Economic Highlights

New Delhi, 27 November 2009

Rich, Bad & Ugly

TIME TO EMPOWER WORKERS

By Shivaji Sarkar

 “Richest 40 add 65 per cent to their wealth over the year. But the poor continue to pay inflation tax”, screams a newspaper headline. The number of billionaires in the country almost doubled to 52 in a year which saw the world going through the worst recession in 80 years.

That is the paradox. The world-over the rich are becoming richer and the poor are being marginalized. While the rich go on adding to their wealth, the poor are losing their capacity to buy the bare necessities as food prices rise by almost 15 per cent (14.55 per cent as per in a year and 55 per cent since March). Inflation does not impact the rich, but it further impoverishes the poor. Larger the number of poor means less they have the capacity to bargain or earn in terms of wages. The loss of the poor is the direct benefit of the rich. They get cheap labour and can further add to their wealth.

The stark reality is that the 40 rich Indians are all industrialists. They have replaced the maharajas and nizams, who were counted among the world’s richest. Maharajas were thriving on the toil of the poor, it is often said, and the 40 rich are industrious people. This is half truth if not untruth. While these and many others of their tribe thrive, those working in their establishments are suffering wage cuts and job losses. This only testifies what Karl Marx had said:  that the rich could become rich exploiting the poor. Are we going back to re-enact Water Babies of the 17^th and 18^th centuries?

For an Indian, it is a dilemma – whether to celebrate the achievements of the rich or mourn over the five- lakh job losses as per official statistics during the period the country’s 40 rich add almost three-fourth more to their wealth. This is also the period when many poor workers, not just debt-ridden farmers, committed suicide after having lost their jobs even in the national capital – Delhi. There is a stark similarity with the US – the trend is alike as disparity grows there. The Lehman Brothers and AIG scandals have robbed millions of people in America of their lifetime savings and pension payments. Officially now 12.5 per cent or 37 million people in the US live below the poverty line (though the line at $ 21203 a year family income may be higher by Indian standards).

The situation in the US is worsening. “My guess is poverty is going to go up from around 12.5 per cent now by about half percentage point to 13 per cent,” said Rebecca Blank, a senior fellow at the Brookings Institution in Washington. “The main driving factor is the rising unemployment.”

During the recent visit of Prime Minister Manmohan Singh, US President Barack Obama expressed the hope, “Indian investments would create jobs in the US”. Has the wheel taken a full circle or is it another ruse of the rich to deprive the poor nations of the opportunity to invest their wealth in their own countries? The situation in Europe is also on similar patterns but there the rich are continuing to grow richer.

Sadly, the condition in India is not seemingly improving. The policy makers have to be cautious. Tata and Reliance are investing in loss-making units in degenerating European economies raising huge debt. It serves one purpose. The workers in the West agree to work at poor wages while the condition at home also becomes conducive for keeping the wages low at the threat of throwing people out of jobs. In the process they add more personal wealth.

This is how the rich are making huge money while the common man is getting impoverished or, at best, holding on to his low income. Increase in inequality appears to be inevitable. The workers of England were impoverished in the 19th century to release investment in factories of Manchester. This is seemingly being repeated in the 21st century. The wolf of recession has helped the rich further reduce the cost on wages. So while the common man is denied of even the subsistence wages, large companies shamelessly make huge profits.

It pays to keep the people poor. The poorest grumble but do not protest. They are more concerned about their hunger and have little time to look at the way they are being deprived. Surely, this cannot be the model for development, either for India or the world. The Arjun Sengupta report says that 77 per cent of Indians subsist on Rs 20 a day. Thus, we have the Maoists who are not fighting for the cause of the poor but the ruse has helped them find support among them and disturb peace in a wide stretch of the country.

Disparity cannot be the model for development. If the rich want to grow richer the system would not prevent that. But what was true in the 19^th century – maintaining low wages - cannot be panacea in the21^st century. Though the industry may be making hey-day due to the weakening of the labour movements across the world, it should be viewed as a temporary relief. Indeed, some workers have started uniting and raising their voice once again demanding “floor wages” – euphemism for just and equitable wages and sharing of profits with the workers. It is at a nascent stage.

If their voice is not heard, it would not be very long when the world may witness resurgence of trade unionism. Industries need to learn that low wages prevent the workers from consuming goods. It results in more production and low demand. In the end it ultimately cuts on their earnings as some manufacturers are now experiencing.

Clearly, it is time to consider empowering the workers particularly in this country, which is at the threshold of taking over the global leadership. The model of rising inequality with alleviation of poverty is unlikely to work. If the corporate and their owners want to grow they would have to do so by paying just and adequate wages. ‘Hire and fire’ cannot be the solution to jack up profits. Being rich is not bad. But they would also have to come up with a model so that all those around them – the workers – also become rich to sustain them. Less the disparity, higher would not only be the growth but also the “index of happiness”. Would the Indian rich take the lead? ---INFA

(Copyright, India News and Feature Alliance)