The ‘pitchfork revolution’ is at the gates

Venky Vembu | Updated on March 22, 2019

Rich gains The wealthy also secure social and political influence in disproportionately large measures   -  istock.com

Growth is great, of course. But as the lessons of recent history show, it is a folly to ignore ‘income inequality’

In his book On Inequality, Princeton Professor and philosopher Harry G Frankfurt records an imagined conversation between two men. One asks the other: “How are your children?” To which, the other man responds: “Compared to what?” Even in its elemental simplicity, the fictionalised back-and-forth pithily encapsulates how notions of well-being have increasingly come to be assessed not in and of themselves, but are being framed in a context that rests rather more on relativism. In other words, my understanding of how I am is influenced entirely by my sense of how my neighbour is doing.

The absurdity of that proposition is, of course, self-evident. The discourse over income inequality and poverty flows along much the same lines. The rational mind argues, for instance, that the fixation in some quarters with the merits of redressing income inequality is entirely misplaced. And that so long as more people are coming out of poverty — which is an absolute measure — it should not matter that some members of society are benefiting disproportionately from economic growth. And that anyone who places a premium on policies that address income inequality is framing it in flawed relativist terms, much like the father in Frankfurt’s fictional narrative.

Two-track growth

This argument is advanced further by the proposition that since economic growth has demonstrably helped in poverty reduction in absolute terms, there is a case for prioritising policies that stimulate growth over those that address inequity.

Indeed, at a recent interaction in Chennai, former Deputy Chairman of the (now-disbanded) Planning Commission, Montek Singh Ahluwalia, gave voice to this conviction. Some members of society may be better placed to harvest the fruits of economic growth, but the benefits therefrom will percolate downwards, and policymakers should focus more on growing the pie than on obsessing that not everyone was securing an equal share of it, he reasoned.

Reading a neighbour’s pulse to assess your state of health is, of course, a manifestation of medical lunacy, and it is doubtless true that the excessively moralistic tone occasionally adopted by those partial to equity is more than a little problematic.

Yet, the debate around this topic isn’t productively advanced by the caricaturing of this school of thought in this fashion, either.

Just the facts

But first things first. It is true that higher economic growth in India has been accompanied by a marked reduction in poverty levels. Even given the embarrassment of riches in the Indian statistical realm in respect of the metrics to define poverty, that case has been established beyond reasonable doubt.

But correlation does not imply causation, and it is far from clear whether economic growth alone accounted for this fall in absolute poverty — or whether it was assisted by policy interventions that targeted ‘inclusive growth’, perhaps through some form of redistribution. Doubts on this score are compounded by the fact that the States that registered the fastest growth rates in their economies have not always recorded the most dramatic falls in absolute poverty levels.

Here again, the effective implementation of a social safety net in some States may have had more to do with poverty reduction than just high growth rates.

In other words, high economic growth is a necessary — but not sufficient — condition for poverty alleviation efforts to make a material difference.

There are other equally compelling reasons why it would be folly to overlook the consequences of income inequality in the mistaken notion that it matters less than high growth does.

Typically, as Frankfurt himself acknowledges, income inequality may be undesirable to the extent that it has an “almost irresistible tendency” to generate unacceptable inequalities of other kinds.

Indeed, he reckons, those other inequalities may sometimes go so far as to undermine the integrity of a society’s commitment to democracy.

What inequality does

This may come about because income inequality will almost inevitably translate into a situation where the wealthy, being “more equal than the others”, secure social and political influence in disproportionately large measures. You only need to look around the world to see how this is already playing out. In virtually every developed economy, the fruits of globalisation have gone disproportionately to an elite cross-section, while at the same time those at the other end of the economic spectrum have been rendered substantially worse off.

And, predictably, this has had far-reaching political consequences. In the US, for instance, the populist tide that swept Donald Trump to power in 2016 was propelled in large part by the blue-collar ‘rustbelt refuseniks’ who wanted to stick it to the out-of-touch elites. That sentiment will only be amplified further by the consequences of fat-cat self-indulgence in giving themselves hefty tax breaks, while simultaneously cutting back on healthcare benefits for the middle class and the poor. The recent revelations that well-heeled celebrities secured admission in elite US colleges for their children through bribes are another manifestation of the perverse cornering of societal resources by the privileged.

Much the same outraged sentiment directed at the elites underlies the Brexit vote of 2016, the malefic consequences of which are still manifesting themselves.

If this is the state of play in economies that are far more developed than ours, with a markedly higher standard of living for even those who feel ‘economically disenfranchised’, the outlook for the future here may be decidedly more grim. The classical textbook lesson that economic growth matters more than income inequality may provide you some intellectual solace, but it may be of little help when the jaded revolutionaries bearing pitchforks turn up to rattle the gates.

Published on March 22, 2019

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