The nouveau riche of Bangladesh

Hasnat Abdul Hye | Published: September 13, 2018 21:59:08 | Updated: September 15, 2018 21:43:31

That the rich in Bangladesh as a class is getting richer has been part of the conventional wisdom. No chapter and verses have to be quoted or numbers have to be rolled out to substantiate this common perception. Given the ostentatious way of living, rather living it up, the rich has no qualms about demonstrating their 'conspicuous consumption'. With pricey cars, ranging from BMW to Lexus, and event-managed birthday bash for kids, not to speak of destination weddings, the rich have already established themselves as a class apart. The bank accounts they maintain in off-shore safe havens and multiple luxury homes abroad are passe as a news. That as members of the rich and famous they belong to the international league, comfortably at par with the billionaires abroad is also has no novelty as news. The rich have always been cosmopolitan in character and in their way of living. There is no surprise there. But what comes as a surprise is the bombshell of a recent news that in Bangladesh the rich as a class is the fastest growing in the world. That is a revelation which makes even the cynics sit up from languor - and with raised eyebrows.

Bangladesh has scored highest in quite a few world surveys on state of the nations on different subjects. Be it corruption index or doing business, Bangladesh has been in the forefront as the worst performer from time to time. But being on top in the league of fastest growing rich class is a new distinction, something that is baffling as to what should be the appropriate reaction. Should we rejoice at this stellar achievement among the group of nations surveyed or should we wring our hands in embarrassment? Yet still, should one be morally indignant at this dubious appellation? It is not easy to be sure on this, not at least through a knee-jerk reaction. First, the reality of the fact revealed has to be allowed to sink in. Then, the analysis of causes and implications should take shape, not just for the sake of hair-splitting of the figures, but most importantly, to evaluate the state of the economy with a view to visualising where the country is heading. But before that a brief look at what has been revealed in the recent disclosure will be in order.

According to a report from New York-based research firm Wealth-X, Bangladesh has topped the list of countries that saw the quickest growth in the number of ultra-wealthy people between 2012 and 2017. The number of ultra-high net-worth (UHNW) persons in Bangladesh rose by 17.3 per cent during the above period, the World Ultra Wealth Report, 2018 has shown. The UHNW individuals are defined as people with investable assets of at least US$ 30 million excluding personal assets and property such as a primary residence, collectibles and consumer durables. This means if these assets are estimated the net worth of the rich would be many times more than the amount calculated as investable. In terms of growth in the number of rich, Bangladesh is ahead of China, India, Hong Kong, Pakistan, Ireland, Vietnam and even the US. Of course, in terms of number of the rich the US leads the pack, being home to 79,595 ultra-wealthy individuals followed by Japan, China, Germany, Canada, France, the UK, Switzerland, Italy and Hong Kong. But it is not the absolute number of the rich but their growth as a class over the years that has drawn the attention of the research firm Wealth-X - and for good reasons. It is significant for the distribution of national income in a country with its implications for common welfare. Double-digit increases in the number of rich have also being posted by India, Vietnam and Kenya, but they far behind from Bangladesh in this respect. The report of Wealth-X shows that global ultra wealthy population remains heavily male-dominated, although the population of women has risen gradually in recent years and increased by 17 per cent in 2017. In terms of number, the UHNW women grew by an estimated 31 per cent, numbering 31 thousand. The skewed participation of gender in the growth index, however, has no significance from the point of view of income distribution and common welfare as the women ultra-wealthy belongs to families which are already rich. To assess the size and forecast the ultra-wealthy population and its combined wealth, Wealth-X uses Proprietary Wealth and Inventory Wealth Model, which covers 75 countries that account for 58 per cent of the global gross domestic product (GDP). 

What is to be noted in the Report just published on the rate of increase of the rich is that Wealth-X does not estimate wealth distribution across each country's population. Most importantly, it is silent on the availability of opportunities for different classes of people for wealth creation. Both are of crucial importance from the point of view of equity and welfare. That the distribution of income in Bangladesh is skewed in favour of the top income group and inequality between the top income earners and the rest is increasing unabated has been highlighted in many recent studies. It also figures in public deliberations of various think tanks and civil society groups. What is missing in this public discourse are the causes that have given rise to the alarming situation. The most important cause for this is, of course, the unequal access to opportunities for wealth creation for different classes of people. To find out how this works out in practice one has simply to look at the sectors identified by Wealth-X in the survey that were the primary focus of the global ultra-wealthy people in 2017. These are, in order of importance, finance, banking, investment sector and manufacturing. It goes without saying that entry and participation in these sectors require previously acquired wealth or ability to garner funds from financial institutions and last but not least, various concessionary facilities from the government. Those who are already reasonably well-off and are politically well connected have a head start in all these sectors in Bangladesh, as in other countries. This may be called 'the effect of cumulative advantage'. This jump-start advantage was gained by a small group of entrepreneurs in late 70s when free enterprise and free market policies were ushered in at the behest of multilateral institutions like World Bank and donors like the US. Banks and insurances were opened for private ownership and management and the manufacturing sector was also made available to this group replacing public monopoly. Backed by policies like liberal taxation, subsidies and protection from imports, these entrepreneurs thrived, becoming a robust and dynamic private sector. Political patronage helped the growth of the nouveau riche and also determined their number. The typical crony capitalism that emerged in other countries with authoritarian regimes also took hold in Bangladesh under benevolent regimes, guided by neo-liberal economics prescribed by lenders and donors. There has been a two-way give-and-take policy between the crony capitalists and their benefactors. This binary relation has been almost institutionalised under different regimes making the rich a close club of the privileged. Those outside has had little scope of overriding this barrier constituted by wealth and power.

The proponents of neo-liberalism had reasons to feel jubilant. Countries like Bangladesh achieved the type of economic miracle that they had forecast would result in pursuant of their market-oriented policies. Bangladesh has emerged as a lower middle-income country, poised to join the ranks of the middle-income league. But the success has come with a price tag, the country has become more inegalitarian than before. What is worse, the opportunities for the middle class to move upward have shrunk, not to speak of the deterioration in the standard of living of the poor. It is in this backdrop that the rich has increased at almost breakneck speed leaving all other countries behind. In a growth strategy led by a privileged class of rich, only their family members or those enjoying blessings of the power that be can hope to rise above through the economic ladder. Therefore, it is not the rate of increase in the number of rich that is worrying, but their social and economic background. Slowly but steadily, a class of oligarch has emerged in Bangladesh controlling the economy and to a large extent the politics. There is nothing new about the nouveau riche in Bangladesh, their origin going back to the 1980s. What can be said new is that entrants to this class have remained confined to their clans. This is what makes the ranking of Bangladesh by Wealth-X so disturbing. A society that does not allow upward mobility of classes is not only potentially unstable, but sick to its core as well.

Share if you like