Oxfam-Davos Siamese Twins of Evil Advocacy of Big Government: Income Disparity Drives Economic Opportunity

A shocker from Haiti, that Oxfam knew that for over a decade that its aid workers forced sex on children, some as young as six years, in exchange for cash, food and mobile phones, could not have presented a great irony to its self-righteous claims a few weeks prior about global income inequality. The globe’s powerholders, including villains of the Oxfam report, being each year at Davos, the Swiss resort where Global Capitalism submits its state-of-the-world report to crucial ‘stakeholders’.

Nearly mimicking Santa Claus, our planet’s biggest celebrities, bombard us with homilies of their commitment to GDP growth, investments, jobs creation, CSR, environmental concerns, poverty alleviation, social indices, good governance, transparency and reforms. Throw in a few extra seasonal flavored lollipops to complete the picture of a panacea in the oven: AI, Big Data, Internet of Things, Robotics… the future, discernible, visible across the horizon, even almost within the grasp of our stretched fingers, belongs to the poor and middle classes the world-over.

Misleading Hope from Davos

The annual draw of the big boys–and a few ladies for that politically-correct inclusivity check–has diversified to include every kind of cherry from every cake that sells–politics, bureaucracy, big business, movies, sports, religion, charity, music, et al. There is space for the subaltern too; victims of oppression and poverty, certified, inoculated and benevolently transformed into official symbols of hope.

Seminars, speeches, discussions, interactions, and deals, yes, deals, fused together present a narrative of impending prosperity boom for most of us, more than ever before.

The media is there, too; shooting and bombarding images of power; aspiration, achievement, bonhomie, concern for fellow humans, all within the umbrella-vision of Big Brothers, Inc.; while we watch in envy but experience relief–our masters and rulers care for us.

There could not be a better modern day adaptation of Robert Browning’s verse drama Pippa Passes: The lark's on the wing;/ The snail's on the thorn;/ God's in His heaven—/All's right with the world!

Oxfam: The Other ‘Grimmer’ Twin

Contrast the vision of Davos to the reality Oxfam report paints. The percentage of wealth distribution and increase in income disparity, this year, as per the Oxfam survey, has India's richest 1% ‘cornered’ 73% of wealth generated last year.

The survey further reports that 67 crore Indians, comprising the population's poorest half, saw their wealth rise by just one (1) percent. The global situation is grimmer. Over 82 percent of wealth generated last year worldwide went to one (1) percent, while 3.7 billion people that account for the poorest half of population, saw no increase in their wealth.

Put the two together and think. Davos and Oxfam. Like Siamese twins. All is fine with the world, no, the world is in real anguish and peril. Both seem unreal; plain spins of a single narratives of same half-parentage; with just sufficient truth to win our confidence, like the Witches of Macbeth yore, only to betray us in deeper consequences.

Growth and Inequality: Never Twain Shall Meet?

It has been well ingrained in our discourse that the single biggest measure of near-universal economic well-being of all people is GDP growth. It is offered as proof of the effective delivery of global free market, of the effectiveness of governments, the yardstick the opposition questions the rulers in their bid to replace them. The other factor, inequality, disparity, is cited by a different set of people as the biggest proof that capitalism has failed. It is like a single newspaper carrying the long live and obituary ad for Adam Smith in adjacent columns.

Growth and Disparity, pieces of a giant global jigsaw puzzle; mantras of the black tie baron and red scarf activist, fit together well in creating a good mystery to completely confound us.

Looking closely not at what the two disagree on, but what they agree upon and you see the real missing headline – the wealthy captain wants government to ensure economic growth, the angry activists wants government ensure wealth distribution. Davos and Oxfam are advocates of increasingly the stifling, choking grip of big government over the citizen of the world, making them first, less free, less liberated, less in control of their own will to pursue life and happiness, and more enslaved to the twin-spins of the biggest authoritarian-messiahs of our times.

Why Income-Inequality & Disparity, Like GDP, Measures and Means Nothing… Anymore

The singularly biggest case against Capitalism is income inequality. The greatest wealth creating propensity of man is initiative without hindrance, or political subjugation. Since agriculture was invented (or was it discovered), humans could grow and store food for future, the first practical ‘wealth’ created, there have been only two realities: poverty as a default state of man on earth and possibility of wealth creation best possible to individuals with initiative and ideas, when they are not enslaved. In modern terms, smaller government and a free individual.

The poor understand this, the rich refuse to. The poor of the world are not against wealth inequality, nor against economic disparity. Global migration is the greatest proof, a vote by feet, of the poorest people on this subject. They migrate from the poorest places on earth, where economic disparity is minimum and wealth equality high, to bigger cities and more prosperous countries. A young man or woman moving from a village in India to a big city is moving to a zone of high economic disparity because rife with opportunity. A family risks everything to migrate from Cuba, or Bangladesh, or Ethiopia to America or Europe, far higher economic-disparity zones, because of greater opportunities, a real chance for a better life.

Opportunity Lies in Economic Inequality, Stupid!

Why do the poor not mind economic disparity as much as the rich?, one wonders. Because in poverty one seeks and finds opportunity. The most significant economic activity takes place between people of unequal means; there is economic stagnation between those of near-equal means.

Consider your typical urban building apartment. Most people who dwell in a typical middle class home hire maids and drivers from another economic strata, creating bad jobs, but jobs. If your maid, and you, had the same economic means, the job of a maid is destroyed. Like in America, where most middle class people cannot hire domestic helps.

Your own most significant economic improvement happens when someone vastly above you in economic strata decides to trade (economically interact) with you: like hire you for a job. If you wish to work with someone of your economic strata, you would more likely be co-founders of a start-up, paying each other notionally, and waiting for a richer source to fund you.

Not all money, of course, flows from the rich to the poor, quite the contrary. There are also significant economic flows between, say, middle-classes, like when we use services of doctors, lawyers, accountants, but these are essentially when the service providers turn entrepreneurs.

Government Power, Not Inequality, Keeps the Poor Down

What stops wealth creation, or its natural corollary, opportunity, is power. Government power. When Prime Minister Narendra Modi in a TV interview gave the example of the roadside vendor making pakodas and chai outside a corporate media office, it reflects that the biggest threat to such entrepreneurs is police and their ‘extortion’ tax. The mindset of powerful who see no difference between dignified small-entrepreneurship and begging.

Every day, every week, a poor migrant or a family from an impoverished village tries to make a living faces this erosion of wealth earned as ‘bribes’. This is not the failure of the trickle down, but success of the power-wall, with its clear mandate: keep the poor down there.

A middle class family buying a flat in a city typically pay off the loan in 20 years. Over those two decades, it pays twice the amount loaned in total eventual payments. One of the safest loans, being on a fixed asset, whose interest rates would far be lower in a purely market-driven banking eco-system, is high because of bad loans which accrue high NPAs, loans given to those with political clout. Beneficiaries of government power, bureaucratic discretion and socialist thinking disguised as capitalists because of an Armani suit. These ‘bribe taxes’ include those paid by builders to municipal officials and land registration officials; all of which adds to several years of ‘slavery’ of a middle-class family to repay that loan.

The power of Davos is the power to keep the poor and middle class down, by force, government force, ready to become physical force when needed, in the charade of a free market.

A good example of how government power keeps poor people poor is the stark contrast of ‘policy’ vis-à-vis Uber and autorickshaws over ‘dynamic’ pricing. Most people who speak of empowering poorer people nip them hard with government forced rules to force down their entrepreneurship; if an auto rickhawallah wishes to earn more money during a peak hour, asking for more than the meter, it is deemed illegal; the traffic policeman will likely rush to ‘enforce’ law.

When the government keeps the poor and middle-classes poorer through force, it implies there are those with access to power, peddlers of influence, who make unearned money. It is their money unearned that should be the focus of debate, not inequality of income of two equally hard working people across social class, but it isn’t.

Wealth of Entrepreneurs versus Bribe-Economy Barons

When a technology service company would make (revenue) of a million dollars, it would do so by employing hundred qualified software engineers on a project. For an entrepreneur (founder, CEO) at Infosys or Wipro or TCS to make around 200,000 dollars of profit therefore, leading to a rise in wealth on stock market, would mean pre-creating hundred white collar jobs directly, paying innumerable taxes, (government would additionally earn income tax from these employees), creating innumerable indirect jobs and spur several lower-end entrepreneurs.

It is a fair way of a capitalist becoming richer in a way hat creates opportunities, benefits government and society, and enriches several stakeholders.

When a politician or bureaucrat (or both) take a bribe, say, from a telecom or mining company for giving a license over an asset they do not own, they take away from the overall wealth of a fair capitalist society. They do not earn that money because of market but political power; and a discretion allowed only because of socialism. This is the illicit wealth the debate must focus upon. It does not.

Reward Fair Work

The Oxfam report was ironically titled 'Reward Work, Not Wealth'. India taxes work of honest people, read income taxes. It does not tax inheritance (estate tax). It does not tax dividends of stock market investors with long term gains. The real loot of unearned by government officials, whose wealth is higher than any others, growing faster and with no value offered in exchange remains a secret, beyond the reach of tax.

It comes out for display at Davos. The annual summit where Santa overstays beyond the Christmas weekend, with his Oxfam twin, at obfuscating the debate, distracting from the real issue, to ensure the power of big government to tax, subsidize, grant licenses, waives taxes, impose fines and keep a large section of people poor by force remains intact.

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Excepts from Autobiography of a Mad Nation.

Sriram Karri is author of the bestselling novel - Autobiography of a Mad Nation- longlisted for the MAN Asian Booker prize - and described as un-put-down-able, racy, thrilling, and a brilliant novel. His first book was the intellectually challenging The Spiritual Supermarket. 

He writes columns, essays, short stories and plays, and has contributed to The New York Times, The Guardian, The New Indian Express,  BBC,   Scroll,   Firstpost, Rediff,  The Huffington Post,  The Wire, Deccan Chronicle, Asian Age and  The Khaleej Times.