The world’s elite, including political leaders and corporate titans, met at the annual World Economic Forum last week in Davos, where the smugness that comes with being invited to an exclusive event was overshadowed by the tumultuous political events of the past year for the global economy. The Forum discussed the contents of the Global Risks Report which identified a number of threats to the world order. At the top of this list, perhaps surprisingly, is not terrorism or climate change but the result of the neo-liberal policies which Davos itself exemplifies — income inequality. The report invokes the rich and powerful to suggest that a fundamental reform of capitalism is necessary to tackle the public anger which it blames not just for the popularity of Donald Trump, but also Brexit. On this matter, at least, the Davos plutocrats and I are in complete agreement.
If public anger is the result of inequality, then the recent Credit Suisse Annual Report on Global Wealth for 2016 should alarm Indian society. To be sure, the report was only documenting in stark numbers something any casual observer — who is not hiding his/her face behind a newspaper while his/her car stops at a traffic light to shut out those pesky street kids clamouring for a few spare coins— witnesses every day, every hour, every minute in this country. India is one of the most unequal countries in the world, and this inequality is growing at an astonishing pace.
Here are some sobering findings of the report. In 2016, the richest 1 per cent in India owned nearly 60 per cent of the country’s total wealth; in contrast, the equivalent figure for most western European nations is between 20 per cent to 30 per cent. The top 20 per cent commanded a staggering 80 per cent, while the entire bottom half of the country owned a pathetic 2 per cent. In the past six years, this share of wealth has shot up by an astounding 45 per cent. India was already more unequal, by a margin of 15 percentage points, than even the US where Bernie Sanders had declared that “a nation will not survive morally or economically when so few have so much, while so many have so little.”
In dishing out such grotesque injustice, we are far ahead of China and most other middle-income countries. The only major economy which beats us, and to which our billionaire barons, their economic gurus and their chums in India’s ruling classes can look up to, is Russia.
The causes and significance of inequality have long divided economists and politicians across the ideological spectrum, but the evidence on its impact on society is emphatic. In their classic book, The Spirit Level: Why More Equal Societies Almost Always Do Better, Kate Pickett and Richard G. Wilkinson describe the “pernicious effects that inequality has on societies: Eroding trust, increasing anxiety, and illness, (and) encouraging excessive consumption”. Their analysis demonstrates the strong correlation between higher levels of national inequality and a wide range of health and social problems, from poorer physical and mental health to higher rates of drug abuse, teenage pregnancies and violence. More worryingly, rising inequality is a major driver for the emergence of authoritarian leaders, championing a divisive agenda poisoned by sectarianism, xenophobia and nationalism. Rising inequality is fuelling conflict, both the incidence of crime in our daily lives (so vividly captured in Aravind Adiga’s White Tiger, where the protagonist, Balram Halwai, a village boy, ultimately kills his master and steals his money) and full-scale civil conflict and war.
Inequality corrodes the fabric of a society that is crucial for all people to feel they belong to it and have a stake in a shared future. Social scientists refer to this connectedness as social capital. It acts as an invisible glue that binds us all together, both rich and poor, through good times and bad. It is this communion of hearts and minds which promotes individual, and ultimately, societal well-being. In short, inequality destroys the soul of nations, of societies, of communities and, ultimately, of every individual’s well-being. Note the use of the word “every”; for this adverse impact is not only experienced by the poor (although they do bear the worst consequences), but also the richest. For the person who is hiding his face behind the newspaper and Looking Away (the title of Harsh Mander’s powerful book on this subject), inequality is bad for you too.
It is not surprising that reducing inequality is one of the UN Sustainable Development Goals which India has signed up to. And, indeed, inequality can be reduced, but it requires strong political will to do so. A number of middle-income countries have managed to contain and even reduce income inequality while achieving strong growth performance, belying the belief that inequality is inevitable while India struggles to achieve a basic standard of living for her population. It is a mystery why no political party championed the cause of reducing inequality (which is distinct from reducing poverty) in the last Lok Sabha elections and they are not doing so in their campaigns for the forthcoming elections.
Perhaps this is because inequality is an inconvenient truth in the saga of India’s shining future, one which everyone would prefer to ignore — not least because no one wants to promote policies which might hurt their own financiers. But there is no escaping the inconvenient truth that there will be no shining future if inequality is not arrested. We need a political consensus, to act with urgency, to reduce the grotesque levels of inequality which not only threaten our vision for sustainable development, but grievously insult our very humanity.