Of troubling new divergences

During the past century or so, the world has experienced exponential economic and technological growth. Despite this staggering ability to increase the proverbial size of the pie, the world remains plagued by glaring inequalities, which show no sign of abating. Under the looming threat of climate-induced disasters, inequalities between the haves and the have-nots are taking on new forms which need to be understood and contended with.

While absolute poverty has decreased in recent years, this fact alone is misleading. Absolute poverty has decreased alongside inequalities growing starker around the world. It is thus good to see the latest UN Human Development Report squarely address the issue of inequality and assert that business as usual will not solve this problem.

There is evident need to go beyond the idea of aggregating income and calculating averages, which obscure just how inequitable our world has become. Inequality today begins even before birth, and it can accumulate over time due to differences in health and education opportunities. Inequality is not just about how much, or little, someone earns. It is also about how wealth and power are distributed; and about how prevailing social and political norms create and preserve vast gaps between the haves and the have-nots.

Inequalities plague not only the have-nots across poorer countries, but also those who reside in some of the most powerful countries in the world. Consider, for instance, how children in professional families in the US are exposed to three times as many words as children in families receiving welfare benefits. This basic fact has a knock-on effect on test scores and life opportunities as children grow older, and it undermines the myth of social mobility on which America so prides itself.

However, there are many countries with a lower concentration of wealth at the top, which have adopted a host of astute policies that support worker rights, ensure decent minimum wages, and make investments in other forms of social protection. In many Scandinavian countries, for instance, inequalities are much less glaring.

Growth-based economic policies to enhance productivity by market-based policies, which favour the already well-off, cannot solve the inequalities problem. Yet, it is this market-based fundamentalism which has become dominant in many developed countries, and it has also been exported to much of the developed world by international financial institutions.

While the need to increase taxation remains vital to ensure the self-sufficiency of any nation, regressive forms of taxation can exacerbate inequalities. Taxation needs to become more progressive, and it must be accompanied by increased public spending on the health and education of citizens, rather than primarily being used to pay for the debt servicing, administrative and defence needs of poorer countries.

Apart from progressive taxation, new mechanisms need to be devised to effectively tax multinational corporations, many of whom now boast assets and influence which exceeds that of numerous poorer nation states.

The UNDP report rightly cautions against the historical tendency of technological revolutions to exacerbate inequalities. Consider, for instance, how the Industrial Revolution not only led to great divergence between industrialised countries and those dependent on primary commodities, but also encouraged production systems which have culminated in the current climate crisis. The threat of a ‘new great divergence’, driven by artificial intelligence and digital technologies is now looming. The growing digital divide in the world has the potential to worsen the marginalisation of people.

This broader debate around inequality merits serious attention within Pakistan. Pakistan has now fallen to a ranking of 152 out of 189 countries, which is significantly below our neighbours. While terms such as ‘youth bulge’, ‘poverty-stricken people’ or ‘out-of-school children’ are oft-quoted phrases used to further vested interests, our policymakers and technocrats remain obsessed with elitist policies, which continue failing the vastly marginalised segments of our society.

Published in The Express Tribune, January 24^th, 2020.

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