Perpetual disparities

The Dawn Review, May 17, 2007

By Moniza Inam

Last week the prime minister and other government functionaries made tall claims about having reduced poverty and Pakistan being set to achieve all of the eight-millennium development goals (MDGs), making great strides in improving the lives of the teeming millions.

The claim, however, has little to show in terms of bringing any actual improvement in the lives of the people at the grass roots level. Donor agencies, independent economists and civil society organisations have challenged the government assessment. They say it is based on manipulation of statistics by the ministries concerned and that poverty in some cases and the rich-poor divide have increased in the last seven years.

Though the government claims to have brought down the poverty level (international monetary value of caloric poverty is $0.40 US or Rs24 per day) to 23.9 per cent from over 30 per cent. According to the World Bank it is 28.3 per cent; the UNDP estimates it to be 25.7 per cent. What meets the eye, however, is a spectacle of rising poverty.

There seem to be more and more people trapped in the vicious cycle of hunger, illiteracy, deprivation and joblessness. For millions breaking the glass ceiling and succeeding in life seems impossible; the poor are pitted against a system with its manipulative devices aimed at them.

In the case of Pakistan, there is the twin issue of inequality attached with poverty. According to the Pakistan Economic Survey 2006-07, the gap between haves and have-nots has increased in the period between 2001 and 2005. The ratio of the income of the richest 20 per cent and the poorest 20 per cent increased from 3.76 to 4.15. According to official sources, Gini Coefficient –– an effective device of calculating income inequality globally- is changed from 0.2752 to 0.2976; that is, for the worse.

Although Pakistan has been able to sustain an impressive GDP growth rate since 2003, averaging nearly six per cent per annum, it has not improved its income distribution. The income gap between different classes has increased and while the poor may have not become poorer across the board, the rich have become considerably richer. Conspicuous by its absence remains a universal benchmark to define the rich.

Overall, economists say the rich have become up to 57 times richer than the very poor and 47 times more affluent than the not-so-poor. The super rich only number 200,000, or 50,000 households, and account for only 0.13 per cent of the population. This scenario has led to a situation where islands of prosperity exist in an ocean of poverty.

Disparity generates antagonism in those who have been left behind, manifesting in many forms. It generates a sense of injustice and resentment and breeds social and political instability, which can lead to violence in society. Unjust social orders in turn lose their political viability. Indifferent attitudes of the very rich towards rising economic disparity are creating what economists call ‘inequality traps’. These can persist for generations, unless the state intervenes to reduce their grip on the affected sections of society. Removal of such ‘traps’ is necessary to accelerate the pace of development -–– one that includes all and not benefit just the privileged few.

Without addressing these issues, a social order can only be destined for being backward and politically unstable. With a track record of weak political and social institutions, lack of social welfare, good governance, quality education for all and an efficient legal system, conditions in Pakistan are getting riper for social discontent and turbulence.

A dangerous effect of rising inequality is the prevalence of psychiatric disorders, such as depression, anxiety and stress which can lead to debilitating illnesses like neurosis and psychosis. Exasperating living conditions have been leading many to commit suicide in recent years.

Terrorism is also connected with the phenomenon in one way or the other. Educated, unemployed youth, madressah graduates with no marketable skills and uneducated people who can’t find respectable means of earning a livelihood can become an easy prey for terrorist masterminds. They exploit the feelings of dejection, anger and annoyance and use their targets for ulterior motives.

It can be argued that government policies have failed to address the problems at hand. There has been much emphasis laid on generating macro-economic activity, achieving sustainable economic growth, a trickle down effect and building an export economy, but the people at large feel they have not been involved in such activities. In real life the impact of government policy is barely visible. Desired results in the form of changing the lives of the people trapped in the vicious cycle of economic marginalisation have remained elusive.

Those who advocate that an economic growth strategy should be based on ‘growth distribution’ make more sense in a developing country like Pakistan. Proponents of people-centred development keep reminding us that economic growth should be a means for human development and not an end in itself. What is happening here is economic development which is taking place with a lopsided distribution of wealth facilitated by the state, which is in return resulting in widening the disparity gap.

This must stop in order to bridge the gulf between the very rich and the extremely poor. Failing to do so can risk disintegrating the basic social fibre of society.