According
to a recent report by Oxfam, the richest eighty-five people in the world,
including Bill Gates, Carlos Slim and Aliko Dangote, own more wealth than the
3.5 billion people who constitute the poorest half of the world’s population.
I have
argued here before that rising income and wealth inequality is the most urgent
challenge of our time. In his Apostolic Exhortation in November 2013, Pope
Francis wrote; “Some people continue to defend trickle-down theories, which
assume that economic growth, encouraged by a free market, will inevitably
succeed in bringing about greater justice and inclusiveness in the world”.
Karl
Marx argued that the dynamics of private capital accumulation inevitably leads
to the concentration of wealth in ever few hands. A century later, Simon
Kuznets advanced the Kuznets curve, arguing that as countries developed incomes
first increased, peaked and then decreased. These two polar opposite views
demarcated the ideological fault line between socialism and capitalism, hence
defining policy and political discourse on wealth distribution and inequality.
Here are
some numbers to illustrate the dire and ever-growing gulf between the rich and
the rest in Kenya. About 10
percent of Kenya’s wealthiest households control 42 percent of the total
income, while the poorest 10 percent control just 1 percent. Over 64 percent of
Kenya’s population lives on Ksh. 7200 or less per month. Moreover,
about 80% of students in our public universities come from families of Kenya’s
middle class; parents who own businesses or have a wage income, which
constitutes less than 20 percent of the workforce or about 5 percent of the
population. We know the achievement gap between rural and urban schools and between
public and private schools. Could this be the beginning of an era where
inheritance inevitably confers elite status?
The
stock response we use in Kenya to blunt the inequality conversation is that
raising national GDP is a higher order priority. In a sense the political class
and the policy bureaucrats want us to believe that we are too engaged in the
construction and production of the future to be bogged down with the untidy reality
of how the gains from such growth is distributed. This is an exceedingly
tenuous proposition.
In
societies such as ours, wealth inequality at the levels we see today could have
irreversible consequences on social cohesion, politics, security, justice, law
and order. We know that unbridled wealth in few hands leads inevitably to
concentration of power and the emergence of an oligarchy, which pauses a grave
danger to state, political and civic institutions. We understand that
unemployed youth are easy prey for networks of terrorism and organized crime
such as poaching, narcotics and human trafficking.
Princeton
professor and New York Times columnist Paul Krugman has argued that intimidated
by class warfare, politicians have avoided making a major issue of the
expanding gap between the rich and the rest. The policy and growth models, as
well as the toxic politics of the past half-century have created the present,
with all its contradictions. And hence, we must be preoccupied with dealing
with the inequality today.
Thomas
Picketty, a French professor of economics, has written a book described as one
of the watershed books in economic thinking and a magnificent, sweeping
meditation on inequality. Some believe that the book, Capital in the twenty-first century, could change the way we think
about the past two hundred year of economic history. Picketty shows that
inequality rises during periods when the rate of return on capital is higher
than the rate of economic growth, which he refers to as the “central
contradiction of capitalism”.
The book
offers what amounts to a unified theory of inequality, which can help redefine
the terms of a debate paralyzed by ideology and constrain all positions to data
driven, evidence-based scrutiny. This ultimately, is the role public
intellectuals must play. As a young economist, untainted by the physics envy of
the 20th century economists, Picketty could rescue
his discipline from the aridity of mathematical abstraction and return it to
the richer model of political economy pursued by the best economist of the 19th
century.
Wealth
equality is not the inescapable byproduct economic development. Wealth inequality
is a result of broken politics. Politics matters because at its very core, it
is tangible. Politics is about distribution; who gets what, where and when. Good
politics can be an effective antidote for inequality.
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