look, I don't enough out of this society.
0:56:26 > 0:56:28"I don't have a stake in this society,"
0:56:28 > 0:56:30and suddenly, they burst out.
0:56:34 > 0:56:37A fact not lost on those who might be in the firing line.
0:56:39 > 0:56:42They will conclude that we are not playing a fair game,
0:56:42 > 0:56:44that we are not playing a game at all,
0:56:44 > 0:56:48we're engaging in an activity where I get everything
0:56:48 > 0:56:49and they get nothing.
0:56:49 > 0:56:53And if it's just a game, they will simply cease to play.
0:56:53 > 0:56:58If it's an economy, they're likely, eventually, to get really angry
0:56:58 > 0:57:01and come and kill me and take all my stuff,
0:57:01 > 0:57:05because that will be their only option at that point.
0:57:05 > 0:57:07And this is just obvious.
0:57:11 > 0:57:1340 years of widening inequality
0:57:13 > 0:57:16has left Britain with a fractured society.
0:57:16 > 0:57:22The richest 1% now earn over 14% of our total national income -
0:57:22 > 0:57:26a figure which has nearly tripled in the last 40 years.
0:57:26 > 0:57:30And the rest of society have become a business opportunity
0:57:30 > 0:57:31for the very few.
0:57:35 > 0:57:39This is the Shard, the tallest building in Europe,
0:57:39 > 0:57:43and a fitting metaphor for the inequality in society.
0:57:43 > 0:57:47The 1% live are on the top floor and the rest of us live down here.
0:57:49 > 0:57:53Britain is being transformed by a polarisation of wealth
0:57:53 > 0:57:55unlike any seen before.
0:57:55 > 0:57:59The super-rich can seal themselves off from this inequality
0:57:59 > 0:58:01but only for so long.
0:58:01 > 0:58:03When it becomes unsustainable,
0:58:03 > 0:58:07the view from the top floor could suddenly be very different.