WEALTH INEQUALITY & AN IMPENDING REVOLUTION

In November 2017, I was in Paris on work. This is one city in spite of its grandeur, historical significance, splendid architecture and its claim as the fashion capital of the world, has always given me an uncanny feeling of discomfort. Every time I have stepped out of the airport, I get horripilation. I don’t think it is only due to the fact that my wife was robbed during Christmas 2012, not at gun point which I understand is quite common but unknowingly. I first visited Paris as a teenager in 1986 and then again in 1989 and followed up with several visits on work between 2007 and 2017. The one thing I noticed was the wide spread begging on the streets. For someone who has been born and brought up in Mumbai, this shouldn’t have been unnerving but the fact that this begging and pestering while strolling anywhere in the city only seemed to get worse with each visit. First it used to be the Romas, then the African refugees from Chad, Mali and now the Syrians.

During my last visit, the Syrian infusion of refugees only made this worse, with a family of four – father, mother and 2 young kids found every 100 metres. Whether this was outside the Louvre or near Champs Elysee, it did not matter. I have noticed similar scenes in Brussels, London, Frankfurt and many other European cities. And it is only getting worse. With so many conflicts in the Middle East and Africa, over the next few years, this sight will be a seamless and integral part of every major European city in the world. Europe’s geographic proximity to these places and ease of reaching its shores only makes it a convenient option. Refugees and people seeking political asylum is a fact of life and given the way the world is going about, this is one problem every developed nation will need to address and do so smartly which at the moment is unfortunately not being done. But a more ominous outcome of this is the massive wealth inequality all around us. This is scary and does not bode well for the next generation and the ones to follow.

The displacement of people due to war, economic hardships, unemployment, sectarian conflicts is increasing with alarming proportions. And while all this is happening, the rich are getting richer and the politicians are bilking their countries with unabashed ease. The globe’s richest 1% now own half the world’s wealth according to a Credit Suisse Report. This share has jumped especially post the 2008 financial crisis when their ownership was 43%. I recently read that there are 2,208 billionaires in the world worth $9.1 trillion with an average net worth of $4.1 billion. In fact some reports state that the top 1% tend to under report their income by 10% to 20%, so you can calculate the real numbers. At the other end of the spectrum, the world’s 3.5 billion poorest adults each have assets of less than $10,000. Collectively these people, who account for 70% of the world’s working age population, account for just 2.7% of global wealth. More importantly while the rich are getting richer, the poor are either remaining poor or getting poorer. The Gini co-efficient (global standard to track the gap between the rich and the poor) in almost all countries has only increased over the last few years. And the gap will only continue to widen. And this is not restricted to the under developed and developing economies only, even the developed economies are seeing the same trend, otherwise Donald Trump would never have been elected President. Otherwise one would not require the presence of private security guards outside the villas and homes of the rich in Sao Paulo and Johannesburg. The median net worth of a black household headed by someone with at least a Bachelor’s degree is USD 26,300 as compared to a white household with similar qualification is USD 301,300 – 11 times greater!!!! As Thomas Friedman has so succinctly summed up in his latest book – Thank you for being late – I quote post abbreviation – There are 1 billion who are middle class and above with secure assets and high and secure incomes, there are 1.5 billion who migrated 15 years ago into cities, have some assets and secure income but are feeling the pinch of the global economic struggles, then there are 2 billion who have just recently moved to cities and have virtually no assets and pretty insecure incomes – these you see sitting by the roads selling stuff. And finally the 2.5 billion who are the rural poor, those who have not joined the global economy at all. The biggest worry however are the middle 3.5 billion who are in the cities in a hyper connected world where they can see everything they are missing. If we cannot meet their expectations, they will destabilize the middle classes in all these countries. They may well turn into a subset of something similar like ISIS. Not all of them, but perhaps only a small percentage of them and a small percent of 3.5 billion is a lot!

The lack of political will, rampant corruption, autocratic leadership and the political bigotry that we are faced with are the major reasons for the mess we are in. Presently if one looks around the world, there is no leader who commands a global stature. Gone are the days when people like Margaret Thatcher, Ronald Reagan, Bill Clinton, and Gorbachev could be looked up to in spite of some of their flaws. There are none now, perhaps only the German Chancellor Angela Merkel could attempt to claim this position with India’s Prime Minister Narendra Modi and Singapore’s leader Lee Hsien Long close on her heels. Whether it is the despots of the African countries, the monarchies and dictators of the Middle Eastern world, the fags of the South American world and the divisive leaders of the European countries, there is a very poor class of politicians all around us. And this vacuum of a strong Government in every country is ensuring that the poor, the middle class are getting alienated with each passing day. The elections these days are based on rhetoric only, which is driven by specious claims. The results of the US election, the Brexit referendum, the German election, the Italian election and more are classic examples. And now we also have the new age dictators in Putin and Xi Jinping who are aiming to divide the globe on a larger scale. And at home their objective is to control their own people and ensure that no dissent takes place. Recently the Economist mentioned that in Xinjiang a region in southern China, there are cameras on every street to treat the movements of Uighurs, an oppressed minority. The Chinese government is working towards collecting biometric and face recognition data of every citizen so as to track where they go and what they do. This is the antithesis of privacy. 

Another trend that has festered over the last decade or so is the sectarianism and divisive nature that the politicians have used to their own advantage and to ensure their political longevity. In India, we have the Patels, the Gujjars, and the Marathas etc. demanding for special rights. The Sunni-Shia divide is getting worse and that was one of the reasons the ISIS was able to make its presence felt. Every African conflict is due to various sects or tribes fighting. In places like Yemen, Sudan, it is no different. It is no longer religion but the next level of groupism that is the reason for conflicts. There is already some talk of the Irish conflict between the Roman Catholics and the Protestants of the late 20th century raising its head again due to Brexit. Well we all know that the world as it was 300 or more years ago had its geographical boundaries along these sectarian, tribal and religious divides. But are we not in the 21st Century where technological advances have ensured that there are no commercial boundaries? Pity we are going back to the ages.

The Nordic countries which are considered as examples of good and fair governance with a strong policy to integrate both political asylum seekers and refugees are also getting xenophobic. Crime is rising in these peaceful havens. In fact crime is rising everywhere, not just the common crime of robbery and murder, but a much larger and vicious white collar crime which creates a larger and most often collateral damage.

Unemployment is a global phenomenon and it is common across all levels of white and blue collar positions. But its impact affects the blue collar more. For them it is a matter of putting food on the table. The unemployment figures are startling across the globe. For example, India even at 7% growth per annum will not be able to absorb the roughly 1 million new entrants that get into the workforce every month. More than 20 million people recently applied for 100,000 railway jobs – no they were no fans of Mahendra Singh Dhoni, some of them were lawyers, doctors and other overqualified but unemployed people.

I fear that all this, all the pent up feeling of frustration, helplessness, anger and distrust will one day lead to a massive revolution. A revolution that may start in one small corner of the world, but which will quickly roll over across the world since we now live in a world of live social media. And then all hell will break lose. In the economically worst affected countries, the armies will be a part of this revolution. The army which is supposed to protect the people will join in the mayhem as they are also being exploited and mistreated and used as a personal fiefdom in these countries.

Of course there are solutions, but the time to implement them is running past us. We all better hurry!!!