Increasing imbalance of inequality

What is equality? It is an even balance in society offering a fair opportunity to compete. People expect from the government that in their social contract with the state, there will be a fair deal for increasing the prospects of peace and growth in society. And where the balance of equality tilts towards the existing wealthy, the peace and growth disappears from society.
People of Pakistan are thinking that in many ways, the economic and political systems of the country have failed as both economics and politics are fundamentally unfair. People make such complaints where governments have failed to address the key economic problems, such as, persistent unemployment and the values of fairness looks blurred because all goodness has been sacrificed to the greed of a few in spite of rhetoric to the contrary, these feelings of unfairness lead to the feelings of betrayal. The unfairness of the economic system leads to the cause in which people start losing their property and jobs. The political system increases the level of inequality and people may head towards a political system that does not provide disproportionate voice to those who are powerful and are sitting at the top.
It may be added, the weak political systems lead to failures to correct the market failures; and the economic and political system look to be fundamentally unfair. This inequality is the cause and consequence of the failure of the political system; and it is contributing to the instability of economic system which, in turn, is contributing to the increased inequality, that is, a vicious downward spiral into which descended, and from this critical situation we can emerge only through well thought and concerted policies.
In an economic system markets are supposed to be stable, the recent global economic turnarounds have taught us that the markets can be very unstable resulting in devastating consequences. The key virtue of the market is supposed to be its efficiency. And for that demand has to be equal with the supply. Since in a society there are huge unmet needs, we require investment that can bring the poor out of poverty. It may be remembered that unemployment is one of the reasons to cause inability of markets to generate jobs for so many citizens and that is the worst failure of the market leading to inefficiency and inequality.
Two general reasons are advanced for government action to alter the market-determined distribution of income. First, income redistribution is a public good; and private efforts at redistribution will be inefficient because of the free-rider problem. Second, the market-determined distribution of income is unacceptable for ethical and other reasons. In the first case, redistribution is based on the preferences of taxpayers, with the objective being a Pareto-optimal distribution of income. In the second case, the preferences of taxpayers who finance the transfers need not be considered.
Of the mechanisms used to redistribute incomes, income transfers have the greatest potential for achieving the objective of raising the income of the target population, while minimising resource allocation effects. Other policies will miss some groups of the target population and have unpredictable or undesirable market effects.
Transfers may take the form of cash or goods and services, with the choice depending on whether the sovereignty of taxpayers or income recipients is to be respected. Every society pays a very high price for its inequality, that is, where the economic system becomes less stable and less efficient. Resultantly, the growth falls and the political system is put into peril. The inequality leads to the control of the political system into the hands of undesirable elements; obviously they are the moneyed interests, and all this leads to erosion of democracy and markets.
There is an ethical aspect to it as well, that is, absence of sharing, where there is no sharing, inequality emerges which leads to disorder, destruction and chaos. Thus redistribution programmes of the state should be directed to achieve equity in any of the sense on the basis of which we can evaluate a system, that is, meeting the vertical and horizontal equity, so on the one hand, households in the same circumstances are to be treated equally, and on the other, households in the unequal circumstances are to be treated unequally but appropriately. Why it is necessary, because inequalities in the distribution of income may alienate large segments of population and encourage behaviour inimical to social and political stability. Hence the resources must be used to protect individual safeguards and the existing position of incomes.
The fact is that the power of market is enormous but its runners have no moral character. It is for us to decide how to manage these conditions. Mind it, in normal conditions markets do play central role in the stemming interests into productivity and in increasing the standards of living. For that government has to play a major role in these directions, this fact is often missed by the advocates of free market. They fail to notice that markets can concentrate wealth, pass on externalities to society and abuse workers and consumers. Markets, therefore, must be tainted and tempered to make sure they work to the benefit of all the citizens. And this is to be done repeatedly, to ensure they continue to do so.
Fairness is considered as paramount by human psyche, because it gives a sense that where an economic and political system remains unfair it thereby fails to usher motivation. Consider society around you. Graduates from top tier business schools in the county get a better chance to get good jobs. Who benefits, the top few and the inequality so created causes bitterness in society. So think that if no one is accountable, if no individual can be blamed for their faults, it means that fault lies in our economic and political system.
Politicians make speeches about what they are doing and what is happening around. But at the same time, they are responsible for all top job appointment made on considerations different than merit. How one can consider them as architect of a good system, since the system is not working since long. The ever higher graph of inequality in society is the direct evidence of their failure.
The failure in politics and economics are related, and they reinforce each other. A political system that amplifies the voice of exploiters, provide enough chances for laws and regulations and their implementation which are designed in ways that not only fail to protect the ordinary citizens against the wealthy but also further enrich the wealthy at the expense of the rest of society.
Given a political system that is so sensitive to moneyed interests, growing economic inequality will lead to growing imbalances. And the two together shape, and are being shaped by, societal forces, social mores and institutions that help to reinforce this inequality. The consequences of such imbalances are quite apparent particularly in the shape of disorder and chaos.
The protesters against this inequality are being criticised for not having an agenda, but such criticism misses the point of protest movements. They are an expression of frustration with the political system and even, in a society where there is an electoral system in action, the protesters are asking for a fair deal. And one should understand that all this is sounding an alarm. And that is why that contemporary writings are focusing on the enhancing directions of inequality.
(The writer is an advocate and is currently working as an associate with Azim-ud-Din Law Associates)