Today's Editorial

Today's Editorial - 11 October 2023

Graded Inequality

Source: By JAYDEV JANA: The Statesman

The term ‘inequality’ has many connotations. The Cambridge dictionary describes it as ‘the unfair situation in society when some people have more opportunities, etc. than other people’.

The United Nations describes it simply as ‘the state of not being equal, especially in status, rights and opportunities’, according to Development Issues No. 1: Concepts of Inequality, published by its Development Strategy and Policy Analysis Unit. Much of the discussion over the issue ‘concerning economic inequality’ always takes the form of two views: One is chiefly concerned with the inequality of outcomes in the material dimensions of well-being that may be the result of circumstances beyond one’s control (ethnicity, family background, gender and so on) as well as talent and effort; and the other view is concerned with the inequality of opportunities.

Indeed, the term ‘inequality’ itself is quite vast and also has various interpretations. However, for the purpose of simplicity, Oxfam International, a British NGO, seeks to classify and view inequality in two aspects: ‘economic inequality’ and ‘social inequality’ which are deeply intertwined and where one often affects the other. Nobel Laureate economist Amartya Sen argued in his book entitled Inequality Reexamined (1992) that inequality is a central notion to every social theory that has stood on time.

The world has always been an unequal place. Social inequality occurs when resources in a given society are distributed unevenly across the socially defined and orchestrated categories. The differentiation preference of access to social goods in society is triggered by differentials in power, religion, kinship, prestige, race, ethnicity, gender, age, sexual orientation, and class.

It usually implies the lack of equality of outcome, but may alternatively be conceptualized in terms of a lack of equality in access to opportunities. It is linked to economic inequality, usually described on the basis of unequal distribution of income and wealth.

Social inequality is found in almost every society. India sees a much louder form of social inequality across the dimension of gender and caste. With so-called economic liberalization, the concentration of economic power in the hands of a few super rich persons accentuates the injustice on account of uneven redistribution of wealth and rings the bell for catastrophe, given the potentiality of a severe impact on opportunities and access to essential utilities for the people at large.

There exists a highly unequal distribution of incomes and assets within the countries as well as between the countries. We live in a data-abundant world and yet we lack basic information about inequality. Economic growth numbers are published every year by governments across the globe, but they do not tell us about how growth is distributed across the population who gains and who loses from economic policies.

In the words of Kofi Annan, former UN Secretary-General and Nobel laureate: “The widening gap between rich and poor is at a tipping point. It can either take root deeper, jeopardizing our efforts to reduce poverty, or we can make concrete changes now to reverse it.” We see that over the last three years, the pandemic has widened the gaps. Those who were prosperous before its outbreak have added to their wealth and increased inequality.

The world in 2020-21 did make feeble attempts to address the deepening inequality, at least in income and wealth, through a few major global agreements. But it appears that the strategies to fix inequality have only benefitted the already advantaged. In fact, a person born today will inherit a world that has never been more affluent nor more unequal.

The gap between haves and have nots will further widen as the inheritor grows up. The first thing the inheritor will note is that nearly half of the world’s population has neither the wealth nor the capital necessary for a decent life. Next, the person would find that his or her country is richer than it has ever been. But the government, after going on a privatisation spree for decades, is becoming poorer and holding fewer assets. Indeed, globally public wealth or assets held by government dropped in the last five decades. It means that the government has neither the wealth nor the capital required to meet an economic shock such as that caused by the Covid-19 pandemic; it will be forced to borrow from private sources, adding to the inheritor’s debts. On the other hand, the other part of the world’s population has become richer: it now owns more wealth and earns more income than the country itself. To put it in perceptive, global wealth is now concentrated in the hands of few private individuals. They have, effectively, become the economic rulers of the world.

Such is the concentration of wealth in the private sector that it owns more wealth and income than governments. In the last four decades, countries have become wealthier while their governments have consistently reported a decline in assets.

The World Inequality Report 2022 says: “The share of wealth held by public actors is close to zero or negative in rich countries, meaning that the totality of wealth is in public hands.” The World Inequality Report 2022 has been published by the Paris-based research organization World Inequality Lab. It came after the maiden year of a pandemic that disrupted the world economy and, for the first time in many decades, pushed up extreme global poverty.

The report says that the top 10 per cent of the population owns collectively 76 per cent of total global wealth, the middle 40 per cent owns 22 per cent and the bottom 50 per cent owns 2 per cent. The status wealth concentration reveals the extreme inequality.

The report also highlights India’s wrinkled socio-economic development policies. It places India among the world’s most unequal countries, afflicted with the highest poverty. Further, it points out that the country also has several rich people; the most after the US and China. India has also the highest number of dollar billion aires.

Around 57.1 per cent share of the annual national income has gone to the 10 per cent of its richest people and 64.6 per cent of the country’s wealth is held by these super-rich. Regrettably, people lying at the lowest economic strata hold only 5.9 per cent of the country’s wealth.

Lately, there has been a growing notion that it is the middle class that plays the most effective role, as seen from the political lens. However, one needs to understand the status of the middle class, which compromises as much as 40 per cent of the Indian population, according to estimates.

Further, economic inequality in India is directly linked with global inequality. The report says due to less availability of employment, women earn only 18 per cent of the total labour income, which this has a cumulative impact on lessened wealth. The report clearly states most benefits of liberalized economic development have accrued to the 1 per cent of the richest.

A Forbes report mentions that the value of wealth held by the 100 richest Indians is Rs 58.12 lakh crore, whilst the total annual budget of the country for the financial year 2021-22 provided an outlay of Rs 34. 83 lakh crore.

India is progressing economically. But due to this progress, the number of billionaires in the country has risen from only nine in 2000 to 101 in 2017 and to 140 in 2021. In effect, inequality grows when private individual finance framework grows strongest and wealthier than the state system. This has indeed happened in India. Interestingly, a report of Oxfam shows that a daily wage labourer working at the current minimum wage will take as many as 941 years to earn equivalent to the annual income of a Chief Executive Officer of an industrial organization.

Another battle of inequality is fuming in the use of natural resources or capital like forests, lands and water. This battle is also related to the consumption that is at the centre of the climate change debate. Like in the climate change debate, in this case as well there is a sharp division between the developed and the developing and the poor countries. While the developed countries are obsessive consumers of natural resources and pump non-comparable level of greenhouse gases (GHGs) into the atmosphere, the developing and the poor countries are just consuming natural resources for survival.

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