Episode 2 The Super-Rich and Us

'The super-rich are taking over.

'85 people now own the same as half the world's population.'

You don't get this stuff at Ikea, do you?!

'Never before has money been so polarised.'

People are struggling to pay their mortgages, pay their rent,

to eat, to pay utility bills.

The 21st century will be the most unequal period in human history.

'My name's Jacques Peretti and last time

'I revealed how billionaires were wooed to this country.'

Explain how important Britain is as a tax haven for the super-rich.

It's very important,

it's the most attractive location now on the planet.

'But the plan to bring them here was flawed.'

A model which is based on a top 1%

generating and consuming all of the growth simply isn't sustainable.

'This time we'll see how, far from happening by chance,

'soaring inequality was a business opportunity

'for the wealthy to make money out of us.'

You would invest a lot in the super-rich

and you would invest also in companies that serve the super-poor.

What you see during that period is a series of...

fairly intentional policies

designed to guarantee that most people are in debt.

Britain's inequality has risen every year this century.

It's driving society apart

and now even the super-rich could be in trouble.

So are the pitchforks coming?

If things keep going the way they are, for sure they're going to come.

-ALL CHANT:

-..united will never be defeated!

This is London Fashion Week -

part of the super-rich social calendar.

But this isn't simply an invite-only fashion event.

It's a glimpse into a world that wouldn't exist without

the new extremes of wealth.

A dress can cost £100,000 at one of these shows.

That's five years' worth of income for an average British household.

Is that really right,

that people should be spending £100,000 on a dress?

If you can afford it, why not?

They can only charge these prices

because of the soaring wealth of their customers.

The super-rich inhabit their own independent state.

It's a bubble - an exclusive bubble.

Nowhere is this exclusivity more apparent than on the polo circuit.

This is Cirencester Park in Gloucestershire.

You need to be a multimillionaire to be a member of this elite.

You've got to have a certain amount of talent

but the horse is a really important part of the job.

The cost of the horses, they vary from, you know, 5,000

up to 250,000.

You need a lot, don't you? because they get knackered.

Yeah, so today I've brought six horses.

And that's a goal.

Ladies and gentlemen, big round of applause for that.

A full team of polo ponies can cost £10 million.

And that's before you've flown the professional riders in

from Argentina.

It's this kind of exclusivity which reinforces the growing separation

between the wealthy and the rest of us.

I wanted to know what the people here thought

about the growing inequality in Britain.

This is Countess Bathurst,

who owns the land on which this event is taking place.

There's an increasing concern about the polarisation of wealth.

-Yeah.

-What do you feel about it?

I think that human nature,

BY human nature,

will always be a little envious

of those who have more than they do.

And I think that there is an element of envy,

and I think that there is also an element of, shall we say,

not realising what it means to be somebody like us.

You know, we do work incredibly hard.

I think that people don't realise what a responsibility it is,

they don't realise sometimes what a worry it can be.

The people on this march also have worries.

They're worrying about how to pay their bills.

The phrase that comes up again and again

when you talk to people here is the 1%.

What have the 1% done to the rest of Britain,

in terms of their wealth escalating

and the lives and living conditions of everyone else stagnating?

We're going backwards, very quickly. Back to Victorian times.

I think really before long it'll be pulling your forelock

and, "Please, sir, I want some more."

People are incensed.

But they'd be more incensed still

if they realised that this inequality wasn't an accident.

The inequality that's made so many people angry

didn't happen by chance.

It was a plan.

The growing prosperity of the super-rich is directly linked

to the austerity we've been suffering for the last five years.

The plan began ten years ago here in New York,

at what was then the biggest bank in the world - Citigroup.

Years before we all started to become concerned

and critical of growing inequality,

the people in this building had worked out

how to turn it into a business opportunity.

It was set out in this document for investors.

Tobias Levkovich was a key strategist at the bank.

Could you tell me what the report said?

Basically it suggested that wealth was concentrated

amongst upper-income Americans, and particularly the top 1%,

and, if you really want to get technical, the top 0.1%.

There's always been the haves and the have-nots,

but today you have the haves, the have-nots and the have-yachts.

The report told investors that massive inequality

was THE cash cow of the 21st century.

At the top end they were to put their money into industries

that serve the new global elite, like jewellery and yachts.

It was unapologetic economic opportunism.

Right at the beginning it says, "This imbalance in inequality..."

talking about what's coming... "expresses itself to the public

"in the standard scary global imbalances,"

you know, basically inequality, and it says, "We worry less."

If you're telling people in 2005,

"This trend is going to be continuing,

"and we worry less about social unrest or backlash issues,

"here you can buy these things

"and be in pretty good shape for the next five to ten years,"

investors kind of like those long calls.

You can put it away, sleep at night

and know that at the end of it you'll have money.

Selling to the super-rich was no surprise.

But their analysis went on to deliver a more shocking revelation.

Citigroup realised that there was a huge opportunity

at the bottom of society.

A chance to make billions from poor people.

Financial analyst Chrystia Freeland has followed the strategy closely.

What the Citigroup analysts observed was that the economy

was dividing into two sectors,

and their investing thesis was,

in the part of the economy that this 1% was active in,

you were going to see tremendous growth.

And you would also see growth in the part of the economy

that caters to poor people, because, basically,

they saw society being divided into the 1% and everybody else.

And so, on this investing thesis, you would invest a lot

in any sectors of the economy that served the super-rich,

in luxury-goods companies, in super-high-end real estate,

that kind of thing,

and you would invest also in companies

that served the super-poor, so maybe in a Walmart.

In this new world, there was someone left out of the equation -

the middle class, who'd be broke.

You had a theory which was called the hourglass theory.

Could you tell me what that theory is?

That the middle class would get squeezed the most.

In other words, the lower end of the income spectrum

would still get opportunities.

On the other side, you would have the wealthier ones

continue to invest and be able to take advantage of opportunities

because they had the capital to risk.

Do you not feel, though, Tobias,

any kind of responsibility or guilt for the fact

that you identified not just rich people but poor people to make money

out of inequality and then gave that advice to your clients?

You can sit there and say,

"Well, you know, this may not meet everybody's

"social happiness criteria but I have to deliver results

"or they're going to take that money

"and give it to somebody else for the results."

So it's not cynical, it's very practical. That is our job.

We're supposed to try to help them make money.

MUSIC: La Vie En Rose by Louis Armstrong

The most extraordinary thing about the Citigroup report

is just how accurate it proved to be.

Ten years later, the hourglass society is here.

And this is one of the best cities in the world to see it in action.

London.

This is Mount Street in Mayfair,

the most exclusive high street in the country.

And at the Christmas party they're celebrating a bumper year.

You're like the modern family butcher, aren't you?

Like, the old family butcher would be on a high street

and you're on a high street

but you're, like, Russian oligarchs and...

You know, we do the stats every year,

we look through the rich list, and we do...

I think last year we did 50%

of the top 100 of the rich list.

-Really?

-It's insane.

-Wow.

-It's absolutely insane.

You know, Kensington Palace Gardens,

which is the most expensive street in the world -

residential street in the world -

we supply half the houses down there.

And the next stop - a cigar shop where rich clients

are allowed to sample the wares INSIDE.

A lot of people, especially at the high end of the luxury-goods market,

have said things have actually really picked up.

We've got some very select customers

from all over the world -

from the Americas, from Russia, from China -

that haven't really been affected.

So, gentlemen, when you're not smoking cigars, what do you do?

Commodity trading and mining, and the brandy business.

What about you, my friend?

I own a telecoms company.

-You own a telecoms company?

-Yes.

Just three miles away from the exclusivity of Mount Street

is the other end of the hourglass.

This is Brixton.

The last ten years have been a bonanza

for industries that target the poor.

Gambling, discounters and payday loans.

Money borrowed to make ends meet.

Deborah Hargreaves from the High Pay Centre

has examined how the hourglass has changed our landscape.

The vast majority of people haven't had a pay rise for ten years,

so their pay has not kept up with inflation.

We've channelled all the rewards to those at the very top.

And this has given us a whole range of different industries

associated with... almost with poverty, really.

But to find out how this unequal society was created,

you need to go back to the 1970s.

MUSIC: 20th Century Boy by T.Rex

It was the high watermark of economic equality.

The most egalitarian decade in history.

The wealthiest 1% earned less than 6% of the national income -

its lowest recorded level.

Bankers' pay was on a par with teachers' and GPs'.

Aspiration was shared across society.

Power to the people!

Utopianism was in the air.

Citizen Smith believed revolution was just around the corner.

You, the survivors of the Tooting Popular Front,

shall inherit my fiery legacy.

You will be lifted into the hearts of the proletariat!

Eh, theirs will be the airy excesses of power!

But there wasn't a utopia just around the corner.

Cracks in society were already showing.

The 1970s brought us strikes and inflation.

It began with the oil crisis of 1973.

As energy prices rose, Britain endured blackouts

and the three-day week.

The night before last

I spent the evening with candles and a lovely fire.

Really, it's the sort of evening I'd like to spend more often,

I shall do it even when we have the electricity back.

The post-war boom was over.

Raw capitalism was on its way back,

and it was to start with the asset strippers,

dismantling companies for profit.

Men like Sir James Goldsmith.

..Sir James, you've made your reputation

-as a buyer and seller of companies.

-That is your impression.

-Not only is it your impression...

-Within the food industry.

..no-one, not even you, not even our worst enemies,

could suggest we're unsuccessful.

What had been a stable and egalitarian society

at the start of the decade was unravelling fast.

The post-war certainties of full employment

and rising prosperity were gone.

This insecurity was about to be harnessed into a new ideology.

New York - the money capital of the planet.

In the 1970s, a new kind of capitalism was about to emerge here.

One which would exploit this volatile world.

It was formulated by two economists,

Fischer Black and Myron Scholes.

It was known as the Black-Scholes equation.

Not many things that we say change the world

actually do change the world.

But this formula did.

It created that over there - that city.

Created the financial world that we live in today.

What the Black-Scholes equation did was to give traders

a formula for predicting what a stock would be worth in the future.

It was gambling - with a system.

But to win big, you needed to bet big.

They said that you need not to be afraid of risk,

but to embrace it.

They said the more you risk, the more you win.

The equation gave Wall Street a new model for trading.

With this information,

traders could bet billions of dollars on what were called options,

the right to buy an item in the future.

These were very brilliant mathematicians,

maths professors, who were able to build this structure.

It assumes certain things about the cost of capital,

the changes in price of the product that you've optioned to buy.

Within a few years, new financial markets for options

and derivatives boomed, powered by the algebra of Black and Scholes.

Today the market for derivatives alone

is worth one quadrillion dollars,

equivalent to ten times the value of all the goods

produced across the planet.

The higher the risk, the higher the reward.

But you have to be able to take the risk.

You have to be able to take the chance

that you might lose the money.

Getting to greater and greater wealth,

you have the ability to take on more risk.

The Black-Scholes equation had triggered an economic revolution.

And it was all based on the idea that risk was good.

But Black and Scholes was only the beginning.

Risk was about to be rolled out beyond the financial markets

and into our lives,

affecting the future of everyone in the world.

It was down to one man, rooted in the Wall Street of his time.

I was the guy that drank hard and smoked hard

and...did everything hard, you know?

Robert Dall was a trader at Salomon Brothers -

one of the largest brokers in New York.

He was an expert in the mortgage market,

which in the 1970s was expanding hugely.

The politicians in this country at this time

were screaming to everybody, "A house for every American".

It's not true, it's not right,

but it was a great thing for politicians to say.

Traders were looking for a way to exploit the burgeoning market.

And mortgages were attractive to them

because they brought in a regular monthly payment.

In 1977, Dall had the idea to bundle 100 million worth

of these mortgages together,

to make a huge income stream, which could be traded on the market.

-When you bundled it all up...

-That's right.

..it suddenly has huge potential.

At the time it was...

..pretty much beyond comprehension that it grew so fast.

The rate of growth was pretty incredible.

They were known as securities,

and what Dall had invented was something called securitisation.

I actually have had people come up to me in restaurants

and things like that and say, "Thank you for the idea."

JACQUES LAUGHS

Robert Dall's invention was to have profound consequences

that would affect all our lives.

The Black and Scholes formula and securitisation

were the building blocks of a new world -

one in which taking risks drove profit.

But what few of us realised

was that the risks being taken were with OUR debts.

MUSIC: Stand And Deliver by Adam & The Ants

By the mid-'80s, Britain was ready to join the party.

American banks arrived in London, bringing the mantra

that had transformed Wall Street - risk was good.

The rules of Wall Street apply in London -

if you're good you get very, very high rewards,

if you're not, get on your bike.

In 1986, the City was transformed by the Big Bang,

which deregulated its activities.

Nicola Horlick was one of the new breed of City superstars,

earning £1 million a year.

Big Bang was very, very significant,

but it was significant in the sense that it moved everything

away from being partnerships and family enterprises to being...huge.

You book me a client, I will sell you half a million at 673.

Small firms built on trust and tradition

gave way to international banking groups

ruthlessly using risk to maximise profits.

Things changed, and all these clever people

started going and working at banks and doing rinky-dink wild things.

The multiples changed and started to zoom up,

and suddenly everybody wanted to be in banks

and they were suddenly the best thing since sliced bread

and they were on 18-times earnings, not three-times earnings.

Just as in America,

securitisation was a big part of the new financial machine.

What that machine needed were debts, and we were about to oblige.

The British were about to get hooked on debt.

To afford the '80s lifestyle,

you needed credit cards and newly available bank loans.

The way you made people feel better

is allowing them to borrow a lot of money,

take on consumer debt.

And that worked for a while,

and I think that was part of the reason why people felt so good.

Britain was experiencing the illusion of unprecedented prosperity

and we paid a price.

Household debt was running at nearly £350 billion by the late '80s.

David Graeber is an economist at the London School of Economics

who takes a critical view of our growing debt during the '80s.

What you see during that period is a series of...

fairly intentional government policies

which are designed to guarantee

that most people are in debt.

If you have a mortgage, you can't go on strike.

So it was quite intentional policy - get people in debt,

it'll reduce the amount of industrial action,

it'll hold down wages, it'll control inflation.

How important is debt

to the extraction of wealth from us, the 99%, to the 1%?

I think it's the key to the whole thing.

The finance industry and the debt industry are really the same thing.

To a large degree, finance just means other people's debts.

They're trading our debts with each other.

The growing addiction of consumers to debt

helped fund the growing wealth of the financial centres

of London and New York.

And a new attitude appeared to celebrate this.

But evolution in corporate America seems to be...

survival of the unfittest.

Well, in my book, you either do it right...

or you get eliminated.

In Oliver Stone's Wall Street,

these aren't economic choices, but a Darwinist imperative.

The point is, ladies and gentlemen,

that greed, for lack of a better word,

is good.

Greed is right.

Greed works.

Greed clarifies, cuts through and captures

the essence of evolutionary spirit.

Wall Street introduced us to a new species,

an alpha elite who were going to change our lives.

They were called the Masters of the Universe.

And they were coming here, to Britain.

These were the superstars of the business world -

the CEOs.

Parachuted in to cut costs, and paid handsomely for doing it.

Richard Giordano was the first.

Throughout the 1980s he was the boss of BOC,

one of Britain's largest companies.

I came to work at a pay level

that was equal to what I was earning in the United States.

Might have been the equivalent of £250,000 per annum.

That was an...enormously large sum in the landscape of that time.

You were referred to as Britain's highest-paid businessman.

That was probably true at the time,

although I was soon eclipsed by many others.

And do you think that the amount of money you were being paid

was seen as very un-British in a way?

I think it was regarded as coming from another planet.

This was a business revolution, wasn't it?

It was a revolution that...

..enshrined the idea of...business success,

entrepreneurship, which had not been true in the 1970s.

It was thought wonderful to be an entrepreneur,

wonderful to be successful...

I guess, wonderful to make more money.

And that was something that I think was a big change.

In the 1980s, we faced a ruthless business culture.

The winners were the top 1%, who saw their incomes rise steeply.

But what about the rest of us?

We were about to undergo our own workplace revolution.

And, once again, it came from America.

It was driven by the thinking of these two men,

Tom Peters and Robert Waterman,

analysts whose book In Search Of Excellence from 1982

extolled a stripped-down workplace

in which only the fittest would survive.

'Nikil Saval is a historian

'who's studied how this new theory of management

'was designed to create fierce competition for jobs.'

The move was to make people...

put them on their toes, in a way. That was the idea.

And so there was an atmosphere

and a mood in which precariousness was seen as the path to prosperity.

This new cut-throat workplace was satirised

in the '80s film Working Girl.

One of the early scenes, you see Melanie Griffith, the main actress,

showing up at her new job with a box of her stuff.

Griffith's character even has the book

by Peters and Waterman in her box

when she arrives at the office.

You know that she's somehow going to succeed in this new workplace,

despite all the obstacles, because she knows...

she knows the model, she knows the business, she knows how to act.

The fictional working girl faced a new kind of insecurity

that was about to confront us all.

Work was being destabilised.

By the time of the second recession at the end of the 1980s,

an even harsher economic reality was emerging.

-Gaz, who's going to buy a rusty girder?

-Come on.

And it was a change reflected in films like The Full Monty.

Gaz, hang on!

Ten years we worked in here. Now look.

Anyone not part of the 1% was expendable.

Even middle management were out in the cold.

Button it, you lot. Some of us are trying to get a job.

Hey, and it says no smoking in here.

You forget, Gerald, you're not our foreman any more.

You're just like the rest of us.

Scrap.

Shut it, right?

MUSIC: Parklife by Blur

By the mid 1990s, Britain was a changed society.

The top 1% now earned a tenth of national income -

nearly double its level in the 1970s.

Bankers were no longer paid the same as GPs or teachers.

A two-tier society was just beginning to take off.

Right across the developed world,

the old paternalistic company with a duty to its workers

was disappearing.

You invested in a business and this business is dead.

Let's have the intelligence, let's have the decency,

to sign the death certificate, collect the insurance

and invest in something with a future!

Ahh, but we can't.

We can't, because we have a responsibility.

A responsibility to our employees, to our community.

I got two words for that.

Who cares?

In the '90s film Other People's Money, the would-be boss

takes for granted that the company is just there to be bled for profit.

I'm not your best friend.

I'm your only friend.

I don't make anything... I'm making you money.

And lest we forget, that's the only reason

any of you became stockholders in the first place.

You want to make money.

In 1994, Cedric Brown, the boss of the recently privatised British Gas,

became, briefly, public enemy one.

His salary more than doubled overnight to £475,000.

The country was outraged, driven by the then Leader of the Opposition.

Yesterday the president of the board of trade

justified the grotesque increase of £200,000

to the chief of British Gas.

Sir, you do have a responsibility to explain to us

why you're worth 25 times what your staff are.

CEOs were reported to have their "snouts in the trough"

and government needed to be seen to be doing something.

Sir Richard Greenbury, the head of Marks & Spencer,

was given the job of heading a committee

to look into executive salaries.

A committee of 11, of whom 8 were chairmen or chief executives.

Do you think it was OK what he was getting?

Well...

Yes, of course it was.

But we had to come up with a formula

of best practice.

What best practice meant

was creating a new publicly acceptable formula

for executive pay.

And Greenbury was adamant that his committee of CEOs was up to the job.

Nobody was earning more than about £500,000 to £700,000 a year.

I don't think anybody could have fairly described us

as being biased.

£500,000 a year was 30 times the average salary

in Britain at the time.

Greenbury's committee said the solution

to big rewards for executives was to tie bonuses

to performance and shares.

It was a fateful decision -

executive pay soared.

The proof of the pudding is in the eating,

and between '95 and 2010,

the whole issue of wages and salaries went off the Richter scale.

If you're a chief executive of a big company,

your remuneration will be tied to the share price of your company.

So you will have a very strong interest

in getting that share price up.

And one of the ways to do that, of course,

is to cut costs.

One of the biggest costs is wage cost.

You could have a direct interest in holding wages down.

The report did the complete opposite of what was intended.

While the lid was kept on our wages,

in the 15 years following Greenbury, executive pay quadrupled.

But what do chief executives themselves think about this?

Sir Martin Sorrell was one of the CEO titans

who came to the fore in the 1990s, as the chief executive

of the world's biggest advertising group, WPP.

He is now one of Britain's highest paid executives,

on £29.8 million last year -

the majority as part of a long-term incentive scheme.

Martin, do you think your wealth separates you from ordinary people?

-Well, when you say my wealth...

-Mm.

-..my wealth is tied up.

All my net worth,

bar a little bit, is tied up in the success of WPP.

How much are you worth?

Well, according to...

Well, look at the Sunday Times Rich List -

I think it puts it at around £250 million.

There's no doubt that the debate around the pay to CEOs,

pay however you term it, is the issue of the time.

You yourself are paid 780 times your average employee.

780 times.

No, that's not true, actually. That's not true.

Is it significantly greater than the average?

The answer is yes.

-Do you think that that's right for a CEO to be paid that?

-But again...

But again, you're looking at compensation...

-JACQUES LAUGHS

-It's a handy get-out clause, Martin.

-No, no, it is not a handy get-out clause.

-Well, it is!

Do you think people are right to be upset about CEO pay?

Well, it depends on whether it's pay for performance or not.

If it's pay just for being there and then failing,

I would agree with you.

As long as it's based on success and it is pay for performance,

I don't see anything wrong in that.

By the 2000s, our society was unrecognisable

from the relatively equal one of the 1970s.

Our debt had been used to turn the markets

into a huge money-making machine.

And the machine depended on sucking ever more debt from new sources.

In the 1970s, securities had been sold on solid mortgages.

But by the early 2000s,

the debt machine required bundling safe mortgages

with risky ones.

The problem was, those people did not know

that those mortgages were different.

They didn't understand that there are certain mortgages

that are real mortgages,

there are others that are phoney.

After the millennium, millions of ordinary mortgages

were bundled with those that would never be paid back.

They were called sub-prime.

It was the fatal outcome of Robert Dall's invention.

The logic of what you created would lead inevitably to sub-prime,

to bundled loans, to an inability for the financial system

to deal with this level of debt.

You yourself didn't bring about the crash,

but you created the mechanics for it to happen.

Now, that's true.

That I am the first to admit to.

In 2007, as sub-prime homeowners in America defaulted on their loans,

the whole edifice began to collapse.

First in America then in the UK.

Thousands of customers have been queuing up outside

branches of the troubled mortgage lender Northern Rock.

Nobody's given an absolute guarantee that the money is safe in this bank.

Share prices have continued to tumble around the world

following the collapse of Lehman Brothers.

The system built on risk had come crashing down.

The markets had failed and the state needed to step in

to bail out the banks.

Every country in the world, around the globe,

are facing the same problems at the same time.

What had seemed like science was now in tatters.

CLAMOURING

It's just very difficult. All the markets are all over the place.

Nobody knows exactly what they're doing, so it's a bit panicky.

The Government eventually spent £375 billion

to prop up the banking system.

The same money given to British households

would have meant a cheque for £24,000 on every doorstep.

But it didn't happen.

Instead of putting money in our pockets to fuel a consumer recovery,

the profit from the bailout went to the super-rich.

MUSIC: Sing, Sing, Sing by Benny Goodman

This is an auction of classic cars -

an occasion for the wealthy to splash out on luxury assets.

Straight in, at lower estimate, at £90,000.

£1,550,000, yes.

The classic car market is booming thanks to taxpayer money.

The hammer is up for £1,650,000.

All done?

Congratulations.

So why did the bailout help these people

more than the rest of us?

The answer is embarrassingly simple -

the public money used to bail out the banks

actually fuelled a boom for those with financial assets.

And who would they be?

Yep, the super-rich.

The classic car market has exploded in the last five years.

Really since central banks have been printing money.

It's really as a consequence of the financial crisis,

of the credit crunch, that our market has done so well.

I thought they printed money to help everyone

try and get back on their feet,

but it seems that the printing of money

has actually really exacerbated the divide in Britain.

the money has poured into the super-rich market

and that's really where it's gone - because that's exploded, hasn't it?

There is certainly some truth to the statement

that the rich have become richer.

The irony is that 95% of the gains from the bailout

ended up with the super-rich,

taking them even further away from the rest of us.

£1.95 million. All done?

Among the celebrity quota, Chris Evans,

with big money for a 1971 Ferrari.

At £1.98 million...

-GAVEL SOUNDS

-Congratulations.

The bailout created this.

Cars being sold for £1.9 million

to a room full of the super-rich.

So the crash worked for the super-rich.

While the vast majority are still struggling to make ends meet,

the very wealthy have come out of the global downturn,

not just unscathed, but smiling.

I have a thing for portraiture.

I find it far more interesting than seascapes or landscapes.

'David Leppan is a multimillionaire

'who analyses the luxury spending patterns of the global elite'.

I'm told that this is only the third building in London

that has two full-length van Dyck portraits on the same wall.

-Van Dyck?

-Yes.

-Are you serious?

Yes, absolutely.

Old masters are underappreciated,

which in my mind makes them a great investment.

'David holds to the established super-rich view

'that their wealth benefits us all.'

We've gone about creating wealth within our society.

Wealth has been attributed to shares, to products,

to art for example.

This is not money that's been taken from somebody else.

So, our economies are growing - wealth is not finite.

There is more and more of it.

This is Wakefield.

While the super-rich have seen their share of wealth increase

since the crash, in places like this,

there have been six years of stagnation,

with living standards still below pre-crisis levels.

I've come to meet Louis Kasatkin,

who used to have a full-time job at a distribution centre.

-Louis, I'm Jacques.

-Hi. Good to see you.

Thanks for your time.

So what did the crash do to your life?

It was just like an earthquake.

It opened up this great hole and everything fell in.

'Louis has been trying to find a full-time job,

'but the little work he gets are zero hours contracts,

'with no guaranteed income.'

So how does it work? You sign up with an agency...

That's right. You get a text on a morning saying,

"This is to confirm that you will be working tonight,"

or "This is to let you know that due to low..."

They always say "low business volumes."

"..your shift has been cancelled."

Louis, that sounds very hand to mouth.

It sounds very precarious, your existence.

Hand to mouth would actually be an improvement

on my current circumstances.

I mean, it is brutal.

Is there any money left at the end of the week?

No, not really.

These zero hour agencies that you talk about,

this seems like an incredible growth industry.

Oh, it is. It's like cancer.

It starts off as one little dark spot

and the next thing you know, you've tumours all over the place.

Since the crisis, the job insecurity prefigured

by Peters and Waterman in the 1980s has become a reality.

It's early morning in the heart of the City of London

and it's freezing.

And I'm standing here with some men

who are sitting on a wall and hoping that a van will drive by

and offer them some work in construction.

The government parades improving job statistics.

In reality, two thirds of the new jobs created since the crash

are self-employed, meaning that pay levels stay low.

Whatever they get, they'll take because they've got nothing.

Obviously they can't sign on or anything.

So whatever they get, they'll take.

If they're given 30 or 40 a day, they'll probably take it.

If we go in there now, we could be sent home.

And that's it, we're finished.

We got to go somewhere else and look elsewhere.

So we've got no rights at all.

Since the crash, inequality has worked for the rich

and produced more insecurity for the rest of us.

Britain is becoming a nation of freelancers.

There's nearly two million of us,

and the epitome of this new world is micro-jobbing -

finding websites that offer jobs for a day or an even just an hour,

and with as little as £5 at the end of it.

You bid for the privilege of the odd job

without any guarantee of security or hours.

This is a new and highly precarious world.

These websites link skilled people - graphic designers,

animators, writers -

with any job that needs doing at a price that has no lower limit.

There's a couple of different ways you can hire a freelancer,

but the most common way is you post a job.

It's free to post.

'Xenios Thrasyvoulou is the founder of the website

'PeoplePerHour, which has nearly 300,000 active users signed up.'

Basically, this is how the site works.

You start very quickly by saying what you need to do.

Typically, within minutes you'll start getting the first proposals.

This has sold 204 times. It's an amazing impersonation.

Look at this.

Hi, thanks for stopping by.

As you can see, I look and sound a lot like Mr T.

If you would like a personalised message...

'He launched the site in 2007

'and has become a cheerleader for this entirely new way of working.'

Employment, as we know it traditionally,

has made people, unfortunately, quite lazy in many ways.

You have stable income and you have a pension

and so on and so forth.

You don't have to fight for anything.

In my dad's generation, people were in lifetime employment,

and they were miserable.

The world we are moving towards, which I think is a better world,

keeps people on their toes, accountable,

they need to fight for it,

and the ones that do are essentially much better off

than they were before.

A lot of American billionaires and economists

have said there should be no lower limit,

we shouldn't be thinking about minimum wages.

I would support that, personally.

People are just not incentivised to go and find a job,

because they are just living an OK life

on unemployment benefits.

What you're talking about is Darwinism.

You're just talking about survival of the fittest

and no safety net for the people who can't be

entrepreneurs and go-getters.

Well, actually Darwinism is survival of the most adaptable.

And I think that is the key here.

We're moving to a different kind of world

where the ones that do really, really well are more adaptable,

are fighters, and the upside is definitely worth it.

What Xenios seems to be saying is we live and work

in a world of survival of the fittest.

No minimum wage, no safety net.

This is what it should be.

I want to see how I would get on in this new insecure world.

How much can I earn in a day?

Haircut, madam?

Haircut, sir?

Haircut, sir?

Haircut, sir?

Haircut, madam?

Look interesting to you?

Haircut, sir?

HE GROANS

Haircut, madam?

How much are you getting for this?

I'm getting £5 an hour.

-Can you get by with what you are earning?

-Um...

Not really.

Haircut, sir?

Haircut, madam?

'There are nearly 2 million freelance workers in Britain.

'Not all like this, but at the most insecure end,

'they share a sense of desperation.'

Please, God. Please, someone take one.

Thank you very much.

-Here you go, my friend.

-Thank you, Sanjay.

-Thanks so much.

-See you soon again.

-I appreciate that.

'I've done two hours' work and earned £20.

'Not bad - but they only want somebody for the lunchtime rush.

'It takes time to find work and when I spot a job,

'it's not exactly merchant banking.'

What do you think? Do you think a fiver for that?

-A fiver, yeah.

-Yeah?

-Yeah, cheers.

-There you go, thanks very much. Well done.

-Cheers.

'There's still a few hours left in the day.

'Next - gardening.

'I've agreed £15 for a big clear-up.'

OK, no problem.

I think I'm done.

So at the end of the day, I have made £45 pounds.

45 quid and I'm knackered.

I've had enough. I want to go home.

People do this every single day.

With these micro-jobs, there's no guarantee of work,

there's no guarantee that I could make that tomorrow.

I could make nothing tomorrow.

I could sit there all day waiting for a job to come through,

be lucky to make 20 quid.

It's so precarious, it's frightening.

Over the last five years, the insecure nature of our lives

and the growing inequality it's created

have become the subject of intense debate.

In Paris, one of the world's most influential economists,

Thomas Piketty, believes inequality is fundamentally changing society.

Inequality is not a problem in itself,

up to a point it can actually be useful for incentives for growth,

but when inequality gets too extreme,

what historical evidence suggests

is that this is not useful any more for growth.

Piketty thinks the extreme wealth of the super-rich

will profoundly alter our future.

We can say is that the share of national wealth

going to the top is of the order of 60% to 70%.

The bottom half of society has very little net wealth, you know,

less than 5%. The very fact that we don't know how far this can go

is in itself a problem.

You know, if we don't do coordination

in favour of fiscal transparency and fiscal justice,

I think the long run looks a bit frightening.

The growing sense of injustice is being felt by more and more of us.

And with no end in sight to rampant inequality...

tension within the 99% is rising.

This is a peaceful camp.

It is the City of London that is violent,

it is capitalism that is violent.

Many believe that the seeds of future violence are being sown.

This is the historian Yuval Harari.

He believes our attitudes to inequality

have fundamentally changed.

In the Middle Ages, as far as we know,

inequality did not cause people

to be very dissatisfied with their condition.

You're brought up from birth expecting the world to be unequal.

Because you knew from birth - "I'm a peasant, he's a king,

"that's the way the world works."

But when you live in a modern capitalist culture,

which encourages everybody, all the time,

to want more and to believe that you can be as good as everybody else,

then inequality becomes a much bigger problem,

because then you always look at what other people have

and you want that.

And this is a great cause for dissatisfaction.

In America, a country with higher inequality even than Britain,

these concerns are being taken very seriously.

Since Occupy Wall Street in 2011,

inequality has become a call to action...

..and the super-rich are the focus of anger.

The police are actually protecting the wrong people.

They're arresting the wrong people, they're all wrong.

What is clear is that some of the 99%

believe that it's time to confront inequality.

There is now a political tide for change.

Powerful Americans, from President Obama downwards,

are talking about the threat to society

if they do not address what he calls the "Great Divergence."

That is a dangerous and growing inequality

and lack of upward mobility

that has jeopardised middle class America's basic bargain -

that if you work hard, you have a chance to get ahead.

I believe this is the defining challenge of our time.

And even the super-rich themselves are taking it seriously.

-THEY CHANT:

-The people united will never be defeated!

You show me a highly unequal society,

I will show you either a revolution or a police state.

Nick Hanauer was one of the first investors in Amazon,

and sold his company to Microsoft for 6 billion.

'Somebody like me

earns 10,000, 20,000 an hour.

That creates a very different life

from the life that ordinary people have to live.

That gap isn't just an economic gap, it's a social gap.

That gap is very, very corrosive

because it decreases the amount of empathy

that the people at the top have for everyone else.

A sentiment that was echoed at a fair pay demo in Boston last year.

The pay protestors have formed a national movement in the US.

In city after city, demonstrations have sprung up attacking inequality.

I think we have to flip around the idea.

We generate the money for them.

They don't give us jobs.

We're generating the richness of the wealthy people.

The norm in this country today is for CEOs

to make massive amounts of money in an immoral level.

We need to bring money back to the workers.

We're not going to get the 1% to change their mind,

we're going to get the 99% to realise

that if they all stand up collectively,

this is over with tomorrow.

HANAUER: History shows us that if you make a society

unequal enough, it is going to turn bad for everybody.

Particularly people like me.

So are the pitchforks coming?

Well, maybe not tomorrow.

But if things keep going the way they are,

for sure they are going to come.

And these predictions are as true for the UK as they are for America.

The cracks are already showing in our own hourglass society.

When rioting broke out four years ago across the UK,

for some it was an illegal shopping trip.

But for others it was about inequality and injustice.

And the establishment are taking note.

Remarkably, riots had been predicted in a strategic report

written by a secretive think-tank at the Ministry of Defence.

It stated that inequality could lead to violence,

if the excluded began to take the law into their own hands.

Rear Admiral Chris Parry commissioned the report.

I think in modern complex societies,

if you don't address the issues of economic inequality

and social cohesion, you are going to get unrest.

You're going to get people who reject the capitalist system,

they reject the market. They'll reject democracy.

They'll take action outside our democratic institutions.

And we won't like that.

'This is not a politician talking

'but a high ranking member of the armed services.

'His warning is stark -

'the potential danger is clear and present.'

I think there comes a point where people say,

"Look, I don't enough out of this society.

"I don't have a stake in this society,"

and suddenly, they burst out.

A fact not lost on those who might be in the firing line.

They will conclude that we are not playing a fair game,

that we are not playing a game at all,

we're engaging in an activity where I get everything

and they get nothing.

And if it's just a game, they will simply cease to play.

If it's an economy, they're likely, eventually, to get really angry

and come and kill me and take all my stuff,

because that will be their only option at that point.

And this is just obvious.

40 years of widening inequality

has left Britain with a fractured society.

The richest 1% now earn over 14% of our total national income -

a figure which has nearly tripled in the last 40 years.

And the rest of society have become a business opportunity

for the very few.

This is the Shard, the tallest building in Europe,

and a fitting metaphor for the inequality in society.

The 1% live are on the top floor and the rest of us live down here.

Britain is being transformed by a polarisation of wealth

unlike any seen before.

The super-rich can seal themselves off from this inequality

but only for so long.

When it becomes unsustainable,

the view from the top floor could suddenly be very different.