A Guy’s View: Worsening wealth and income inequality

“Every few months, Thomas Piketty (and/or a handful of other economists with a social conscience) will remind the world that a tiny elite is binge-eating the global economic pie while 7 billion humans fight for their table scraps. Journalists will then aggregate some alarming statistics and edifying charts; progressives will share these over social media, adorned with red-faced emoji (and/or jokes about guillotines) — and congressional Republicans will carry on trying to establish a special, zero-percent tax rate for people who inherit private islands.” Eric Levitz – Inequality Is Rising Across the Globe – And Skyrocketing in the US

The captioned observation was published in the New York Intelligencer, December 15, 2017. The full effects of the Trump presidency were not yet felt, including the massive tax cut for the richest Americans which was implemented subsequent to Levitz’s article. All indications are that the wealth gap is continuing to widen.

In the last week, I heard a member of the American legislature assert that the 400 wealthiest people in the United State of America have more wealth than the bottom 150 000 000 people in America. When I heard this picture of wealth distribution in that country, it sounded alarming. And then I took a minute to consider whether that was reflective of most places, including Barbados.

This led me to the World Inequality Report 2018. That report confirmed that income inequality had increased across most of the world. The gap was lowest in Europe and highest in the Middle East. One could probably point to certain factors that are built into those two groups of societies to partially explain this reality.

The report captured the national income share in 2016, and this told a clear story of the direction in which the money continues to flow. The top 10 per cent income share was 37 per cent in Europe, 41 per cent in China, 46 per cent in Russia, 47 per cent in US-Canada, and around 55 per cent in sub-Saharan Africa, Brazil, and India. In the Middle East, the top 10 per cent captured 61 per cent of national income.

Although the income gap is widening everywhere, the pace is not the same. It has been growing fastest in America, Canada, China, India and Russia. One observation is that this marked the end of a post-war egalitarianism which was responded to in different ways.

I found the following extract from the report instructive: “Economic inequality is largely driven by the unequal ownership of capital, which can be either privately or public owned. We show that since 1980, very large transfers of public to private wealth occurred in nearly all countries, whether rich or emerging. While national wealth has substantially increased, public wealth is now negative or close to zero in rich countries. Arguably this limits the ability of governments to tackle inequality; certainly, it has important implications for wealth inequality among individuals.”

Put differently, the report has observed that Governments have passed the assets of the state, acquired with public wealth, to private individuals, hence, the means of production are all now in the hands of private capitalists.

The concentration of wealth in private hands while their labourers starved, forced conscientious Governments to intervene in the market place to bring relief to the poor and suffering. This was fuelled by a social consciousness which is alien to the privileged class. Why would they limit their privilege?

But that class has never surrendered its position and has used its influence to continue to cement itself at the top of their countries. Lending agencies have been their friends.

Every country that has fallen into the hands of the International Monetary Fund or the World Bank comes out with vastly reduced public assets. Those entities demand that the wealth of the countries that borrow their money is transferred to private hands. To them, the world is one big economy to be controlled by a few states and people. Society beyond economics is of no moment for them.

To take the position that this skewed distribution is wrong is to run the risk of being labelled a socialist, and in America there seems to be no greater negative stain. In Barbados, however, that was not a matter of concern, for most of us understand that without socialist policies, the majority of us would still be living in the dark ages.

Labels aside, this pattern of wealth distribution should never exist outside a slave economy. No case is being made out for a pure socialist structure, and in the absence of legally enforced equality, there will always be a disparity in wealth distribution. It cannot be ideal, however, for a few persons in a society to enjoy staggering wealth, while those who work for them cannot survive on the wages they earn.

Barbados’ economic picture was no different from what is now being reported in America. This country was once no more than a large plantation where labour was free, and for a long time after it was no longer free, it was nearly free. Socialist policies of successive Governments changed that to some extent and gave hope for even better things to the majority of the population. But where are we in 2019?

This country entered an IMF programme in 2018. The usual blind political blame game has been on since then, with the current administration accepting no responsibility for taking this country over the cliff and into the sea of hardship. Whatever policies the previous administration pursued, Barbadians were spared the dire situation which many now face. And yet, the defenders of the realm are bold enough to look people in the face and say, blame those who are not here for what we are doing to you.

We have embarked on a journey without being told where we are going. What we know for sure is that we have decided to climb up the rough side of the mountain and in the process, many a weak one will falter.

We have been told that the IMF has set targets which we have to meet. It seems clear that those targets include un-employing many Barbadians. They also seem to include the imposition of taxes which will stifle the ability of Barbadians to retain any reasonable portion of their earnings, if they have jobs. We can also see that the social services to which Barbadians have grown accustomed are on the chopping block. Life for ordinary Barbadians will not be the same. But, certainly, this will not come near the top one per cent of our population. They will magically be further enriched by the end of this terrible journey.

All of this is consistent with IMF programmes all over the world. At the end of the programme, we will have a prettier balance sheet, richer people at the top and starving people at the bottom.