Wednesday, October 16, 2013

Rich Man’s World


The prices of food and other essential things keep rising.  Newspapers and TV channels celebrate it in catchy headlines.   But the number of private vehicles on the roads keeps increasing indicating that people have money to buy them and fill their tanks with fuel.  The number of people spending time in expensive shopping malls and multiplexes have not decreased.  So who is affected by the inflation and price rise?

Economist and Nobel laureate, Joseph Stiglitz, delivered a speech recently to the AFL-CIO convention and said:

95% of the gains from 2009 to 2012 went to the upper 1% (in the USA).  The rest — the 99% — never really recovered.

“We have become the advanced country with the highest level of inequality, with the greatest divide between the rich and the poor.

The situation is not confined to the world’s most “advanced country.”  It is replicated in every country which follows the same economic policies, including India.  The American economic policies are tailored to make the rich richer at the cost of the poor.  Earlier, in the toddler days of the system, about 20% of the population were benefitted by the system – their wealth increased.  The proportion continued to dwindle systematically and has now become a mere one percent.  That’s the tragedy (or advantage, depending on which side of the dividing line you are) of the system: it works for less and less number of people.  The system is manufactured to cater to less and less number of people at the expense of all others.  It is tailored to create the ultimate plutocracy.

Is such inequality inevitable?  Stiglitz raised the question for the umpteenth time in his recent speech.  He said:

Inequality is not inevitable. It is not … like the weather, something that just happens to us. It is not the result of the laws of nature or the laws of economics. Rather, it is something that we create, by our policies, by what we do.
We created this inequality—chose it, really—with [bad] laws …”

The system we adopted refused to address the problems and needs of the vast majority as any good system should do.  Instead, it focused on a few in the name of “wealth creation.”  Profit became the only motive.

The insurance companies deny the rightful claims of their clients in order to maximise the profits of the company.  The business people bribe the politicians in order to formulate policies that promote trade and generate profit.  Educational institutions appoint people in managerial posts so that the entire staff can be exploited to enhance the profit of the institution.  Hospitals prescribe all the tests available to the new technology.  Banks have to innovate strategies to retain balances in the accounts of the aam aadmi.

Unemployment and poverty rise in such a system.  Crimes become natural offshoot. 

And crimes won’t be confined to that side of the dividing line where the survival game is on.  The crime virus identifies no borders.  It penetrates even the holy of holies.  And then godmen rape their devotees, and godwomen erect empires of commerce.  Spirituality metamorphoses into a drug to sedate the harrowed nerves of the hapless 99%.

Is there a way out of this enormous trap laid by the economic system?


“It is plain that the only true and sustainable prosperity is shared prosperity. If we could ensure that everyone who wanted a job and was willing to work hard could get one, we could have an economy and a society that is both more equal and more prosperous,” said Stiglitz.

10 comments:

  1. You are so right, the divide between the rich and the poor is getting more and more deeper. This will have serious repercussions and I dread to think about it.

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    1. Even the institutions which make huge profits are cutting down the salaries of the staff in the lower rungs and raising the salaries in the higher ones. The ideology (if it can be called that) is clear. Who brings in the profits? Only they matter.

      But man does not exist for any system. [With the exception of religion, if that can be called a system.] Systems have given way for much lesser causes in the past. The present system too will change.

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    2. Yes well said. All this happened of the unbridled capitalism with market forces dictating the terms which is a minority, But still they control the 90% of the wealth which other wise would have to be distributive in nature . The trickle down effect is really not happening .

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  2. I'll not even get into the specifics and the facts you have misquoted lest I be accused of missing the big picture.
    1. Sir, I find your article extremely leftist and the kind of stuff being used by the Naxal leaders to spread their propaganda. So crime need not emanate from capitalism alone.
    2. I can give you at-least 7 noble laureates who have given empirical evidence in their work that even income redistribution has to be market led. The kind of income redistribution you are talking about was more or less brought about pre-1991 by successive governments and it ended up creating a demonic and infamous bureaucracy - the so called 'License Raj'. So I think that, that experiment has failed miserably in India.
    3. Sir, I would highly suggest that you read the latest World Development Report:
    http://siteresources.worldbank.org/EXTNWDR2013/Resources/8258024-1320950747192/8260293-1322665883147/WDR_2013_Report.pdf
    It would give you a counter argument for each of your claims.

    Both capitalism and socialism are ridden with vices. On a level plane socialism may seem
    better but the question is - is it feasible? It has(till date) failed every single time. As I have said before, no country can claim to be a purely socialist or purely capitalist society(with the exception of Luxembourg perhaps) and all resulting economies are mixed economies. The differentiating factor being the composition of capitalism and socialism in the mix. The sensibilities of the country's think tank lies in assessing the right amount of mix suited to it. Our analysis so far has been pathetic, which makes India one of the worst examples of mixed economy anywhere in the world. Socialism has invariably led to lack of accountability and undermining of democracy(China, USSR, Vietnam) and rapid distancing from the US, which is not very advisable in a uni-polar world.

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    1. Sid,

      I'm familiar enough with your comments to understand the colour of the lenses through which you see the picture, small or big.

      Tell me where I have misquoted, to start with. I have only quoted from Stiglitz and the link to the source is provided. Anyone can verify if I have misquoted anything.

      My grey hairs prevent me from sticking labels on anyone so quickly. Thank god(s) you are not in the Intelligence, else I would have been under scrutiny for being a Naxalite propagandist.

      History does not ever go back though it may repeat itself. There is an irrevocable linearity, in spite of its vicious circularity, about history. Hence there's no going back to socialism, a system that has been trampled upon too much not only by the capitalists but (alas!) by the socialists themselves. I wonder why anyone would expect me to support such a system.

      What I, like Stiglitz, am suggesting is a better alternative to the present form of capitalism which focuses only on profit. The focus should change to human beings. There's no need to resurrect socialism for that. And if you think profit is more important than human beings, please stop reading me hereafter.

      I haven't read World Development Report yet. I can anticipate the kind of statistics it will provide. I don't set much store by it. I have people who give me first hand information from quite a few different countries about what's happening to employees. I know a handful of the victims personally and many others through those persons. Can statistics teach me more than that?

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  3. The so called oppressed are not taking it lying down either. You should have mentioned the OCCUPY WALL STREET MOVEMENT in the USA, INDIA AGAINST CORRUPTION in India and ARAB spring in the middle east (in a way). This gives us some hope.


    INDIAN policy makers and the country alone cannot be blamed for the current situation of the economy. Yes the current government has terribly misgoverned(corruption and scams etc) but the root cause of every depression in 21st century starts from the west - example - sub prime mortgage crisis and the sovereign debt crisis. We live in a globalised world and India can only take preventive steps to minimise damages emanating from west.

    What you have highlighted in your blog is the classic - ECONOMIC GROWTH vs ECONOMIC DEVELOPMENT debate.This found place in the media in past months in the form of JAGDISH BHAGVATHY vs AMARTYA SEN debate.

    Should economic growth be allowed to eliminate poverty or should poverty be eradicated resulting economic growth - this is the crux of the problem. you can join either camps.

    Neo liberal agenda has an upper hand but governments are being prompted by the civil societies to concentrate on accountability and transparency and play the role of welfare state .
    The corporate world doesnt complaint when they receive fiscal stimulus and tax concessions but they cry about Fisc. Defi when RIGHT TO food act or MGNREGA is given shape !
    For me the economic growth model has nt succeeded - its like rich urinating on the poor(a newzealand politician said so). Neither does the blanket nationalisation model works coz it stifles the entrepreneurial spirits of the population. The trick lies in striking the right balance. State should empower the people in the lowest rungs i.e. grass root. . this calls for decentralization and transfer of decision making to the lower rungs. Let them manage their resources and find soultions to the problems. State should act as a facilitator. We need enthusiastic officers to implement the programmes. Let them climb up the ladder.
    These were just random thoughts. some may be relevant . some irrelevant. That speech by stiglitz was great !!

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    1. Dear friends from Edathua,

      I can understand the new generation's ire.

      I could have said much more in my blog. You are accusing me of not saying all that. I plead guilty. But how much can a blogger say? How much can a blogger do?

      I did mention the Occupy Wall Street, however. 99%. What else is it?

      Sid, above, mentioned the WDR. I did go through it after his comment came in. I find that the Report also implies a desire in the Bretton Woods for a change. For example, the Report clearly and explicitly mentions that India's efforts like NREGA are commendable. Sid is wrong. I'm right. The system is out for a change.

      Cheers.

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    2. The above debate is too huge to be contained in a blog ! Coz it can be viewed from many perspectives. You have made a brave attempt. I appreciate that ! Like I said those were just random thoughts which hit me while commenting. I stressed on occupy wall street and things because Stiglitz speaks as if nothing has happened against these highhandedness in his speech(It will happen only when.........). And I thought that mentioning OWS etc in the blog will give hope to the reader ! Those were suggestions and not accusations !! sorry !!

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  4. "If we could ensure that everyone who wanted a job and was willing to work hard could get one.." - I'm wondering whether this would solve the problem either, as a worker could still be exploited by his/her employer, his/her tax money could still go into paying unemployment-allowance to a person who is less willing to work etc. I can understand "shared prosperity" is good, but the question is who will take care of sharing it? I mean if the state handles the "sharing" part, we know what's going to happen..

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    1. Santhosh, I'm sure you are aware of 'welfare government.'

      I can understand the practical problems about providing jobs for anyone willing to work hard and is in need of a job. You know, that's about simple honesty. Who gets a job these days? One who is capable or one who can bribe?

      Who will take care of sharing?

      You and I.

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