The bare bones of a beefy issue

Kuldip Nayar

The demolition of the Babri Masjid and the ban on cattle sale for slaughter are two sides of the same
coin. They reflect the prejudice of the majority community. Both are fouling the air. Prime Minister
Narendra Modis government, which completed three years in office just a week ago, is blessing the
different shades of Hindutva which are slowly but gradually engulfing the entire country. It looks as if
the ruling Bhartiya Janata Party (BJP) has started its preparations for the next Lok Sabha elections in
2019. The governance by chief minister of Uttar Pradesh, Yogi Adityanath, shows that the RSS has
taken over in more senses than one as the state government has started appointing trusted men at key
positions.

New Delhi is no better. The Nehru Memorial Centre is one example where the director has been
removed and, in his place, an RSS ideologue has been installed. He is spoiling the very ethos of the
organization and supporting the rightist forces instead of promoting the liberal atmosphere which is
attributed to the Nehru Centre. The ongoing scuffles in the Jawaharlal Nehru University have political
parties behind them with the same purpose.

The present concentration of the rightist forces seem to be on beef. Their arrogance is exhibited by
students wings in one campus or the other throughout the country. This time it happened at Chennais
Indian Institute of Technology. What is different from the past is the frequency and ferocity of violence.
The thrashing of students who eat beef is to re-emphasize their self-righteousness. The liberal
atmosphere of the campus is now dependent on the political party that dominates the state in which the
educational institution is situated.

Consequently, the BJP influences the Hindi-speaking states in the north. The writ of the Congress and
other regional parties runs in some other parts of India. This has divided the country mentally and idea-
wise. Prime Minister Modi, when he resumed office, had given the slogan: sabka saath, sabka vikas,
meaning thereby that we shall be all together and advance hand-in-hand. But subsequently he and his
party, the BJP, appear to have lost the way.

And today, whether they like it or not, their government has come to represent a particular way of
thinkingan intolerant Indiawhich has the overtones of Hindutva. Probably, the partys think-tank has
come to believe that they can win more votes by dividing society, thanks to the Bajrang Dal and Akhil
Bhartiya Vidyarthi Parishad which have begun vitiating the atmosphere. They are holding more and
more exercises in different cities where lathis and other weapons are brandished.

This is something similar to the fear of Islamic domination that is being exploited by right-wing parties
in the West. We forget that in the democratic structure that we have, everyone is free to eat whatever
he or she likes. Nothing can be enforced. In a vast country like India where food and dress change
every 50 kilometres, diversity is inevitable. Indeed, this is Indias strength. Respecting diversity keeps
our different units together in a federal structure which we follow.

The BJP hardliners, who believe that they have come to power because of a fundamental shift in
national values, should think again. There is more than a grain of truth in the argument that voters gave
them a chance because they had lost faith in the Congress and were looking for an alternative.

The Congress, on its part, will be failing them if it persists with dynastic politics. The party must realise
- if it has not done so far - that Rahul Gandhi does not sell. Sonia Gandhi herself will be a far better bet
than the other leaders so far available in the party. The disadvantage of being an Italian has disappeared
over the years and she is considered as much an Indian as anyone by birth. But the problem is that she
has very little chance to head the country because the Congress has lost its shine. No doubt, the BJP
has Hinduised politics but that is the dominant thinking which has caught the public imagination at
present, thanks to Modis leadership.

This thinking may not last long since the Indian nation is basically pluralistic. The BJP itself seems to
be conscious of this because there is some evidence that it is moving from the right-of-centre to the
centre. The predicament that plagues the party is that its cadres come from the RSS. Maybe, that is the
reason that there is no scam in the government. However much one may dislike the RSS ideology, its
emphasis on integrity cannot be doubted. Yet, there should be no doubts about its interference in
governance. Even top bureaucrats are judged on how close they are to the Hindutva philosophy.

Former Prime Minister P.V. Narasimha Rao appointed several officers who were known to be secular
at key places so that the government reflected a pluralistic way of thinking. He felt personally betrayed
when the Babri Masjid was demolished because he never thought that things would reach this point.
But the fact remains that he connived at the whole operation. Now the thread has been picked up by a
CBI court which has charged L.K. Advani, M.M. Joshi and Uma Bharti with criminal conspiracy.

It would be a great let down if what the judiciary is doing is undone by the dominant political parties.
Advani and his associates can appeal to the higher court but if the ruling party does anything which
favours the accused, it would amount to mocking at the law. The Congress has asked for the resignation
of Uma Bharti who is a minister in the Modi cabinet. If she were to be dropped by Modi, it would send
the right kind of message. This is the least that the Prime Minister can do to assure people that his
government has no side to take.

Kuldip Nayar is a veteran Indian journalist, syndicated columnist, and author. He has edited
several newspapers, including Indian Express. He was the Indian High Commissioner to UK and
a Rajya Sabha MP.
Disengaging from the idea of India
Sajad Padder

I got an admission in a dilapidated government school in 1990. Back then schools wore a deserted look.
Pandit teachers were leaving the valley. Our area had a sizable pandit population particularly in villages
like Batagund, Aakura, Thejiwara and Nowbugh. Their migration was a setback to our education
system. Militancy was on rise and crackdowns by the armed forces were quite common. As if this was
not enough, the Babri Mosque demolition in 1992 further damaged our social fabric. In retaliation,
temples, schools, bridges, ration stores, panchayats and other symbols of state were damaged by
frenzied mobs. While the poor mostly compromised on the education of their children, the well-off
families could afford private education.

In our teens, we were enthused with strong anti-India sentiment. My uncle, a Hizb militant and a pro-
Zia ideologue, was very eager to send me across the border for training. The only thing that held him
back was my teenage. Even my parents would have happily assented to it. Pro-Pakistan sentiment was
at peak. We used to tune in Radio Pakistan and Radio Azad-Kashmir for news and resistance songs.
There was no cable television. Cricket would test our loyalty. Urdu commentary from Pakistan was
much preferable. The happiest moment was when Inzamam-ul-Haq would hit the ball for a six. Pakistan
was a formidable team then. The cricket gap as Stephen Cohen would put it was still there. Wasim
Akram, Waqar Younis and Saeed Anwar were our favorites. We would hate to see the likes of Sachin
Tendulkar, Sourav Ganguly, Javagal Srinath and others.

After the 2002 assembly elections Mufti Mohammad Sayeed became Chief Minister of J&K. Renegades
like Ikhwan were disbanded. A burgeoning young population made it to the colleges and universities
for higher education. We began to appreciate the Indian cricket team too. In 2006, I got admission in
Kashmir University to complete Masters in Political Science. The likes of Karl Marx, John Locke, J S
Mill, Mahatma Gandhi, Amartya Sen and others began to unlock our minds. Some Kashmir specific
CBMs were put in place like the Srinagar-Muzaffarabad and Poonch-Rawalakote bus services. Militancy
was waning. Indian economy was doing exceptionally well. Our state economy gained some
momentum. A New Kashmir was in the offing.

The 2008 Amarnath land row sharply polarized the state along communal lines. In the same year,
Mumbai terror attacks led to suspension of the Composite Dialogue process. The year was preceded
by relative calm at the borders due to the November 2003 ceasefire agreement. The Manmohan-
Musharraf backed backchannel negotiations were underway and a Non-Paper on Kashmir was ready
for discussion at the highest level. But electoral compulsions held Dr. Singh back. In 2010, Kashmir
erupted in protest against the Machil fake encounter. The subsequent violence claimed more than 100
lives. To normalize the state, interlocutors were appointed by the UPA government but their report was
consigned to the dustbin.

Then in 2012-14 again provided an opportunity to put some serious effort for addressing the alienation
in Kashmir. I was personally enticed by the idea of India as a democratic, socialist, and secular
republic. The direct and indirect interactions with the likes of Pratap Bhanu Mehta, Srinath Raghavan,
Ramachandra Guha, Yogendra Yadav and others somehow convinced me about the virtues in Indian
democracy. Ideologically at variance, they all exhibit unwavering commitment to democracy and
secularism. Jawaharlal Nehru University epitomized the health of Indian democracy where one could
enjoy complete freedom of speech and expression. On the day of Afzal Gurus hanging, hundreds of
students protested in the campus. While present in the campus, I couldnt muster courage to join them
because we are disciplined by the authorities at Kashmir University.

The 2014 parliamentary elections and the elevation of Narendra Modi as the Prime Minister somehow
unnerved the people of Kashmir. We still remember the press conference on the eve of the Gujarat riots
when PM Vajpayee urged him to adhere to the Raj-dharma. Modi sardonically replied: Hum bhi vahe
kar rahe hain, sahib. The Idea of India is being seriously contested. The growing intolerance and the
rise of Hindu nationalism at the cost of constitutional patriotism suit the party in power. The beef ban
and the lynching of Akhlaq in UP had its repercussions on Kashmir.

The emboldened communal goons hurled a petrol bomb on a valley-bound truck at Udhampur, resulted
in the death of a 19 year old Zahid. The proposal for establishing the Sainik and Pandit colonies were
resented by the local population. The attacks on Dalit, Muslim and Left affiliated students in the
Universities across India, RSS rallies in Jammu city, the muzzling of dissent with the iron fist, and the
jingoistic media convinced us that the worlds largest democracy is in peril. Even Pratap Bhanu Mehta,
who was optimistic about Modi sarkar, could smell the partys poison on the eve of Akhlaqs murder.

The 2010 mass protests were in response to the human rights violations and the questionable status
quo over Kashmir. Thereafter, no serious effort was made to address the Kashmir issue. The new
political dispensation in New Delhi adopted a hawkish approach towards Hurriyat although the PDP-
BJP agenda of alliance lays out the ways to engage both the separatist leadership and Pakistan. Modi
publicly snubbed Late Mufti Sayeed at the Sher-i-Kashmir cricket stadium by asserting that he does not
need anybodys advice on Kashmir. Instead of engaging Pakistan, India is busy in the self-defeating
goal of isolating it., Pakistan is not blameless either. It needs to reassess its Kashmir policy.

The 2016 uprising and the brutal state response left deep scars on our collective psyche. More and
more educated youth are picking up arms. The army as an institution is more politicised today than ever
before. Serving army officials are airing their views publicly on issues like human rights, counter-
insurgency and foreign policy. There is even commendation for the human rights violations. The revival
of renegades like Ikhwan is also on the cards. It seems that the secular, democratic, accommodative
and argumentative India is a thing of the past. Liberals have taken a backseat.

Cow is more precious than human being. Cow vigilantes openly defy the law and kill people on mere
rumors. Hindu nationalism has won over constitutionalism patriotism. Institutions like JNU are under
attack. Nothing allures in the modified India. Long live India.

The author is PhD in Political Science from the University of Kashmir

Ignore the jobs doomsayers
Notion that India has peaked in manufacturing & IT employment is at best premature, at worst,
dishonest
Manish Sabharwal

Einstein said that if you judge a fish by its ability to climb a tree, it will live its life believing it is stupid.
Only 0.7 per cent and 11 per cent of Indias labour force work in information technology (IT) and
manufacturing and yet, many pundits predict that Indias IT and manufacturing employment has peaked
lets call it the jobs doomsday prediction because of automation, robots, the immigration backlash and
anti-globalisation driven-trade barriers. I believe this prediction is wrong for a low-income and low-
productivity country like India and am willing to wager that in five years, IT employment will rise from
the current 3.5 million to 6 million; in 10 years, manufacturing employment will rise from 10 per cent to
20 per cent of the labour force. Id like to make the case that this jobs doomsday prediction is shallow,
ahistorical and impulsive.

The jobs doomsday prediction is shallow because it blindly extrapolates the labour market context of a
rich country like the US (with a per capita income of $45,000) to a poor country like India (with a per
capita income of $1,500). America is rich because it has highly efficient and productive land, labour and
capital markets. India is poor because 50 per cent of our labour force produces only 11 per cent of our
GDP and we only have 18,000 companies with a paid-up capital of more than Rs 10 crore. Preventing
people from falling into poverty (the USs problem) is a more difficult problem than pulling people out of
poverty (Indias problem).

The jobs doomsday prediction is ahistorical because it suffers from the presentism disease identified
by historians as a belief that the times we live in are unique. History acknowledges that technological
change is powerful but it takes more time than people think. Carlota Perezs wonderful book
Technological Revolutions and Financial Capital says The full fruits of the technological revolutions
that occur about every half century are only widely reaped with a time lag. Usually decades of turbulent
adaptation and assimilation elapse, from the moment when the set of new technologies, products,
industries and infrastructures make their first impact to the beginning of a golden age or era of good
feeling based on them. Technological change is not a bulb that goes on but a gentle sunrise

The jobs doomsday prediction is impulsive because it does not fully process the implications of Indias
huge domestic market for manufacturing and the hard-to-replicate ecosystem for Indias IT industry.
India retained the top spot globally for inward Foreign Direct Investment because the $60 billion is
clustered in manufacturing for areas where domestic consumption is reaching critical mass; Make-in-
India could be Make-for-India till the global storm passes. Indias IT industry has network effects in
software that parallel Chinas in hardware; we produce more engineers than the US and China
combined. Also, the passing shower of H1B visas pales compared to the climate change in technology
 all companies are technology companies, all hardware has a layer of software, data and smartphone
costs are cratering, etc. And Bangalore and Hyderabad are probably the only cities in the world where
you could hire 1,000 Hadoop programmers in a week
.
Its not my case that India is immune to the march of technology or that Indias economic renaissance
is a given; just that since we are so poor and come so late to the productivity party, our solutions are
more obvious and lower-hanging. Wutburger the German compound word for angry citizen is a
Western political reality because its unclear what can be done about technology deflating employment
in countries used to high incomes (video rental chain Blockbusters 83,000 employees have been
replaced by 2,000 people at Netflix).

Technologys deflation does raise the question of whether India will ever be able to get to the per-capita
levels of America, but India is far from the productivity frontier, policymakers finally have a 10-year plan
to create a middle class of 800 million, and many Indians believes that the next generation will have
better lives than them. India is more than a country; it is a continent that may already have the worlds
highest population. A new book called Scale by Geoffrey West is a wonderful meditation on the non-
linearity and exponentiality that arises from size. Scientists experimenting with drugs killed the elephant
Tusko because the 297 mg dose they injected was calculated by extrapolating from earlier research on
cats. Actually, despite the huge difference in mass, non-linearity meant that the right dose for the
elephant was only a few mg more than the cat.

India is an elephant; most data and anecdotes for the jobs doomsday prediction come from countries
that are, relatively speaking, cats, if not mice (Rajasthan is bigger than Germany and UP has more
people than Germany, France and the UK combined). Indias scale has delivered in the past; remember
how the Green Revolution trumped Stanford economist Paul Ehrlichs suggestion in the 1960s to let
Indians die of starvation because the world was running out of food?

We optimists know that pessimists will always get more intellectual respect because they sound wiser.
And only a fool would believe India will create enough good jobs without finishing the huge tasks of
building infrastructure, reducing regulatory cholesterol and raising human capital. But the jobs
doomsday prediction of India having peaked in manufacturing and IT employment is at best premature,
and at worst, dishonest. And therefore, it is crucial for policymakers to realise that if we lose our 800
million middle-class-creation battle, it will not be because of automation or protectionism but our own
inability to make our land, labour and capital markets more productive.

Manish Sabharwal is co-founder and chairman of TeamLease Services. He has a management

degree from Wharton and sees himself as a crusader for labour reforms in India. Since its
inception in 2002, TeamLease has placed more than half a million people in temporary and
permanent jobs.
Is India ready for the fourth industrial revolution?
The fourth industrial revolution simultaneously poses the biggest opportunity and the largest threat to a
prosperous future

Ravi Venkatesan

In 1750 AD, Indias share of global industrial output was 25%; by 1900, this had declined to 2%. The
reasons were the chaos triggered by the decline of the Mughal empire, colonization by Britain and the
first industrial revolution. Like China, India missed out on the industrial revolution which saw the
invention of the steam engine and powered looms and unleashed a productivity revolution. As a result,
our handloom industry was decimated; India became deindustrialized and fell into abject poverty. China
has re-industrialized with a vengeance, while India is still struggling to catch up.

This bit of history is more relevant than ever. The industrial revolution was a massive disruption.
Countries that drove it or embraced it went from rags to riches, while those that missed out went from
riches to rags. Today, we are in the midst of the fourth industrial revolution that promises to be
profoundly more disruptive. The question is whether India is positioning itself to ride this tidal wave or
whether once again we will be swept away by it.

The world is at the beginning of a revolution where there are huge advances in genomics, artificial
intelligence, materials and manufacturing technologies. Machines are closing in on human ability with
astonishing speed. Robots are replacing humans not just on factory floors but in homes too. Reusable
rockets promise to make space travel and colonies on Mars and the moon a reality. Possibly in our own
lifetime, we will reach a point called singularity where machines become as smart as humans and
then keep getting smarter. We will soon be able to edit genes to create favourable traits and new life
forms. Science fiction is becoming reality.

As with previous industrial revolutions, new technologies will create new jobs and simultaneously
destroy many old ones. The rise of machines, from robots to smart software, threatens to impact not
just low-skilled factory workers, but everyone including software engineers, stock traders and taxi
drivers.

Even chief executive officers are not exempt; a recent McKinsey study estimates that half the tasks
done by CXOs can be automated. While in the long run, it is possible that more jobs will be created
than are destroyed; in the medium term, the opposite will be true. An Oxford study estimates that 47%
of the jobs in the US, 69% of the jobs in India and 77% of the jobs in China will not exist in 25 years.
This is not conjecture. Chinas factories are adding robots faster than they are hiring people. Indias
information technology sector is already witnessing jobless growth and total employment may have
peaked.
The really vital question is this. While lots of people will lose their jobs all over the world, where will the
new jobs be? Today, much of the worlds fundamental research and innovation is happening in the US.
Disruption is being driven very disproportionately by American companies such as Google, Amazon,
Tesla, Illumina or First Solar. The chances are quite high therefore that the bulk of the new jobs will be
created in the US. This is important. In the first industrial revolution, Britain and Europe were able to
export the job losses created by machinery to colonies such as India. Productivity growth and trade
eventually resulted in enormous job and wealth creation in Europe even as it resulted in famine and
devastation in India, China and Africa.

Let us assume that all the new developments will create five new high-end jobs and destroy 10. Current
trends would suggest two of these will be in the US, two in China and perhaps one in Europe. If this is
true, do countries like India once again become colonies? Not of countries perhaps but of companies
such as Google, Pfizer or Monsanto? Do we simply become markets for innovations developed
elsewhere? Will the vast majority of our people then live on subsistence-wage service jobs? Is India
doomed to remain a low-middle-income country?

India is already facing a severe jobs crisis. The consequences of the fourth industrial revolution are truly
frightening unless, of course, we learn to ride this wave. But what exactly does that take? People often
wistfully wonder whether India will have its own Microsoft or Google. This is exactly like wondering when
we will win an Olympic gold medal. If we win a gold medal, it will be because of a freak eventa person
of extraordinary ability and tenacitynot because of the system.

What allowed Apple, Microsoft and Google to emerge is fundamental scientific research at world-class
corporate labs such as Xerox PARC or Bell Labs and universities such as Stanford and Massachusetts
Institute of Technology. The US government has played a vital role in underwriting high-risk, long-term
research projects through institutions such as Defense Advanced Research Projects Agency and
National Science Foundation; virtually all the technology in the iPhone was funded this way. Sensible
immigration policies attracted the brightest minds from India, China, Russia and Hungary to these labs.
Finally, a vibrant entrepreneurial ecosystem allowed the commercialization of research.

The contrast could not be more stark. There is almost no understanding or discourse on these matters
in India; our policymakers, scientists and business leaders are firmly stuck in the old paradigm. Not one
Indian university is ranked in the global top 300. It is hard to think of a single Indian company that is at
the leading edge of any of the disciplines that matter to the future. To do cutting-edge work in most
scientific and engineering disciplines, our finest minds have either to join the research and development
centre of a multinational company or leave the country. Government funding for science-based
technology research has been minuscule. It is no wonder that all our entrepreneurial activity is restricted
to me-too businesses rather that game-changing ideas.
The fourth industrial revolution simultaneously poses the biggest opportunity and the largest threat to a
prosperous future. India cannot afford to squander this moment. What we need urgently is a national
mission like the Apollo space programme. Is the prime minister listening?

There is a tide in the affairs of men, which taken at the flood, leads on to fortune. Omitted, all the
voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat. And we
must take the current when it serves, or lose our ventures. Shakespeare in Julius Caesar

Ravi Venkatesan is the chairman of Bank of Baroda. He is the author of an acclaimed book
"Conquering the Chaos: Win in India, Win Everywhere" published by Harvard Business Review.
Prior to this, as Chairman of Microsoft India between 2004 and 2011, Ravi helped build India into
Microsoft's second-largest presence in the world.

A leaderless world is here to stay

Ian Bremmer

Mr Donald Trump's decision last week to remove the US from the Paris Agreement on climate sent a
crystal clear signal that we're now living in a G-zero world, a world without consistent leadership. Who
is leader of the free world today? Not Mr Trump, the first US president since the 1930s who does not
believe that international leadership is in the country's national interest. For Mr Trump, everything is a
transaction. He sees the world not as a community - sometimes cooperative, sometimes contentious -
but as an arena in which strong leaders fight for dominance. This view appeals to him personally, and
he knows his loyal supporters like it too.

Are Europeans now leading the free world? Not exactly. The transatlantic alliance has been gradually
hollowing out for many years, and the election of Mr Trump has veteran leaders like Germany's Angela
Merkel and new ones like France's Emmanuel Macron scrambling for new strategies. The Americans
are sceptical of Nato, the British are leaving the European Union, and anti-EU political parties continue
to make gains, even if they aren't yet winning elections. Dr Merkel and Mr Macron don't appear to agree
on Europe's best course forward, and if Europe's leaders fail to meet the demands of their people for
change, the populist forces that have transformed European politics in recent years will continue to rise.

The ground is also shifting in the Middle East. Mr Trump may have better relations with Russia's Vladimir
Putin, Turkey's Recep Tayyip Erdogan, and Israel's Benjamin Netanyahu than former US president
Barack Obama did, but that brings no new order to a still-volatile region. On Syria's battlefields, the US,
Russia, Iran, Turkey, Saudi Arabia and Israel have distinctly different interests - and none of them is
strong enough to impose its will.

The Islamic State in Iraq and Syria will lose the little ground it has left, but it will continue to use social
media to inspire followers, imitators and the emotionally disturbed. The main G-zero terrorism problem
is that mutual suspicion, not the acknowledged need to share information among the world's intelligence
agencies, is now cyberspace's defining feature. Nowhere is the G-zero more obvious.

Who now carries the standard for free trade? The United States, long its champion, has pulled out of
the Trans-Pacific Partnership (TPP). Despite the best efforts of Japan's Prime Minister Shinzo Abe, the
US looks likely to remain outside the deal for at least as long as Mr Trump is in office. But this isn't
simply about Mr Trump. Remember that Democrats Hillary Clinton (reluctantly) and Bernie Sanders
(resolutely) opposed TPP, as well.

Mr Trump has also made clear he wants to rewrite the North American Free Trade Agreement with
Canada and Mexico. A mega-deal with Europe, the Transatlantic Trade and Investment Partnership,
now lies buried beneath the weight of opposition in multiple countries. There are still genuinely
ambitious multilateral trade deals taking shape, notably Canada's new agreement with the EU. But this
is an exception.

Is China the new leader on trade? Not quite. President Xi Jinping made headlines earlier this year at
the World Economic Forum in Davos with a rousing defence of global commerce. "Pursuing
protectionism," he warned, "is like locking oneself in a dark room. Wind and rain may be kept outside,
but so is light and air." But the China-led Regional Comprehensive Economic Partnership, a deal
composed of the 10 Asean countries plus Australia, China, India, Japan, South Korea and New
Zealand, involves much less genuine market integration than the more ambitious TPP. It says little
about investment, intellectual property and competition policy.

Then there is China's "One Belt One Road" project, an ambitious plan to direct massive investment
towards south and central Asia to create new paths for commerce between Asia and Europe.

If wisely executed, this project could provide a historic economic boost for China, the EU and many
poor countries between them. Unfortunately, there's no guarantee that money will be invested for
economic rather than political reasons. Corruption and incompetence may well delay progress, dampen
ambitions and stoke political conflict. Nor is China ready to offer credible leadership on security
questions, and the inability of China and the US to work together to resolve the North Korea problem
suggests that conflict might trump commerce, even in East Asia.

In short, the number of global flashpoints and "problems without borders" continues to grow, and there
are no credible cooperative plans to manage them, much less to solve the problems that have created
them. For now, the G-zero order looks here to stay.

Ian Bremmer is the president of Eurasia Group and author of Superpower: Three Choices For
America's Role In The World.
Growing Inequality under Global Capitalism
Anis Chowdhury and Jomo Kwame Sundaram
Income and wealth inequality has increased in recent decades, but recognition of the role of economic
liberalization and globalization in exacerbating inequality has never been so widespread. The guardians
of global capitalism are nervous, yet little has been done to check, let alone reverse the underlying
forces.
Global elite alarmed by growing inequality

The World Economic Forum (WEF) has described severe income inequality as the biggest risk facing
the world. WEF founder Klaus Schwab has observed, We have too large a disparity in the world; we
need more inclusiveness If we continue to have un-inclusive growth and we continue with the
unemployment situation, particularly youth unemployment, our global society is not sustainable.

Christine Lagarde, IMF Managing Director, told political and business leaders at the WEF, in far too
many countries the benefits of growth are being enjoyed by far too few people. This is not a recipe for
stability and sustainability. Similarly, World Bank President Jim Yong Kim has warned that failure to
tackle inequality risked causing social unrest. Its going to erupt to a great extent because of these
inequalities.

In the same vein, the influential US Council of Foreign Relations journal, Foreign Affairs carried an
article cautioning, Inequality is indeed increasing almost everywhere in the post-industrial capitalist
world. if left unaddressed, rising inequality and economic insecurity can erode social order and
generate a populist backlash against the capitalist system at large.
Much ado about nothing?

Increasingly, the main benefits of economic growth are being captured by a tiny elite. Despite global
economic stagnation for almost a decade, the number of billionaires in the world has increased to a
record 2,199. The richest one per cent of the worlds population now has as much wealth as the rest of
the world combined. The worlds eight richest people have as much wealth as the poorer half.

In India, the number of billionaires has increased at least tenfold in the past decade. India now has 111
billionaires, third in the world by country. The largest number of the worlds abject poor also live in the
same country over 425 million, a third of the worlds poor, and well over a third of the countrys
population.

Africa had a resource boom for a decade until 2014, but most people there still struggle daily for food,
clean water and health care. Meanwhile, the number of people living in extreme poverty, according to
the World Bank, has grown substantially to at least 330 million from 280 million in 1990!

In Europe, poor people bore the brunt of draconian austerity policies while bank bailouts mainly
benefited the moneyed. 122.3 million people, or 24.4 per cent of the population in the EU-28, are at risk
of poverty. Between 2009 and 2013, the number of Europeans without enough money to heat their
homes or cope with unforeseen expenses, i.e., living with severe material deprivation, rose by 7.5
million to 50 million people, while the continent is home to 342 billionaires!

In the United States, the income share of the top one per cent is at its highest level since the eve of the
Great Depression, almost nine decades ago. The top 0.01 per cent, or 14,000 American families, own
22.2 per cent of its wealth, while the bottom 90 per cent, over 133 million families, own a meagre four
per cent of the nations wealth. The top five per cent of households increased their share of US wealth,
especially after the 2008 financial crisis. Meanwhile, the richest one per cent tripled their share of US
income within a generation. This unprecedented wealth concentration and the corresponding
deprivation of others have generated backlashes, arguably contributing to the victory of Donald Trump
in the US presidential election, the Brexit referendum, the strength of Marine Le Pen in France and the
Alternative for Germany, and the ascendance of the Hindutva right in secular India.

Communist China and inequality

Meanwhile, China has increasingly participated in and grown rapidly as inequality has risen sharply in
the ostensibly communist-ruled country. China has supplied cheaper consumer goods to the world,
checking inflation and improving living standards for many. Part of its huge trade surplus due to
relatively low, albeit recently rising wages has been recycled in financial markets, mainly in the US,
which helped expand credit at low interest rates there.

Thus, cheap consumer products and cheap credit have enabled the slowly shrinking middle class in
the West to mitigate the downward pressure on their living standards despite stagnating or falling real
wages and mounting personal and household debt. Chinas export-led development on the basis of low
wages has sharply increased income inequality in the worlds largest country for more than three
decades. Beijing is the new billionaire capital of the world, no longer New York. China now has 594
billionaires, 33 more than in the US!

Since the 1980s, income inequality in China has risen faster than most! China now has one of the
worlds highest levels of income inequality, rising mainly in the last three decades. The richest one per
cent of households own a third of the countrys wealth, while the poorest quarter own only one per cent.
Chinas Gini coefficient for income rose to 0.49 in 2012 from 0.3 over three decades before when it was
one of the most egalitarian countries in the world. Another survey put Chinas income Gini at 0.61 in
2010, greatly exceeding the USs 0.45!

Anis Chowdhury, a former professor of economics at the University of Western Sydney, held
senior United Nations positions during 2008-2015 in New York and Bangkok. Jomo Kwame
Sundaram, a former economics professor and United Nations Assistant Secretary-General for
Economic Development, received the Wassily Leontief Prize for Advancing the Frontiers of
Economic Thought in 2007.