By Biraj Swain:
As a matter of principle I do not begin with investment bankers’ quotes, neither do I end with them. In fact I do not quote investment bankers at all. And there’s good reason for that. If anything, the 2007-08 financial meltdown that is still scorching us has taught me effectively what the steroid-charged investment banks’ greed and financial regulations’ collapse can do. And when the twain meet, we have years of crunching austerity and bleeding welfare policies on one hand and continuing business-as-usual bank-bailout mess on the other.
But on the occasion of Action/2015’s ‘I Move Campaign’, I make the exception and start with Ruchir Sharma. He is the Morgan Stanley emerging markets and global macro head. In his 2012 far-reaching book, Breakout Nations, he discusses what makes a nation breakout and if the BRICS block pass the muster. Okay, enough plug. But what he also discusses is the under-analysed parts of turbo-charged economies like India, i.e. maximum growth has happened in the most criminalised sectors (that social justice campaigners like us choose to call resource curse) like extractives and real estate, which are still beneficiaries of cronyism and state largesse. The book is full of indices and tables. Another stand-out table is how the families and groups which have capitalised markets most in India continue to remain the same. There is almost no churning at all, no new families or surnames in the list of richest Indians. He calls it the Churning Index and it is a good long shot at the comprehensive failure of social mobility in India. Coming from an investment banker, this is gold dust, right? How come campaigners haven’t latched on to it the way they should? Or for that matter the over-present, navel-gazing Indian mainstream media?
Mainstream media did play up Breakout Nations and a simple Google search would yield the evidence. In fact they played it up so much that our investment banker Sharma became an overnight political analyst deconstructing electoral results in 2013 and 2014 elections. Curiously enough, Stephanie Hope Flanders, one of the finest financial journalists with Financial Times and BBC pedigree, has made the other journey, i.e. leaving active journalism to head the Europe and UK strategy at JP Morgan. That she called out the Libor rate fixing and many other financial sectors’ rigging, is testimony of her sterling contribution to journalism and to deconstructing the financial voodoo. But she is yet to be anointed political commentator by British, European or international media that Ruchir Sharma has already achieved, thanks to the coronation culture of Indian media. Strange are the ways of Indian media indeed!
But it is the same media, especially the elephant in the room, the over-powerful and unjustly-influential electronic/TV media who have almost completely blacked-out Thomas Piketty. Let us not insult our readers by introducing Piketty- but if you were living in a cave or under a rock, he is the French economist, the toast of 2014, who wrote the seminal tome with sweeping data-sets, “Capital in the Twenty-First Century” (2013). He works on wealth and income inequality. He is director (directeur d’études) at the École des hautes études en sciences sociales (EHESS) and professor at the Paris School of Economics.
That his book with 250 years of data-sets and complex equations has become the best-seller, is not just testimony to Piketty’s work but the global outrage at current levels of inequality, the mutation of democracy into oligarchy via the wealthy elite and their lobbying machineries rigging the rules.
Even journalism’s current moral compass, comedian-satirist John Oliver and his Last Week Tonight, the Al Jazeera of late night comedy shows, were compelled to make deep dive section on this topic. And Al Jazeera’s own Marwan Bishara, famous for speaking truth to power, made a documentary, called it what it is, Oligarchy. Not to forget the Oxfam paper on 85 richest persons owning half the global populations’ wealth to mark the 2013 rich-fest (also known as World Economic Foum at Davos)!
In “Capital Capital in the Twenty-First Century”, Piketty and his colleagues illustrate the increasing wealth and income inequality. They spent 15 years digging for data spanning three centuries and 20 countries to prove this point. While many are sceptical of the solutions he suggests, that his work is path-breaking is undisputed. The book spans the history of income and wealth distribution in over 20 countries since the Industrial Revolution. “History tells us that there are powerful forces going in both directions (equality and inequality). Which one will prevail depends on the institutions and policies that we will collectively adopt. Historically, the main equalizing force – both between and within countries – has been the diffusion of knowledge and skills. However, this virtuous process cannot work properly without inclusive educational institutions and continuous investment in skills. This is a major challenge for all countries today. In the very long run, the most powerful force pushing towards rising inequality is the tendency of the rate of return to capital ‘r’ to exceed the rate of output growth ‘g’. That is, when ‘r’ exceeds ‘g’, as it did in the 19th century and seems quite likely to do again in the 21st, initial wealth inequalities tend to amplify and become extreme. The top few percents of the wealth hierarchy tend to appropriate a very large share of national wealth, at the expense of the middle and lower classes. This happened in the past, and could well happen again. For instance, according to Forbes global wealth rankings, top global wealth holders have been rising three times faster than the size of the world economy over the 1987-2013 period.”, he states taking a non-ideological, data-intensive look.
He illustrates how we are in the midst of belle époque (the new gilded age). Other than the capitalists, the rise of the super-salaries and the super-salaried, who come from the same section with concentration of privileges, is the original new research based contribution of his book. To address this problem, he proposes redistribution through a global tax on wealth.
From Paul Krugman (on the New York Times) to the multi-part series on Economist, all media outlets worth their names, have discussed and reviewed the book. I recommend you read those greats. Better still, do yourself a favour, and read the book! In fact, Financial Times has claimed to discover mathematical errors in Piketty’s equations and some of the leading economists have gone on to rebut Financial Times’ claims. Even Prabhat Patnaik the leading Marxist ideologue has weighed in on Piketty.
And if you are wondering, no this is not a shameless plug of Piketty or his book! One wonders, when the whole global media, the right, left and the undecided/neutral, in the face of searing inequality, is discussing Piketty, inequality and his prescriptions or (in)feasibility of the same, how come our Indian mainstream media, barring some print brands including some financial papers, have almost blacked out Piketty? Is this happenstance or is this ostriching by design? Or is it because inequality is being effectively tackled in India? Au’ contraire’! Some statistics:
1. In the 2011 seminal work Poverty and Social Inequality, the World Bank (another group I generally don’t quote!), stated that if income data of India were ousted, India would stand with the global outliers, Brazil and South Africa in terms of inequality.
2. The top 1% of India owns 8-9% of the national income, as per rockstar economist (Economic Times’ adjective, not mine) Piketty. He adds a cautioning note to these figures with the persistent dodgy quality of India’s income-data, which is again, by design, than happenstance, “Let me make it clear that there are major problems with the measurement of income inequality in India. Of course, there are data problems in every country. But among all democracies, India is probably the country for which we have met the largest difficulties in getting reliable data. In particular, India’s income tax administration has almost given up compiling detailed income tax statistics, although detailed yearly reports called “All-India Income Tax Statistics” are available from 1922 to 2000. This lack of transparency is problematic, because self-reported survey data on consumption and income is not satisfactory for the top part of the distribution, and income tax data is a key additional source of information in every country. The consequence is that we know very little about the actual decomposition of GDP growth by income and social groups in India over the past few decades.”
3. Income and wealth inequality is increasing day by day, three richest individuals in India own as much wealth as the bottom 37 crores people
4. Top 1% richest Indians own almost half or 48.7% of national wealth!
5. Public services are funded mostly by indirect taxes paid for by the poor! Our current taxation system burdens the poor while leaving the rich out. In fact, as P Sainath, effectively points out, the corporate karza maafi to the big boys since 2005-6, has been to the tune of Rs 36.5 trillion. This at a time when allocations to life saving multiplier sectors like rural employment and food subsidy (which are a mere fraction) is being mooted to be slashed mercilessly!
So, when we are in the midst of such obscene inequality, economic trickle-up, pro-capital, pro-middle-class budgets, the ever-loquacious TV media, going conspicuously silent on Piketty, is also an obscenity! And as the cardinal principle goes, coverage leads to outrage, and no, coverage means not just muted outrage but asphyxiating public action! Whatever happened to journalism as a public good/public service?
Because ostriching Piketty in India, especially India, is not just blacking-out his book, but ostriching the crushing inequality in all its naked avatars! Another obscenity we can ill-afford! As part of the I Move campaign (I Move for Justice, Peace and Equality), we also call for a frank and open discussion on the inequality staring us in the face. What better place to begin the conversation than in our living rooms, via the 24X7 news channels?
And yes, before we forget, as for the infeasibility of the global tax on wealth, didn’t the world’s elite think the same about ending apartheid too?
About the author:Â Biraj Swain works on Poverty, Public Policy and Governance in South Asia and Horn East and Central Africa. She is adjunct Faculty at Pondicherry Central University, UNU, UNESCO-MISARC. She is also the co-director Global Call to Action against Poverty.
GCAP works to challenge the institutions and processes that perpetuate poverty and inequality across the world to defend and promote human rights, gender justice, social justice and security needed for survival and peace. GCAP is one of the leading civil society coalitions calling for radical and transformative SDGs.