Inequality amid Plenty

Monday, 31 January 2011 00:45

Written by Neric Acosta

The global risk context in 201is defined by a 21st-century paradox: as the world grows together, it is also growing apart.

World Economic Forum, 2011

As areas of the globe surge in modern technology and breakneck economic growth, lifting millions out of poverty and want, a gargantuan gulf between those who live with or have access to material prosperity and those who remain destitute and backward, in fact, continues to widen and deepen. In emergent or so-called transition, resource-rich economies and democratizing societies like Brazil, India, Mexico, South Africa and ours, the contrasts are even far more stark and discomfiting.

The World Economic Forum annual forum now underway in Davos, Switzerland -- long regarded by anti-globalization circles as emblematic of rapacious international capitalism and the tiny global elite that benefits from it – has acknowledged the proverbial ‘elephant in the room’: global income and wealth inequality. Reports show that from 1980 to 2005 in the United States the top one percent of the population amassed more than 80 percent of the total increase in the income. As the Herald Tribune succinctly put it: “The gap between the superrich and everybody else is now greater than any time since the Depression of the 1930s.” Even the more egalitarian welfare states of Scandinavia and Germany have seen income inequality rise steeply in the last three decades of globalization’s spread.

A metropolis like Metro Manila is witness to the construction of new, exclusive enclaves of high-rise condominium buildings, swanky restaurants and expansive malls, which all mushroom along with countless call centers, flashy hotels and banks. Eastwood, McKinley Hill, The Fort, Trinoma, and Greenbelt among others, could well mimic – by mere appellation or design -- any modern complex in any of the urban centers in the West, or in oil-fed wealthy cities in the Middle East.

But a stone’s throw away from these places are teeming settlements of a vast urban underclass. An aerial vantage of the urban landscape shows how swathes of the large city are carved out for wealthy real-estate development while a sea of informal colonies, largely without access to water, sanitation and other basic services, sprawl far into other congested urban territory. Under bridges and along fetid estero banks countless families build makeshift dwellings.

Here, in the seedy sections of ramshackle homes and tenement housing are sown the seeds of crime and desperation. Restless, angry youth channel otherwise creative energies towards gang violence, banditry and terrorism. When such economic alienation is conflated with the politics of ethnic pride or religious identity, the mix becomes more lethal.
One wonders how much of the spate of crimes and murderous terror acts (like the horrid bombing of a bus in a busy part of EDSA) in the country of late can be traced to or linked with the fact that we have, democratic institutions and free economy notwithstanding, one of the most unequal societies in the world. The rate of underemployment, not just unemployment, hovers in the 20 percent of the labor force, correlated with increasing self-rated hunger metrics. The diaspora of Filipino labor, luring up to a third of the country’s entire labor force to over 100 countries in the world, may have been long the ‘escape valve’ that have diffused a social volcano from erupting.

Surely, this divided situation for many countries in a hyperconnected, turbocharged world economy could not hold out forever. If a society, John F. Kennedy once said, “cannot help the many who are poor, it cannot save the few who are rich.” The recent angry protests in Tunisia, Egypt and Yemen are feared to have a domino effect across the Middle East, but societies that have such deep chasms of income and opportunity invariably have in them the conditions of tension and instability. New oligarchies are a function of this global economy, as are the growing ranks of the poor and disenfranchised.

Some economists have pointed out, as the report coming out of Davos puts it, that the emergence of “a global plutocracy may be driven not only by seemingly benign forces like technology revolution and global trade, but also by malign ones, particularly the elite’s ability to shape government and other public policy activities in its own self-interest.” In such a context, the rich get richer largely with its close ties to government. Or as economist Ragharam Rajan of the University of Chicago would have it when speaking of a growing albeit still tiny number of billionaires in his native India, “land, natural resources and government contracts or licenses are their predominant sources of wealth, and all these factors come from government.”

That should bear resonance to our situation as well. The trajectories for our country should be clear: rapid and robust growth, for sure, but more importantly, growth that is sustainable and inclusive. That is why, despite its being derided as a colossal dole-out program, the conditional cash transfers – if managed effectively -- to hand-hold the poorest of the poor out of their destitution is but a first necessary step in bridging this gaping income divide. No society can long afford growth that parallels widespread exclusion of millions – or pursue unequal growth without risking social disintegration.

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