How I See Economic Inequality (1)

The greatest country, the richest country, is not that which has the most capitalists, monopolists, immense grabbings, vast fortunes, with its sad, sad soil of extreme, degrading, damning poverty, but the land in which there are the most homesteads, freeholds — where wealth does not show such contrasts high and low, where all men have enough — a modest living— and no man is made possessor beyond the sane and beautiful necessities.
– Walt Whitman
Image courtesy of: http://www.oxfamamerica.org

When fighting for equality is only but a memory…

I was about 4 or 5 years old when the concept of “equality” was introduced to me. I was living in the province with my grandmother, Nanay B. and she was patiently explaining why my cousin and I had to have equal share of candies. Her explanation was “so there will be no conflict”. From then on, my cousins and I would always try to divide everything into equal parts: news toys would be enjoyed by each of us for exactly 10 minutes, food would be equally shared among us, even hugs and kisses from the elders have to be exactly of the same intensity and length. An adult judge would be called in if someone tried to outsmart the rest. It didn’t work 100% of the times, but everyone agreed that an equal distribution would help avoid conflict. I didn’t know it then, but that would be the last time I would witness a firm stand on equality.

As an adult, I’ve grown to view the concept more as an ideal and less as an achievable reality. The basic reason being, that we live in a world where competition is the engine that makes things happen. And when the leitmotiv of our everyday existence is consciously wanting to be the best (some would settle to being better), isn’t it only natural for others to be left behind? and isn’t having people left behind already a situation displaying inequality?

Under the lens of rationality, inequality is “just part of life”.

As a member of a community, I can’t help but aspire for resources to be more equitably shared, even though the lottery of life has placed us in different situations the moment we were born. I believe it is a legitimate appeal so that all of us could obtain a minimum standard of living and that would allow us to serve our purpose in life.

Under the lens of world citizenship, inequality is causing conflicts and distorting the society by crippling social cohesion.

Both statements are true and one only needs to look out of their windows to find real-life testimony to these. They co-exist, and they divide our conscience into: convincing ourselves that there is a solution versus believing that this is a hopeless case.

Redirecting the debate

I’ve seen articles online arguing how inequality is actually necessary so the wheels of a capitalist society would turn. As a very simplistic example: you wouldn’t be enjoying that affordable item of yours that was made in China, if the factory workers had the same educational qualification as you do. Precisely, we are where we are now because historically it was the inequalities in the pre-capitalist societies that have made way for resources to be distributed the way we see them now. Right now we have the landlords, the capitalists, the workers (laborers, yuppies, executives, etc…), the oppressed…

Let’s say we accept that inequality was necessary back then and that it is inherent to the system at the present moment. Our sense of morality would dictate for us to “not be okay” with that fact. Yet, doesn’t it seem ridiculous to argue whether inequality is necessary or not in our current society? it is here and it is happening, after all. The debate is enriching, but its practicality is nil.

The way I see things, it’s not the disparity in the possession of wealth* per se that should be the focus of the debate. Instead, I propose to reorient the dialogue on the fact that: discussions about solving inequality is almost always geared towards the redistribution of the “pie”; taking from the rich to give to the poor. This response gives me the impression that the beneficiaries of such designation are seen as mendicants, waiting for charity to improve their lives. And I refuse to believe that.

Ver imagen original

Image courtesy of: http://www.slate.com

Wealth is a by-product of an exerted effort, a risk taken and an opportunity tapped. However, not everyone I know dreams of living the life of a millionaire; most of them would be content providing for their families and knowing that their future is somehow secured. I know of people my age who have turned their backs on their “conventional” lives to live in and develop abandoned rural villages. There are also those who could have made it big in the corporate world but have chosen to continue contributing to the academia and other non-lucrative enterprises. Then there are those who simply dream of tilling lands or running a business of their own.

This is why I believe that it is the lack of access to opportunities that is the underlying cause of inequality. I have a feeling that if the world could be fairer in giving access to livelihood, financial capital, training, education, etc… people will have the chance to make a living on their own and eventually accumulate wealth for themselves, by themselves.

My proposition does not mean to downplay the importance of redistribution. Rather, it encourages the evaluation- and even the criticism- of the existing suggested solutions. Wealth redistribution perhaps offers the chance to solve inequality issues at the present moment and the immediate future. But opening up the doors for people to create their own wealth could potentially deliver a more sustainable and longer term solution.

Enter globalization

It is very difficult to detach globalization from discussions about economic inequality. As a young optimist, I was convinced that time would prove me right when I said that globalization will be more advantageous to the underprivileged. The principle is that opening the international barriers to capital, goods and labor will bring a positive outcome for everyone.

Ver imagen original

Image courtesy of: http://www.huffingtonpost.com/

12 years have passed and time hasn’t been my ally. Although globally, inequality has declined (due to a worldwide economic growth), the gap within countries has worsened. And as what I have observed, the most striking repercussion of globalization is the trickle-down effect.

Investopedia defines the trickle-down effect as, “A phenomenon where an advertisement is rapidly disseminated by word of mouth or by viral marketing”. One the one hand, we are at the height of the daily improving Information and Communications Technology (ICT). This advancement is constantly making it easier for the people of our generation to take a peek at how others live no matter how far they are from us, eventually leading us to want, to “need” what they have and enjoy. At the same time, globalization is expanding the market for consumption as well as facilitating the financing of such consumption, thus allowing for the satisfaction of people’s new wants and needs.

Georg Simmel used fashion as a fantastic example to explain my point: “The elite initiates a fashion and, when the mass imitates it in an effort to obliterate the external distinctions of class, abandons it for a newer mode- a process that quickens with the increase of wealth.”

Notice how the middle-class have lately become quite busy purchasing the now-accessible goods and services (most of the times with the now more-accessible credit) which make them feel like they’ve reached a higher echelon in society- cars, properties, branded clothing, lavish celebrations, vacations overseas, and so on… All the while consuming, they don’t seem to notice how the economic gap is actually widening, not slowly diminishing. Something inside me says that this phenomenon has been successful in somehow placating conflicts that could possibly stem from the common people.

To cite an example: analyzed survey from 40 countries by researchers from Harvard University and Chulalongkorn University revealed that respondents in every country underestimate the size of the salary gap between a CEO and an average worker. In the U.S., the median American’s response to how they perceive this salary difference is a ratio of 30-to-1, when in reality the gap is 350-to-1. (Year of survey unmentioned by the source)

I’m afraid that this is not exclusive to the Americans and I can see this happening in many countries. The question is, how long will this distraction serve its purpose?

Conclusion

Nanay B. was right in asserting the importance of equality to avoid conflict; and since this is far from being achieved, it is not surprising that outcries and at times hostility are bursting from all corners of the world. Within my adult life, the most striking accounts I’ve heard so far are:

i) the 2005 riots in the suburbs of Paris

ii) the 2010 Arab Spring

iii) the 2011 “Indignants’ Movement” in Madrid

iv) the 2016 Kidapawan farmers’ protests

Surely there are more expressions of social unrest around the globe and across history. But given what we know about the fast-rising economic inequality, should there not be a manifestation of greater interest from the rest of the public? a higher participation from all members of the community?

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Image courtesy of: http://www.bbc.com

I can see Adam Smith’s thoughts as writings on the wall:

Though our brother is upon the rack, as long as we ourselves are at ease, our senses   will never inform us of what he suffers. They never did and never can carry us beyond our own persons, and it is by the imagination only that we form any conception of what are his sensations…His agonies, when they are thus brought home to ourselves, when we have this adopted and made them our own, begin at last to affect us, and we then tremble and shudder at the thought of what he feels.”- Adam Smith, The Theory of Moral Sentiments

Is the middle-class really so entertained at their illusions of wealth that they are not even aware of the magnitude of this social injustice?

I seem to remember that the French Revolution was led by the bourgeoisie, in complete compassion and genuine desire for a more equitable society. If history does repeat itself, then why is this not yet happening? Just wondering…

This is how I see economic inequality: an outright contortion of the society.

 

* Wealth and Income have been indistinctly used in this post. However, it must be remembered that wealth denotes a stock variable (measurable at a particular point in time), while income is a flow variable (measured with reference to a specific period in time).

Author’s note: Coming up is the second part of this post- a more technical note containing the different materials that aided the author in writing this entry. Stay tuned!

 

Sources:

  1. Investopedia
  2. “For richer, for poorer”, available at: http://www.economist.com/node/21564414
  3. “On Income Inequality: A French Economist vs An American Capitalist”, available at: http://www.npr.org/2014/05/08/310784652/on-income-inequality-a-french-economist-vs-an-american-capitalist
  4. “Fashion” by Georg Simmel, available at: http://sites.middlebury.edu/individualandthesociety/files/2010/09/Simmel.fashion.pdf
  5. “1789: France’s bourgeois revolution”, available at: http://www.worldsocialism.org/spgb/socialist-standard/1980s/1989/no-1019-july-1989/1789-france%E2%80%99s-bourgeois-revolution
  6. “The Surprising Reason that Crushing Economic Inequality Isn’t More of Election Issue” by David Sirota, available at: http://www.alternet.org/economy/surprising-reason-crushing-economic-inequality-isnt-more-election-issue
  7. https://www.goodreads.com/author/quotes/14424.Adam_Smith
  8. http://www.economicsdiscussion.net/difference-between/difference-between-flow-variables-and-stock-variables/555
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2 thoughts on “How I See Economic Inequality (1)

  1. Pingback: How I see Economic Inequality (2) – colorfulifesite

  2. Pingback: Chomsky’s quote on Neoliberal Democracy- a reflection – colorfulifesite

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