The rich get richer, the poor get poorer

The rich get richer, the poor get poorer

The title of this piece is not just a cliché, but also a fact. Over the past two decades, Bangladesh has been experiencing an impressive economic growth. Technically, we had already achieved the lower-middle-income status in 2015 by increasing our Gross National Income (GNI), and on March 16, 2018, the country fulfilled the eligibility requirements to graduate from “Least Developed Country” to “Developing Country”. But unfortunately, the benefits of all these achievements and the economic growth that we boast of bypassed the major portion of the population while the higher-income groups have been the main beneficiaries.

A report titled “Household Income and Expenditure Survey (HIES) 2016,” published by Bangladesh Bureau of Statistics (BBS), shows that the rich-poor inequality in terms of wealth accumulation has been widening in the country. The poorest 5 percent had 0.78 percent of the national income in their possession back in 2010, and now their share is only 0.23 percent. By contrast, the richest 5 percent, who had 24.61 percent of the national income in 2010, now has a higher share—27.89 percent to be precise. The report also shows that the income share of the bottom half of the population used to be 20.33 percent of the national income in 2010 but it has now fallen to 19.24 percent. In other words, the income of people higher on the economic scale has increased since the last HIES was conducted in 2010. Particularly, the top 10 percent of the population now has a greater income share (38.16 percent) compared to what they had (35.84 percent) in 2010. On the contrary, the bottom 10 percent now has half (just 1.01 percent) the income share (2 percent) of what it had in 2010. (The Daily Star, Oct 18, 2017)

Although Bangladesh’s development in recent decades has been incredibly rapid, these statistics on widening inequality come as a rude reality check. The causes and factors behind this are multifaceted and complex. However, according to various studies, primary factors that deprive poor and vulnerable people of their most elementary rights and may lead to income inequality in Bangladesh include unequal access to education and employment opportunities, exploitation at workplace, low-wage jobs with scant benefits, high rates of youth unemployment, poor healthcare, corruption and lack of access to formal financial services such as credit, savings and insurance that higher income groups may take for granted.

Poverty and education are inextricably linked—quality education opens the gateway to better paying jobs. But owing to extreme poverty, many poor parents can’t afford to send their children to school because everyone has to earn something—even the children. Even if they are going to school regularly, they have to constantly struggle for their livelihoods, making it difficult for them to concentrate in the classroom. Moreover, due to financial and emotional pressures of food insecurity, unstable home environment, lack of healthcare and other factors, they face high levels of stress, which put them at a serious disadvantage in gaining the skills necessary to compete in the job market, eventually preventing them from rising on the social ladder. On the other hand, children born in rich families have an economic advantage, in terms of better education and access to opportunities, which in turn increases their chances of earning a higher income than their disadvantaged peers.

The reasons for inequality also include wage exploitations by big companies—keeping the wage of employees at the lower rungs of the hierarchy as low as possible is an inherent part of running a business and making a profit to maximise salaries and dividends for the executives and shareholders. For example, garment workers in Bangladesh are among the most exploited, as western buyers keep the prices of garments down. Industry experts are claiming that buyers do come back to place orders repeatedly, but every year they lower the price further. Oxfam also confirms in a report titled “Reward Work, Not Wealth” that it takes a CEO of the world’s top five fashion brands just four days to earn the same amount a Bangladeshi garment worker will earn over their lifetime.

In Bangladesh, there is another pervasive factor that also contributes to income inequality—lack of access to credit. While banks are funnelling loans worth billions of taka by violating banking rules and procedures to influential businessmen backed by the political leadership, many small businessmen and poor farmers/sharecroppers usually have no access to credit because of collateral requirements like land, building, etc. Even if they manage to get small loans, they live under the constant pressure of repayment. There have been many sad incidents like farmers selling off their cattle and other belongings just to repay instalment loans. Statistics show that access to credit for farmers is significantly low relative to their contribution to the GDP. In the 2013-14 FY, the share of agriculture in the GDP was around 16 percent, while agriculture’s share of advances in total stood at about 6 percent.

There is no denying the fact that rich people have an advantage in life. Income inequality is largely due to a lack of economic opportunity, especially for the people on the bottom rung of the socioeconomic ladder. Therefore, our leaders should start serving all people instead of excessively rewarding those at the top. If a government is sincere, honest and efficient, it can reduce income inequality through the tax and benefit system (i.e. by taxing the upper-income groups at higher rates) and spending the revenue in those sectors and areas such as free/subsidised healthcare and education/skill development scheme for lower-income groups, so that they can get access to jobs that are more productive and rewarding. Since agriculture is the lifeline of over 47 percent of the labour force, the government can help small and poor farmers by providing quality seeds, fertilisers and water at a discounted rate, introducing crop insurance scheme, improving infrastructure facilities (roads, highways, port, etc.) so that their cost of doing business decreases and income increases. Of course, the government has taken some initiatives in this regard, but those are not enough to improve the livelihood of the rural poor.

We must control inequality, not because the rich have much more than the poor but because it is destroying our moral conscience, fracturing the social fabric, and poisoning our politics. Research shows that when some people possess a great amount of wealth compared to others, some of them feel a sense of superiority and believe that their money can shield them from the consequences of their action. Therefore, for each and every citizen of Bangladesh to live in peace and security, we need to have policies in place that promote fairness and equity, because a happy, equal and just society will always achieve peace and prosperity.

 

Abu Afsarul Haider graduated from Illinois State University, USA in economics and business administration and is currently involved in international trade in Dhaka.

Source: The Daily Star.

2 Responses to The rich get richer, the poor get poorer

  1. I appreciate your sense of social responsibility.

  2. Siddique Ahmed

    “Economic inequality is often characterized by the aphorism “the rich get richer while the poor get poorer,” If people are kept in a poverty trap and illiteracy they lose their voice against cruel injustice committed by the state. Their poor consciousness and power of observation does not allow them to understand ‘Economic inequality’, ‘the glorious ascend from LDC to mid income group’, ‘reasons for rise in cost of living’, ‘ lack of access to nutrition and health services’ etc. Left in a hard struggle for survival and a rising cost of essentials they submit to political exploitation of their human right and social justice. We have made a great celebration of our economic maneuvering to reach the level of developed country from LDC. The cost of our growth is a large rich poor gap, unequal wealth distribution (More wealth being shared by the rich and less by the poor),’a big inflation (rise in essential commodity price)”. The top 10 percent of the population now has a greater income share (38.16 percent) compared to what they had (35.84 percent) in 2010. On the contrary, the bottom 10 percent now has half (just 1.01 percent) the income share (2 percent) of what it had in 2010. (The Daily Star, Oct 18, 2017). Bottom half of the population used to share 20.33 percent of the national income in 2010 but it has now fallen to 19.24 percent (BBS). This will deprive poor and vulnerable people of their most elementary rights such as unequal access to education and employment opportunities, exploitation at workplace, low-wage jobs with scant benefits, high rates of youth unemployment, poor healthcare, corruption and lack of access to formal financial services such as credit, savings and insurance that higher income groups may take for granted. Poverty and education are inextricably linked—owing to extreme poverty, poor parents can’t afford school for children as everyone has to earn including the children. Moreover, due to financial and emotional pressures of food insecurity, unstable home environment, lack of healthcare and other factors, they face high levels of stress, eventually preventing them from rising on the social ladder. Banks are funneling loans worth billions of taka by violating banking rules and procedures to influential businessmen backed by the political leadership while small businessmen and poor farmers/sharecroppers usually have no access to credit because of collateral requirements. Inequality stifles growth and make it unsustainable, increases crime covering illegal methods of gaining assets, higher number of officers/police become susceptible to bribes, stealing, robbery, ransom seeking, killing, drug addiction, rent seeking etc. Inequality causes health hazard, adulterated or low grade food intake and high mortality rate for poor. Economic inequality increases political inequality. High-income groups are able and incentivized to manipulate government in their favor through both legal processes and through corrupt practices. Political figures are required to court potential wealthy donors in order to fund successful campaigns, buy services of media and muscle man or even buy votes whereas the low income people despite their high capability and merit cannot even get nomination for being election as MP.

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