There is no sarcasm in the caption of this write- up, as there was not a whiff of it in the book written by James Agee, Let Us Now Praise the Famous Men (1958), from which it is borrowed, albeit in a different context. The words mean what they purportedly say, without tongue in cheek.
The occasion and context is a flurry of anxious views expressed by economists, policy makers and media analysts about the burgeoning growth of the rich in recent times and the dark forebodings that this development portend for countries experiencing the phenomenon. It would be disingenuous of this writer to pretend that the angst was not shared by him until he saw it from a different perspective, the economic one hitherto superseded by moral metrics.
Writing in 2012, Nobel Laureate Joseph Stiglitz mentioned with a sense of despair and horror : 'Some thirty years ago, the top 1 per cent of income earners received only 12 per cent of the nation's income. Since then the disparity has grown dramatically, so that by 2007 the average after-tax income of the top one per cent had reached US dollar 1.3 million, but that of the bottom 20 per cent amounted to only 17 thousand dollar and the richest 20 per cent of income earners earn in total after-tax, more than the bottom 80 percent combined' (The Price of Inequality). Elaborating on the issue of unequal growth in income and growing income inequality, Stiglitz wrote: 'There was greater inequality where ever one sliced the income distribution; even within the top 1 per cent, the top 0.1 percent of income earners was getting a larger share of national income. By 2007, the year before the financial crisis, the top 0.1 per cent of America's households had an income that was 220 times larger than the average of the bottom 90 per cent' (ibid). The undertone of deep abhorrence and righteous indignation in the above quotes are unmistakable. And Stiglitz is not alone in criticising this economic phenomenon, he is in the company of many.
Coming to Bangladesh, disapproval of the unfairness of income distribution seen in recent years by economists and analysts has been common. Very recently, a Bengali daily made headline news on the fact of growing number of rich and their increasing volume of wealth. According to the figures quoted from the Global Wealth Databook (2022), prepared by the Credit Swisse Research Institute, 21 individuals in Bangladesh now (2022) own more than US$5 billion. Even during the Covid pandemic, the percentage of people owning more than US$1 billion increased by 43 per cent, according to the same source (Bonik Barta, February 5, 2023).
The news about the continued increase in the number of rich and the rich getting richer in Bangladesh or in other countries is not new, the figures only indicate the relentlessness of the increase of the number of the rich and concentration of income and wealth in the hands of the few. The figures on unequal income and growing inequality may be shocking and give a jolt, but the phenomenon should not be surprising. It is the inevitable outcome of the economic model consciously adopted by almost all countries in the world since long and as such predictable. Free enterprise and shareholder capitalism under laissez faire regimes reward the few with much and the majority with less of the total economic pie. This dispensation is not arbitrary or random. The share in the total income depends on the assets owned (money, capital stock, land) and skills acquired (managerial, manual). Since only a minority owns the first or has access to the second, their share in the reward by the economic model is disproportionately high. There is nothing mysterious or nefarious about it. Looked at from the point of view about the effectiveness of the model, the outcome should be considered as successful and satisfactory as long as growth in the economy is the goal. In the context of this overarching goal, the only legitimate query will be to find out if those who grew rich and richer have done this abiding by with existing rules and regulations (maintaining competitiveness, environmental balance, payment of taxes, fees, rates etc.).
For inequality in income and wealth that results from the growth process underlying the model, the rich cannot be held to account as long as they do not run foul of any of the above mentioned conditions. But the governments cannot wash their hands off from the incidence of the privation of the majority caused by the 'success' of the model. From their point of view, it may be an unintended consequence, even a collateral damage but they cannot look the other way when the majority suffer from deprivations of a decent standard of living, above basic needs. Not only moral, under democratic governance governments have a legal obligation to help ensure basic needs and a reasonable standard of living for those whose boats have not been lifted, to use a favourite metaphor of the World Bank, by the tide of growth under the chosen economic model. The unwritten social contract between the rulers and the ruled under democratic dispensation enjoins this obligation on all governments professing to be democratic. So, while the governments may be perfectly justified to adopt an economic model that promises to ensure growth, they will be rightly faulted if the bulge beneath the top of the pyramid of income earners is ignored or not adequately cared for.
The success of the economic model of free enterprise (for non-listed firms) and public corporate bodies under capitalism can and should be seen as capable of both promoting growth and ensuring equity. These twin objectives are not and should not be considered as contradictory, either by policy makers or the rich at the top of the income ladder (corporate bodies and individuals). By ignoring this simple reality, as Kenneth Galbraith wrote long ago about America, ' we enhance substantially the risk of depression and thereby the threat to our affluence itself' (The Affluent Society,1958).
So, the first step is to scrutinise to find out if those who became rich have done so honestly and then give them three cheers for making the economic model a success. To sustain the model for the long haul, the government should ask them to abide by the rules and fulfil the conditions laid down. The most important of these is payment of taxes to enable governments to conduct their functions, including provision of public goods (education, health, infrastructures) at affordable costs for those in the middle and bottom of the income ladder. In addition, welfare programs have to be carried out for the unemployed and the poor. In order to put a human face, the profit- oriented model has to underwrite these functions of governments. If this obligation is redeemed, praise for the rich will be well deserved.
Unfortunately, the opposite to what is expected of the rich is seen to occur, and not too infrequently. In many cases, governments are themselves complicit in these failures of the rich, deliberately or unwittingly. Some examples: taxes not collected properly, tax evasion abetted, fixation of income tax for the rich and corporate bodies at unreasonably low rates, waiver of taxes, liberal tax exemptions, reliance on indirect taxes instead of direct taxes slapped progressively, frequent debt relief, bail out of financial institutions even in cases of their own faults, poor enforcement of regulations, misapplication of subsidies, and quite a few others that have become commonplace in fiscal management of governments.
In respect of the role of governments in promoting growth and equity, Stglitz made the following observation: 'Policies are available that would simultaneously increase growth and equality creating shared prosperity. For Japan and Europe, as for United States, the question is more one of politics than of economics' (op cit). The implication is loud and clear: where economics ends ( generation of growth) political economy should take over (for redistribution of income). Stiglitz concludes this observation with a question: Will they (governments) be able to construct a social contract for the twenty first century ensuring that the benefits of such growth as occurs will be fairly shared'?
To sum up, the rich deserve praise for promoting economic growth under the model selected. This appreciation, however, is contingent upon their compliance with the rules and regulations, particularly payment of taxes that they owe to governments. Governments, on their parts, have to be aware and serious about their obligations to ensure growth with equity through creating an enabling environment for private entrepreneurs within the economic model adopted and taxing them progressively to finance routine functions, provision of public goods and social security programmes. No one parts with what is individually owned, through fair means or foul, far less the rich, even when lauded to the skies. The visible hand of the government has to temper the invisible hand of the market at the end of the day when reckoning is made about which income group has what share of the economic pie baked by the model.
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