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Inequality and Its Critique

By Anjum Altaf

Oxfam presented its new report at Davos whose main takeaway for India is that:

“Indian billionaires saw their fortunes swell by Rs 2,200 crore a day last year, with the top 1 per cent of the country’s richest getting richer by 39 per cent as against just 3 per cent increase in wealth for the bottom-half of the population.”

https://theprint.in/economy/richest-indians-got-wealthier-by-39-worlds-poorest-saw-their-fortunes-dip-by-11-in-2018-says-oxfam-study/180630/

Shekhar Gupta at The Print has castigated this report in very strong terms as methodologically flawed and politically motivated.

Please read the news item and watch Gupta’s critique then write a comment with your own analysis. Where do you come out on this issue? [I wish he would stay still while speaking — it is tortuous to watch]

Here is a set of expert opinions solicited by The Print:

https://theprint.in/talk-point/oxfam-inequality-study-skewed-parameters-to-assess-wealth-or-disbalanced-economic-growth/181348/

Consider the three in conjunction with the following argument which inserts some much needed theory into the debate.

https://thebulwark.com/is-all-economic-growth-created-equal/

Read this as well. The authors are collaborators of Thomas Piketty who brought inequality on the agenda with his Capital in the Twenty First Century.

Nobody has really thrown out Piketty’s data or methodology. For the most serious critique see the following by Debraj Ray:

https://www.econ.nyu.edu/user/debraj/Papers/Piketty.pdf

Those wishing to push further can read the following response by Branko Milanovic:

http://glineq.blogspot.com/2014/06/where-i-disagree-and-agree-with-debraj.html

I look forward to your contributions.

 

13 Comments
  • Marwah Maqbool Malik
    Posted at 09:28h, 26 January Reply

    I am inclined to disagree with Gupta’s critique. From what I’ve understood, his overall argument is that inequalities in wealth are not relevant for the debate on inequality and that the report does not take account of or specifically discuss income inequality so it should be trashed.

    I think the statistics on wealth inequality are very relevant and feed directly into how we understand inequality. Inequality is not merely about the distribution of income, but it also encompasses distribution of (and access to) opportunities for people. To place this in the terminology that Gupta uses, those with greater wealth (and by extension assets) will invariably have greater access to opportunities at a particular point in time and in case of economic or other kinds of shocks are also better able to cope with them. Additionally, he does not touch upon capital. The top 1% are also capitalists. The returns they generate are privately owned. In a capitalist society having access to greater capital generates even more capital so that those who start off with little or no capital will, without any re-distributive mechanisms, generate disproportionate wealth.

  • Myrah Nerine Butt
    Posted at 18:41h, 26 January Reply

    Money helps generate more money. I do understand the value of measuring wealth. The rate of return on capital exceeds the rate of growth of income. The rich are getting richer because they have access to more resources. The wealth gap is wider than income and would probably push policymakers to pay more attention so I think it is beneficial to measure that from a policy perspective.

    I fully agree with the point by Deepanshu Mohan .. In developing countries like India, cost to basic services .continues to rise in proportion to rising incomes, which negatively affect the real incomes (purchasing power) of lower-middle income groups over time. Measuring access to services (physical proximity, affordability, social acceptance) to services is critical. In Pakistan particularly, we need to explore how decentralization has impacted people’s access to services.

    Nirupama Sounrarajan states in one of the pieces that, “Bridging the inequality is not just the responsibility of the government, it is also the moral responsibility of civil society. “ She goes on to say “Instead of penalising the rich for getting richer, we must find ways for them to pool their resources, to spend CSR money more efficiently together, to create scalable impact.

    She points towards the Gates-variety corporate-philanthropy. Given that resources are finite, could it be argued that the very basis of their wealth accumulation is exploitative and maybe took away other segments of the population’s piece of the pie? In that sense, corporate philanthropy is just massaging the egos of the rich and not contributing towards sustainable change. Also, corporations eventually do look out for personal interests and CSR is also used to access markets.

    The bulwark piece subscribes to the concept of “the economic pie” presumes that our primary goal should be growing the economy and that those left behind can be compensated by the winners so that everyone ends up ahead. This is trickle down for me in a way and I don’t think that relying on just that is sufficient.

    • Anjum Altaf
      Posted at 07:12h, 05 February Reply

      Marwah/Myrah: So is it agreed that Gupta’s argument is invalid. Wealth is a good enough measure. Inequality of wealth is not just an economic problem but a danger to democracy. Inequality of wealth, if not constrained, is also a self-perpetuating phenomenon, as argued by Piketty.

      So what is to be done? Is the solution a super-wealth tax as advocated by Cortez-Ocasio?

      If so, how would that respond to Myrah’s trickle-down reservation?

      “The bulwark piece subscribes to the concept of “the economic pie” presumes that our primary goal should be growing the economy and that those left behind can be compensated by the winners so that everyone ends up ahead. This is trickle down for me in a way and I don’t think that relying on just that is sufficient.”

      If it is not sufficient, what else might be needed?

      Useful reading:

      https://www.nytimes.com/2019/01/05/opinion/alexandria-ocasio-cortez-tax-policy-dance.html
      https://notesonliberty.com/2019/01/25/john-rawls-had-good-reason-to-be-a-reticent-socialist-and-political-liberal/

  • Anjum Altaf
    Posted at 13:48h, 08 February Reply
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