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The Financial Express

Growth that benefits the rich


Growth that benefits the rich

The top one per cent of the country's rich has not experienced much change in their earnings or amounts of wealth recently when compared to their status a year before, so says a recent study. In 2020, the country's richest pocketed 16.2 per cent of the gross national income and in 2021, their income remained at the same level. Similarly, their total wealth was 24.6 per cent of the total national wealth in 2020. In 2021, too, the ratio of their total wealth to that of the nation remained more or less the same. But what does this so-called 'world inequality report' published by the Paris School of Economics imply? Does it also mean that the national income and wealth that could not further fatten the country's rich have reached the poor making their life a bit more comfortable? Far from that. Because, from the study conducted by the Power and Participation Research Centre (PPRC) and the Brac Institute of Governance and Development (BIGD) early this year, it was found that the number of new poor in the country stood at 30.9 million which was 18.54 per cent of the total population. The same research group through a similar study done a year before found that the pandemic had then pushed 24.5 million people into poverty which was 14.75 per cent of the total population.

Evidently, the number of poor increased by 6.4 million in a year. But why should the number of the poor increase at a time when the economy had recovered from the pandemic shock and was supposed to be surging ahead with economic activities going on in full swing? In fact, the global rise in inflation due mainly to energy price hike has affected local economy driving up its consumer price index. And since the last mentioned study on poverty was done, the inflationary situation has far worsened during the recent months sending millions more into abject poverty. But during this time, the rich have not been impacted by the inflation in the way the poor have. For as the poor's income has not increased, they are compelled to buy less amount of food items and meet other expenses with the same amount of money that they earned before inflation. So, they got poorer and swelled the ranks of the new poor. But during the same period, a section of traders has been making windfall profits out of the rising consumer prices. They have obviously got richer than before.

Now if compared to the rest of the less fortunate majority, what the rich still have is simply out of proportion. Consider that the top one per cent of the rich control 16.2 per cent of nation's total income, whereas the lower 50 per cent population's share of total national income is a mere 17.1 per cent. When it comes to the shares of the total national wealth that these two groups of people possess, the comparison is quite unsettling. The one per cent rich controls 24.6 per cent or close to a quarter of the nation's entire wealth. But the half of the country's population in the lower income slab owns less than five per cent (4.8 per cent, to be precise) of the total national wealth.

The study further points to the fact that the wealth of the country's one per cent rich at the top has decreased in comparison to what it had nearly three decades ago in 1995. [The rich in question then (in 1995) owned 25.5 per cent of the total national wealth and enjoyed 16.7 per cent of the total national income.]But one must not miss the most important point here. It is that, according to an estimate, the nation's Gross Domestic Product (GDP), a measure of the national wealth, has increased more than seven times in the last two decades. In that case, though the wealth or income of the rich has remained more or less the same as a percentage of the national wealth over all these years, yet in absolute terms their wealth and income have actually increased at the same rate as that of the nation's. So, they are far richer (at least seven times more) than they were two decades back. Consider the extent to which income and wealth gap between the top rich and poor has widened.

In fact, the GDP, though it gives a total picture of a nation's economic growth, says little about how the wealth thus generated is distributed among the populace. The attempt to show the prosperity of a nation with the help of the per capita GDP is, therefore, a purely barren exercise as abstract figures say little about real life. Neither are the large infrastructures an indicator of the wealth of the common people. For the big money spent on infrastructure make the contractors and corrupt government officials richer. It may even prove to be wastage of national resources, if an infrastructure so built cannot serve the interest of the common people as expected. However, in cases where the national wealth is invested more in employment generation, in public health and in education, the public gets the benefits of the investment directly. In other words, the manner of investment determines where the nation's wealth finally goes. It is from this perspective that one needs to look at the last quarter century's economic growth.

 

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