Yawning wealth gap

EDITORIAL

Rich-poor gaps have evoked catchphrases like haves and have-nots, the rich getting richer and the poor poorer, and triggered 1.0 per cent versus 99 per cent Wall Street movement with its short-lived but conscience-pricking effect in an unequal world. As for concentration of wealth in fewer hands, economists tend to emphasise its two ramifications: Firstly, super-rich class has an increasing number of entrants at the astounding rate of one billionaire every two days; and second, while the rich grow richer and many among the poor come out of the poverty trap, income inequality between the rich and the poor has increased. In other words, the poor may be better off with an improvement in their living standards; but there is an issue with child nutrition and mother care.

An Oxfam report has found 26 people now possess the same amount of wealth as the poorest half of the humanity comprising 3.6 billion. The increasing concentration of wealth in fewer hands is illustrated by the fact that while in 2017, 43 persons accounted for half of the world's wealth, in 2018 only 26 persons have done the same! The report entitled "Public Good or Private Wealth" has been released ahead of the World Economic Forum (WFE) meeting of political and business leaders in Davos, Switzerland. Up close the title shows a tinge of benign sentimentality conveying a sense urgency to stem the tide of private wealth accumulation in the face of its apparent daunting nature. The Oxfam reports are periodically remindful of growing asymmetrical wealth acquisition and distribution patterns to the governments and corporations, and therefore serving a useful purpose. Nonetheless those have come under criticism of think-tanks. The reports are said to be "obsessed with the rich, and have failed to provide an effective solution for reducing inequality." Interventionist polices, it is argued, are likely to destroy wealth rather than provide for a fair redistribution of wealth.

Basically, the system offers all kinds of facilities, incentives and fiscal waivers for entrepreneurs to increase the profitability of their business. Tax evasion, capital flight, non-performing loans, investment in real estate overseas, miss-invoicing of exports and imports, rent-seeking and all manner of extortionist forays make people wealthy beyond their dreams. The rags to riches stories add to the ranks of the nouveau riche.

What makes one sit up and take note is an Indian prominent economist's insightful observation into phenomenon of the rising superrich in his country. He believed that such wealthy people would have been the architects of high rate of gross domestic product (GDP) growth in India. So, considerations of sustained GDP growth can weigh in for a nurture of all avenues of wealth creation. In India, it is learnt, inheritance and wealth taxes have been scaled down. The charity Oxfam's findings are clearly diagnostic leaving suggestions as to where remedial measures need to be taken. It is ironic that poor people suffer twice, once from being deprived of basic services and also enduring a higher burden of taxation. As an insult to injury, whilst governments fail to tax the wealthy, they pass the burden of indirect taxes on to the numerically majority poor people. The Oxfam's plea for the governments to deliver 'real change' by ensuring corporations and wealthy individuals pay their fair share of tax and invest in free healthcare and education resonates with all right thinking people

• Courtesy: The Financial Express /Jan 24, 2019