Is Inequality Fated To Stay? The Case Of Bangladesh – OpEd

Hunger, Famine, Inequality, Injustice and many other words in English language may have different interpretation but are intrinsically intertwined and almost incestuous in origin. A person infested in famine must be hungry and is not equal in food intake compared to their richer compatriots. At the extreme pole one could cite one of the most famous quotes in history. At some point around 1789, when being told that her French subjects had no bread, Marie-Antoinette (bride of France’s King Louis XVI) supposedly sniffed, “—“Let them eat cake.” Or one could revisit My Fair Lady and the conversation between Colonel Pickering and Alfred Do little where Do Little admonishes Colonel Pickering for boasting for having morals which Pickering could not have afforded had he been as poor as Do Little.

This brings us to the question: whether immorality is deeply connected with famine and hunger. In least developed countries hunger is a common affair and is generally accepted as a way of life. In the race for growth and development these countries get more embroiled with statistical improvement of growth for praise from the World Bank, IMF, Asian Development Bank and other international institution than really improving the life of greater number of people. Trending of lack of interest of women to marry less educated males    post-industrial society where the glass ceiling for the women to rise to be equal or higher than their male colleagues have been broken due to the demand for educated and technologically attired candidates regardless of gender.   

“Just as manufacturing had previously displaced agriculture as the major source of employment, sociologist Daniel Bell argued, so the service sector was now displacing manufacturing. In a postindustrial, knowledge-based economy, the production of manufactured goods depended more on technological inputs than on the skills of the workers who actually built and assembled the products….

The revolution in information technology that has swept through the economy in recent decades, meanwhile, has only exacerbated these trends (What the Right and the Left Get Wrong By Jerry Z. Muller March/April 2013Foreign Affairs). Related to this post-industrial society’s emphasis on education Nobel Laureate Paul Krugman’s (THE UNEDUCATED AMERICAN)  blaming of the US’ progressive loss of global position partly on “fiscal responsibility” which greatly affected amount of money spent on education. Consequently, Krugman states that in the USA a college graduation rate is slightly below the average across all advanced economies.

In the context of less developed countries e Bangladesh, for example, prides itself for bringing the country’s poverty rate (people living below $1.90 a day) down to 21.8 percent while people living in extreme poverty, came down at 11.3 percent in 2018, according to the latest data of the Bangladesh Bureau of Statistics.   

It has also been claimed that Bangladesh    would be able to attain SDG by eliminating poverty by 2030.  Though famine conditions have not been seen in Bangladesh for decades but the people living in extreme poverty cannot have the required amount of food necessary for living well. In other words, while people do not starve in Bangladesh a determinate number of people are undernourished with consequent denial of access to health and education. While an essential driver for development is hope, and Bangladesh’s promotion from LDC to low middle income country is laudable, an eminent economist points out that “not much is added to our achievement by calling ourselves a “non-LDC developing country”, if at all we have to find a new designation.” (May 15, 2018 Least Developed and Developing Countries-A matter of definition? Wahid Uddin Mahmud). 

Citing the lone case of South Korea who graduated to an industrialized country after the Second World WarDr Mahmud continues to explore the path on which Bangladesh should continue “What could then be our next target in terms of country classification? It could be graduating to the high-middle-income status according to the World Bank’s classification, which will mean increasing the per capita income nearly fourfold in real terms; or, it could be becoming a developed or industrialized country in the sense it is understood in the common development terminology”.

It is given that with enlarging population not necessarily able to gain from demographic dividend, lower productivity due to lack of required skill, dependence on remittance from expatriate manpower  and export of readymade garment, calamitous effects from climate change, losing arable land to feed the growing population, growing youth unemployment, possibility of political unrest that at present appears nowhere near the horizon and the country virtually ruled by a coalition of likeminded people Bangladesh may continue with the Political Capitalism  model–  an economic system in which business controls government more than government controls business and the economic and political elite cooperate for their mutual benefit. If left unaddressed, in the words of Professor Jerry Muller (March/April 2013 Foreign Affairs), rising inequality and economic insecurity can erode social order and generate a populist backlash against the capitalist system at large. 

 Conceding the thesis the political capitalism is not the midway between socialism and capitalism one cannot but agree that capitalism breeds inequality of opportunity and an undeclared aristocracy emerging through marriage between the scions of ultra-rich families.

Thus transference of movable and immovable assets are ensured from one generation to another and as the value of the assets increase over time they are concentrated in fewer hands. This develops the elitist class who are considered superior, by themselves of others, due to wealth and power (the two are closely related as the retention of power is dependent on the support of the elites in society). In the US, for example, 1% of the population owns almost 39% of the wealth which is twice that the bottom 90% of the people own. Rising inequality, observes Paul Krugman, has both economic and political costs (Paranoia and Plutocrats January 24, 2014).

Concentration of wealth in the hands of the few even with higher productivity may cause stagnant wages and worsening living standard along with unaffordability of good education, higher mortality due to lesser income as a proportion to medical costs. The moneyed class who are allied with power have to  contend with explosive resentment of the have-nots and consequent rise of autocrats and diminishing space of democratic values.

One would be better advised that Adolph Hitler’s rise to power in 1930 general elections giving the National Socialist Party largest number of seats in the Reichstag was due to the disaffection of the German people with the worsening economic condition, Treaty of Versailles notwithstanding, and partly occasioned by the Great Depression forcing the US government to recall the loans earlier given to the German government. Albeit Thirties scenario is too dystopian and the rise of fascism to be replicated in the present day global society and one has to accept the fact that capitalism has come to stay packaged in basically two varieties—one Western capitalism imbued with democratic ideals and the other being the Chinese variety where private sector thrives under strict supervision by Chinese Communist Party. 

The problem of unregulated capitalism result in the money accrued is spent on luxury not needed by the spender which political philosopher Benjamin Barber calls “infanitilisation” e.g. money spent on satisfying infantile desires. Barber’s criticism rests on his argument that while early capitalism encouraged virtues with the working men’s “robust motion of agency and spirited grittiness” while the decay that spells later day capitalism suffers from a paradox—“the needy are without income and the well-heeled are without needs”.

This redoubles Paul Krugman’s doubts about the Conservatives that equality of opportunity will gradually bring about equality of income. Such views propagated by the conservatives ignore the culture of poverty resulting in the cycle of poverty also known as “development trap” denoting low income, poor education, poor housing and poor health. Since these disadvantages work in a circular fashion it becomes difficult to break out of this cycle. Conceding the premise that capitalism has come to stay or in any case is better than other alternatives the inequality in all its forms are evident in both developed and developing countries. An OXFAM study recently released tells us that India’s richest 1 per cent hold more than four-times the wealth held by 953 million people who make up for the bottom 70 percent of the country’s population, while the total wealth of all Indian billionaires is more than the full-year budget.

Releasing the study ‘Time to Care’ ahead of the 50th Annual Meeting of the World Economic Forum (WEF), rights group Oxfam also said the world’s 2,153 billionaires have more wealth than the 4.6 billion people. The report flagged that global inequality is shockingly entrenched and vast and the number of billionaires has doubled in the last decade, despite their combined wealth (The Economic Times January 20, 2020).

 The situation is similar in Bangladesh. The gini coefficient, which is the economic measure of equality was 0.458 in 2010 rose to 0.482 in 2016. The rich has become richer while the poorer became poorer. Capital Dhaka being the center of administration and industrialization the income inequality increased between the urban and rural areas as did the migration to the city from rural areas. One saving factor has been the foreign remittance sent to village homes by Bangladeshi expatriates working abroad. While the World Bank, IMF, ADB and many others are praising the high growth rate of Bangladesh and have projected the rate of growth will remain high in the coming years unemployment remains a problem mainly due to disconnect between growth and employment opportunities. 

The IMF mission that visited Bangladesh recently expressed concern over banking sector irregularity, reported by the media time and time again, can derail the growth momentum. IMF mission was also skeptical about the new regulations brought in to arrest the growing amount of bad loans, many of which, may become unrecoverable. What good is economic growth if its fruits are denied to the great majority of the people? Harvard Professor Joseph Nye jr, Nobel laureate Joseph Stieglitz among many others have questioned the efficacy of refusal to address the worry of the have-nots across the world.

Very recently Klaus Schwab, the founder of the Davos based World Economic Forum (Capitalism Must Reform to Survive From Shareholders to Stakeholders January 16, 2020) has taken pains to inform the world that “Davos Manifesto’s opening line declared that “the purpose of professional management is to serve clients, shareholders, workers, and employees, as well as societies, and to harmonize the different interests of the stakeholders.”   

This information is meant for those who are critical of Wall Street corporations who prefer shareholders’ interest to those of stakeholders.  In conclusion, both the developed and developing nations alike, must recognize the fact the statistical increase of Gross Domestic Product and euphoria over high growth rate alone will not endear any government to the people for votes in the next elections.

Kazi Anwarul Masud is a former Ambassador and Secretary of Bangladesh.