Inequality encompasses the unequal distribution of resources, opportunities, and privileges among individuals and groups, resulting in uneven playing fields for overall progression within the community. The primary drivers of inequality include the socio-economic structure, technological advancements, educational disparities, power dynamics and influence wielded by the societal elite, social and cultural norms, governmental policies, and more. Inequality perpetuates itself in society through mechanisms such as social reproduction via inheritance, networking, political divisions, misallocation of resources (like land, capital, and credit), and the creation of self-perpetuating cycles of inequality. Limited avenues for advancement contribute to social stratification, restricting individuals' ability to improve their socioeconomic status regardless of their abilities or efforts. A society plagued by inequality becomes less resilient to shocks, such as economic crises or natural calamities, impeding the collective potential of the nation as wealth becomes concentrated in the hands of a few, leaving the majority marginalized.
As per the 2022 data from the World Inequality Database, the wealthiest 10 per cent controlled 58.5 per cent of Bangladesh's total wealth, with the top 1 per cent possessing 24.6 per cent and the bottom 50 per cent holding a mere 4.8 per cent, highlighting a significant wealth gap. This unequal distribution has persisted within specific segments of society over decades with minimal change. The following graph depicts the widening wealth gap between the top 10 per cent and the bottom 50 per cent from 1995 to 2022.
The Income Gini coefficient, a statistical indicator measuring income inequality and reflecting poverty levels and wealth disparity within a population, signifies the deviation from perfect income equality. Higher values of this coefficient indicate more pronounced income disparities and serve as an indicator of a nation's social well-being. According to the 2022 Household Income and Expenditure Survey by the Bangladesh Bureau of Statistics (BBS), the income Gini coefficient rose to 0.499 in 2022, up from 0.482 in 2016 and 0.458 in 2010, demonstrating a trend of income concentration among the affluent, exacerbating the wealth gap. On the contrary, the country's Human Development Index (HDI) for 2022 has increased to 0.67, up from 0.61 in 2016 and 0.56 in 2010, with significant contributions from enhanced educational opportunities, particularly at primary and secondary levels. It is imperative to tackle inequality and stabilize the Gini coefficient to improve the HDI by enhancing access to higher education, skill development, higher income per capita, and life expectancy. Migrant workers from our country often earn only minimum wage in foreign nations due to a lack of necessary skills, while high-paying jobs in our country are often filled by foreign technical experts. Inequality is perceived as a primary factor in causing this dilemma.
Inequality sets off a chain reaction, perpetuating social and economic imbalances across different facets. Particularly, income inequality can trigger and reinforce other forms of inequality, spawning a cycle of disadvantage. Higher-income individuals tend to accumulate wealth over time by saving and investing their income, thereby widening wealth gaps. Income inequality restricts access to quality education, hampers career progress, and limits contributions to family and society. Lack of income equality hinders access to healthcare, nutritious food, and leads to poorer health outcomes. It also obstructs secure living environments, fosters segregated communities, and amplifies social and economic divides. Job inequality can emerge from income inequality, pushing individuals into low-paying, insecure jobs with limited growth prospects. Excessive inequality strains social unity, fostering tensions, crime, and political turmoil. Disadvantaged members of society may demand but lack access to balanced nutrition, adequate clothing, decent housing, essential healthcare, and quality education, resulting in a supply-demand mismatch, inhibiting overall economic growth by dampening demand, restricting investments, reducing workforce participation, and curtailing production. This lack of investment in human capital stifles national progress, akin to a tree deprived of sunlight and water, leading to diminished human capital, limited social mobility, decreased economic productivity, and innovation, alongside rising crime rates, social unrest, and disengagement from civic responsibilities.
A balanced society could be viewed as a level playing field where each player can compete with one another and exhibit their talents freely, fostering an environment void of inequality. Each individual harbours unique potential, which, with a supportive environment and opportunities, can be cultivated into a valuable asset. Amartya Sen, the esteemed Indian economist and philosopher, introduced the groundbreaking concept of the "Capability Approach" in the 1980s. At the core of this approach lie the notions of 'functionings' and 'capability'; 'functionings' encompass states of 'being and doing', such as being well-fed and having a home, while 'capability' denotes the assortment of valuable functionings a person can effectively access. Sen's argument highlights that a person's capacity to purchase nutritious food and secure housing significantly influences their future job prospects and income. Similarly, we can infer that the presence of TV channels and digital platforms fosters the growth of diverse artists, news anchors, content creators, and popular YouTubers.
As Bangladesh experiences a demographic dividend, it is crucial to plan effectively to harness each individual's potential for maximising social welfare. Failure to do so will result in an underutilised human resource pool, wasted potential, and individuals becoming societal burdens rather than national assets. To promote the capability approach, we must implement comprehensive strategies such as providing quality education, generating employment opportunities, and empowering disadvantaged communities economically. This can be achieved by implementing a judicious fiscal policy featuring progressive taxation on high-income earners and the wealthy, thereby preventing wealth concentration. This approach ensures access to basic necessities like commodities, healthcare, and housing, while supporting small businesses and providing unemployment benefits. Additionally, it safeguards vulnerable populations through social safety net programs. Meanwhile, macro-prudential monetary policy can help keep inflation in check, maintain the purchasing power of low-income households, promote financial inclusion among marginalised groups by providing access to financial services, and regulate the credit market. This, in turn, stimulates economic growth, leading to lower unemployment and bridging the gap between the rich and the poor.
Reducing inequality is essential to enhance social well-being by unleashing the full potential of individuals. By nurturing the capabilities of every citizen, we can establish a positive cycle of growth, innovation, and social advancement in the country. Targeted measures to tackle income inequality, enhance economic opportunities, and guarantee essential services access can pave the way for a fairer and more inclusive society where everyone has the opportunity to prosper. Prioritising social welfare maximisation through concerted efforts to diminish income gaps and fosters a just and prosperous society for all is paramount.
Dr Md Abdul Latif is Additional Director, Bangladesh Institute of Governance and Management (BIGM). [email protected]
© 2024 - All Rights with The Financial Express
