Inequality gap between the rich and the poor

In the wake of the recent Oxfam disclosure on the widening gap between the rich and the poor, attributing the evil to wealth accumulation by only 1.0 per cent of the global population -- the global elite, countries in many regions are in a mood to somehow defend their policies to curb inequality.

It is generally believed that inequality has moved up the political agenda over the past half-decade amid concerns that the economic recovery since the global downturn of 2008-09 has been accompanied by a squeeze on living standards and an increase in the value of assets owned by the rich. The extent to which so much global wealth has been accumulated by the so-called 'global elite' is exposed in the Oxfam report, just days ahead of the World Economic Forum meeting in Devos, Switzerland. The report warned, these 'global elite' across the globe share a combined wealth as much as that of the poorest 3.5 billion of the world population. This has been put in more precise terms saying that the share of the world's wealth owned by the best-off 1.0 per cent has increased from 44 per cent in 2009 to 48 per cent in 2014, while the least well-off 80 per cent currently own just 5.5 per cent. Oxfam added that on current trends the richest 1.0 per cent would own more than 50 per cent of the world's wealth by 2016.

Observations in the Oxfam research, however, reflect a narrative not quite unknown. Briefly, these are:

-Resources are in the hands of few;

-Extreme inequality is not just an accident or a natural rule of economics. It is the result of policies and with different policies it can be reduced;

-Inequality is engineered. That's how the 1.0 per cent have taken over;

-Fight against poverty cannot be won until wealth inequality is tackled;

-The richest people use their wealth to capture opportunities.

Winnie Byanyima, executive director of Oxfam International and one of the six co-chairs at this year's WEF, said that increased concentration of wealth since the recession of 2008-09 was dangerous and needed to be reversed. The message is clear enough. Rising inequality is dangerous. It is dangerous for growth and also for governance.

Oxfam made headlines at Devos last year with its study showing that the 85 richest people on the planet have the same wealth as the poorest 50 per cent (3.5 billion people). This year the comparison is even starker. Oxfam called on governments to adopt a seven-point plan:

* Clamping down on tax dodging by corporations and rich individuals;

* Investing in universal, free public services such as health and education;

* Sharing the tax burden fairly, shifting taxation from labour and consumption towards capital and wealth;

* Introducing minimum wages and moving towards a living wage for all workers;

* Introducing equal pay legislation and promoting economic policies to give women a fair deal;

* Ensuring adequate safety-nets for the poorest, including a minimum-income guarantee;

* Agreeing on a global goal to tackle inequality.

It is in this context pertinent to refer to the arguments raised recently about reduction in inequality gap in Bangladesh by the finance minister at a discussion on the 'lawmakers' role and expectations of the country's extreme poor from the budget'. To quote the finance minister, inequality between the rich and the poor has been falling in Bangladesh since 2010 as result of proper targeting the poorer segments of the population and efficient delivery of resources under social safety net schemes. He further added that the government has estimated poverty, based on some specific sample surveys, and found the rate of extreme poverty declining to 11 per cent.

The rate of poverty declined to 24 per cent now from 31.5 per cent estimated in 2010, based on the Household Income and Expenditure Survey (HIES). Some 17.6 per cent of the population was categorised as extreme poor in 2010, according to HIES. The difference between the poverty rate and extreme poverty rate has decreased in the last five years. "After 2010, inequality is declining. And our success is that the rate of drop in inequality is faster than the rate of decline in poverty alleviation," said the finance minister.

On the flip side of what the finance minister argued is that although the government's safety net programmes are directed to pull the poorest segments out of extreme poverty, these have virtually nothing to do with reducing inequality between the rich and the poor for the simple reason that the safety net schemes do not hinge on the rich in any way. Hence, taking a position on reduction of income inequality on the success of the safety net schemes does not seem convincing.

In other words, safety net schemes may bring some respite for the extreme poor, but what about the extreme rich gaining increasingly strong footing in accumulating more. Isn't it time to capture our understanding of how much wealth the extreme rich in the country possess vis-à-vis the poor?

wasiahmed.bd@hotmail.com