Reflections on New Year: Reducing inequality is the challenge ahead

Pandemics have often enough been followed by social upheavals in the past. The challenge before countries is to avoid them and build a more humane and equitable society, writes Govind Bhattacharjee

Reflections on New Year: Reducing inequality is the challenge ahead

Govind Bhattacharjee

Malcolm Forbes, publisher of the Forbes magazine, once said, “When things are bad, we take comfort in the thought that they could always get worse. And when they are, we find hope in the thought that things are so bad they have to get better.”

Whether the promised vaccines would contain the pandemic or not, it is unlikely to restore our world which has been disrupted beyond recognition. Only time will reveal whether things will get better or worse in 2021, whether the storm has passed away for good or is gathering still more strength to unleash its fury upon us, but hope is something we cannot give up. With hope we can visualise, and then try to shape our world according to that vision which imparts a meaning to our mundane lives.

The pandemic has battered economies, plummeted growth, disfigured industries, maimed travel and recreation, mutilated lives and livelihood. It has thrown millions of the jobless into poverty, and caused loneliness and depression among people – children, adults and aged alike. It has highlighted the gross inadequacy of our public health infrastructure and spending, accentuated the injustice, inequality and disparity in society

It has also sensitised us to the plight of the informal sector workers and especially the migrant labourers who are denied any social security; many of these have been pushed into extreme poverty. The doles handed out by the governments in developing countries like India has been too inadequate to mitigate their suffering and they will continue to live in poverty because they were born poor.

It has pushed offices and schools into homes, denying the workers the joy of human touch and children the joy of playing. In doing do, it has brought out the deep digital divide that further amplifies the divide between the rich and the poor.

And last but not the least, it has made governments the world over much more autocratic and dictatorial by giving them unimaginable powers otherwise impossible in normal times to enable them to deal with the pandemic, but having tasted blood once, governments will be unlikely to loosen their newfound stranglehold on power anytime soon.

A study by Tahsin Saadi Sedik and Rui Xu of the IMF in October 2020 pointed out that past pandemics had often caused social upheavals by reducing output and further heightening inequality. The lesser the growth and lower the output, the higher is the social unrest; they feed each other in a vicious cycle.

The first thing the government should do in 2021 is to pre-empt such an upheaval. To do so, it needs to increase its public health spending manifolds, cover the unorganised sector workers – in factories and also at home - in a wide social security net, and provide a basic minimum income for the needy who need to be identified carefully, using the existing databases which now lay scattered over a plethora of poverty alleviation programmes like MNREGA and other sources like the national database of informal sector workers the government had promised to build.

The huge resources the government will need for all this will understandably be difficult to get, especially when revenues have nosedived and debts have swelled following unprecedented contraction of the economy during 2020. There are also other priorities like national security, which cannot be compromised. The only option is to borrow more and forget about the FRBMA targets for a year – after all, it is not the debt but the use we put the debt money to that should cause concern

Small firms are bearing the brunt of the pandemic. Thousands of these have already closed down, and thousands more will. Even among the larger firms, insolvency and bankruptcy will spread the contagion to banks leading to the twin balance sheet crisis of corporate debt and banking insolvency.

After the pandemic has severely exposed the risk of a single source supply chains, the global supply chains are moving closer to home for increased reliability and resilience. Our financial sector should be made ready to welcome the incoming industries with a supportive network. Indeed, the economic landscape is changing fundamentally, calling for a new social contract for the 21st century.

While in the last century, globalisation of supply chains was facilitated by the remarkable advances in telecommunication, in the post-Covid world, manufacturing will ride piggyback on advanced techniques that can cut costs, which means increased use of industrial robotics and automation. To save the jobs threatened by robots while attracting global manufacturing corporations, governments will have to provide a social support system like an assured income to the displaced workers.

COVID-19 is not the first nor will it be the last disruptor that we shall see. The only way we can face such disruptions is through knowledge – that requires fixing our moribund education system. Implementation of The New Education Policy remains uncertain and hazy. It is time to focus on education at all levels, loosening the tight bureaucratic controls and increasing the level of funding to at least 6 percent of GDP, long recommended but never implemented.

Education being a concurrent subject, the states and Centre must share the responsibility and costs if the promises are to be fulfilled. The pandemic has shown how important is the knowledge of science and international collaboration in handling a crisis of such magnitude. Innovation emerges from such knowledge and collaboration where national boundaries cease to matter. There is thus greater benefit in being more internationalist in our approach, while remaining nationalist at heart.

The pandemic has also given us a rare chance to address climate change as governments invest in green recovery plans to create jobs and cut emissions. The unprecedented lockdown has seen the rejuvenation of Nature and return of many unseen species.

As the HDR 2020 noted, “The Covid-19 pandemic is the latest harrowing consequence of imbalances writ large.” It was a result of “squeezing local ecosystems so hard that deadly viruses spill out”, and it will not be the last unless “we relax our grip on nature.” The pandemic has also taught us how little we need to survive and add quality to life, and it is for us to set limits on conspicuous consumption and the demands for consumption and growth.

But a pandemic can also be a seed for social and economic regeneration. The Spanish flu, one of the deadliest pandemics in human history, was raging ruthlessly when the First World War had ended in 1918, infecting 50 crore people - almost a third of the global population and killing between 5 to 10 crore people worldwide.

But then it was followed by the so-called decade of the Roaring Twenties which had seen an astounding spurt in economic growth and prosperity, driven by a resurgence of innovation in all fields - from construction and consumer industries, automobile and electricity, radio and television, aviation and railroads, democracy and women’s suffrage, arts and painting, expressionism and surrealism, Jazz and Flappers.

We also ring out 2020 with the hope that it will usher in another Roaring Twenties in the twenty-first century. But even if does not happen, we need not worry.

On his 80th birthday, when asked by a journalist what he had learnt about life, the poet Robert Frost replied, “In three words, I can sum up everything I’ve learned about life. It goes on.”

Life will go on, no matter what. We can only hope that out of the ashes of the dying 2020 will emerge a new courage for us to live it.

(The author is a former bureaucrat and an academic)

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