The Widening Gap | 2019-03-15 | daily-sun.com

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The Widening Gap

Rajib Kanti Roy

15 March, 2019 12:00 AM printer

The Widening Gap

Cover Photo: Mohammd Asadurjaman Aslam Molla

At the end of George Orwell’s allegorical novella ‘Animal Farm’, the deprived animals peer through a window of the farmhouse to observe a horrible sight where the pigs who rule over them turn indistinguishable from their temporary allies, the human farmers, whom they originally fought to overthrow. It happens as pigs betray with the animals manipulating the Seven Commandments made by them to enjoy a better standard of living than the others and secure their absolute power. Some six years before commencing ‘Animal Farm’, Orwell envisaged the consequences of a revolution if its result is snatched away by the post revolt ruling class and stated, “What you get over and over again is a movement of the proletariat which is promptly canalised and betrayed by astute people at the top, and then the growth of a new governing class. The one thing that never arrives is equality.” It seems that the fate of the animals depicted in Orwell’s novella mirrors the fate of the ordinary people of Bangladesh! The country that emerged following a blood-bath War of Liberation in 1971 had promised in its proclamation of independence that equality, human dignity and social justice will be ensured for its citizens. In fact, equality was the first pledge that was made to the people of this country. It was because the commoners of this land had experienced the bitter face of disparity created by the West Pakistani establishment. Back then 22 families/groups in Pakistan were controlling over 66% of the industrial assets and 87% of the banking! Thus the mass people expected that the new country will bring an end to this situation and their fate will change. After 48 years of achieving independence still disparity tends to be a harsh reality in Bangladesh. And the most shocking fact is that this inequality is increasing with the passage of time!

New York-based research firm Wealth-X said, with a rise by 17.3 percent Bangladesh topped the list of countries that saw the quickest growth in the number of ultra-wealthy or ultra-rich people between 2012 and 2017! According to the report published in September 2018, people who have investable assets of more than $30 million or Tk. 250 crore are defined as ultra-high net worth (UHNW) individuals. The same organisation observed in January this year that with the rise of a compound annual rate of 11.4 percent Bangladesh will see the third quickest growth in the number of high net-worth or rich individuals in the world in the next five years! According to Wealth-X, the people who have a net worth of $1 million to $30 million or Tk. 8.5 crore to Tk. 250 crore, are rated as high net worth (HNW) individuals.

Bangladesh’s leading position in the list of the countries which have increasing number of ultra-rich and rich individuals could be considered as a reflection of our economic progress. But the World Bank report titled ‘Poverty and Shared Prosperity 2018: Piecing Together the Poverty Puzzle’ revealed that with 3% of the global extreme poor population Bangladesh ranks 5th among the countries where most numbers of extreme poor people reside! In line with the WB definition, people who live on less than $1.90 a day are assessed as extreme poor. According to the WB findings currently the daily income of 16.2 million people of Bangladesh is less than $1.90. The rate of each PPP dollar is estimated as Tk. 32 in this study. It means 2 crore and 41 lakh people of this country earns less than Tk. 64 per day! This number comes after counting Bangladesh as a least developed country but if we consider it as a middle income country, the figure of extreme poor people amounts to 8 crore and 62 lakh!

 

Let us keep the statistics provided by the international organisations aside and focus on the findings of a government institution. In 2016, the last Household Income and Expenditure Survey, which is conducted by Bangladesh Bureau of Statistics (BBS) in every five year, found that the income share of the poorest 5 percent of our population was 0.23 percent of overall income, a sharp fall from 2010 when it was 0.78 percent. In contrast, the top 5 percent’s share of income grew to 27.89 percent, up from 24.61 percent in 2010. This is how the bottom 5 percent’s share of national income has decreased, whereas the top 5 percent’s share of national income has increased. While the BBS survey mainly sheds light on growing income inequality, the situation is no less frustrating when it comes to wealth inequality between the top 5 percent and the bottom 5 percent, which has more than doubled during the same period. While the existing data is worrying enough, real inequality is likely to be worse because the richest people in our society are reluctant to reveal their actual wealth and income to evade tax.

The widening gap of income and wealth between the rich and the poor not only means unbridled luxury and extravagance of the ultra-rich and deprivation of the poor, it also indicates to the unhealthy state of our economy. That is why it is important to scrutinise the reasons behind this rising inequality. Certainly there are reasons for rise in the number of rich and ultra-rich people to a certain extent but experts have repeatedly asserted that we have reached such level of disparity owing to corruption and weak economic management.

 

According to a report titled ‘Illicit Financial Flows (IFFs) to and from Developing countries: 2005-2014,’ published by Global Financial Integrity (GFI) in 2017, capital flow from Bangladesh stood at $61.63 billion or Tk. 5 lakh 17 thousand and 692 crore! And the result was reflected in the deposits of Bangladeshi savers in the Swiss National Bank (SNB) which stood at ₣66 crore 19 lakh and 61 thousand or Tk. 5 thousand and 594 crore in 2016! In 2009, the amount of defaulted loans was Tk. 22 thousand and 481 crore which has multiplied 4.5 times in the last 10 years and reached Tk. 99 thousand and 370 crore! And if the figure of bad loans or non-performing and written-off loans (which is almost Tk. 35 thousand crore) is added to it, the total amount of defaulted loans stands at Tk. 1 lakh 34 thousand crore! According to Center for Policy Dialogue (CPD), only 14 mega scams in banks cost Tk 22,502 crore in the past decade! Here money laundering and defaulted bank loans are examples of just two ways among many other ways through which a gluttonous section of people are making easy money.

Another important reason for rising inequality is that our policymakers hardly concentrate on taxing the rich people. Far from taxing the richest, successive governments rather succumb to the business community’s demands to reduce the existing taxes in the name of providing ‘incentives’. Thus a study conducted by the Ministry of Finance has found that 45 to 65 percent of the assets in our economy are not taxed. As the ultra-rich have ample ways to evade their dues, a large portion of the government’s revenue comes from indirect taxation such as value added tax (VAT), which is applicable to all people regardless of their income. Consequently those who are poor spend a large proportion of their income, whereas the rich spend a very little amount.

 

Besides, price of electricity has been increased 8 times and price of gas has been doubled in the last 10 years! The rate of toll has been increased in at least 51 bridges of the country which is causing a hike in prices of different goods. Education and health services have turned into a commodity. And all these together are resulting in rising disparity. And when it comes to raising minimum wage of the lower and lower middle income group of working class, no major parties (not even the opposition) in Bangladesh voice in favour of them.

Inequality is on the rise globally, and Bangladesh is no exception in this regard. Albeit the government has taken a few steps to expand its social safety network to support the underprivileged, these are not enough. The country may be performing better in certain development indicators, yet income and wealth inequalities continue to exist and may emerge as a big threat to the overall economy if adequate policy attention is not given to the poor, vulnerable groups and the conditions that perpetuate disparity and marginalisation.

In any third world country the people belonging to the ruling party and who are close to the government often enjoy illegal opportunities. Taking advantage of this situation these groups of opportunists abuse their power and position to increase the amount of their personal assets. And that is what exactly happening in Bangladesh. An unholy nexus between a certain class of politicians and bureaucrats is encouraging ‘monopolistic’ crony capitalism diluting the culture of accountability and institutional effectiveness. Consequently a new ultra-rich class is growing in the country. And with their trickling money another brand new middle class is emerging.

Influence of these new classes will not only affect our economy but also shape our politics in a negative way. Rise of such new classes is not a natural incident rather this is the result of the country’s weak economic arrangement. Politics of a country is reflected by its economic planning. If we look at the list of the countries where the number of ultra-rich people is increasing at the highest rate, a common feature can be found among them. Inclusive politics is absent in almost all those countries. Participatory democracy encourages transparency and accountability. Thus the groups enjoy illegal opportunities always try to continue the existing practice so that no new system can challenge their process of amassing illegal wealth. Bangladesh must not be happy by being one of those countries as it shouldn’t forget the promises that it made to its citizens during its birth.


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