Inequality: An alternative approach?

The debate about rising levels of wealth and income inequality has been at the center stage of election campaigns as well as policy makers and think tanks. In its recently published report titled An Economy for the 99%, Oxfam asserts that eight individuals are now in control of the same wealth as the bottom half of the globe. Last year the report put this number at 62 individuals that controlled half of the worlds wealth.

The report points out the Trump election and Brexit as a barometer for the rising discontentment amongst the masses with the currently prevailing political and economic systems in place. It goes on to challenge the GDP approach of measuring economic progress citing its inability to measure inequality as well as measuring unpaid work done by women across the world.

Instead, Oxfam proposes a human economy which is designed for the 99% which amongst other things would involve governments working for the 99% and companies working for the benefit of everyone. The model suggests an approach whereby the governments support business models that implement capitalism that benefits everyone.

Although this column agrees that the GDP approach has a number of flaws it is widely regarded as the most workable model the world has. Additionally, the basic premise of capitalism even in its purest form is that it simply does not work for everyone. It is basically a method of rewarding risk taking with inequality as an undesirable yet pragmatic byproduct of the system.

But the question is in countries such as Pakistan where the governments ability to deliver fundamental services such as health and education is in a pitiable state along with scant accountability, how can a human economy be developed?

Critics of Oxfams approach argue that neoliberal reforms such as free trade, fewer regulations and enforcement of property rights have been instrumental in alleviating poverty amongst countries which have enforced them. These include the examples of India, China, Vietnam, Pakistan and many others which have seen people coming out of extreme poverty although inequality in these regions is also on the rise.

Yet the report is right in a lot of its prescriptions such as doing away with regressive taxation in favor of progressive taxation that puts the onus on the wealthy instead of the poor. Sadly, in Pakistan this is something the government has to concentrate on with its inability to expand the tax net burdening the already financially stressed middle and lower income segment.

Although many of the reforms if implemented which is a very big if in itself might provide a somewhat more equitable distribution of wealth, Oxfams approach relies heavily on a government role in affairs such as technology regulation. It argues that technology should be harnessed for the 99%. The past experience globally when it comes to government involvement in such affairs has not been positive to say the least as it curbs innovation.

To sum it up there are positive steps mentioned in the report but this column does not feel Oxfam or anybody else for that matter is yet able to provide an alternative to the GDP approach and current economic system implemented globally. The best option would be to work on plugging the gaps that the existing system has rather than overhauling the entire model from scratch which is easier said than done.