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Globalization and Growing Disparities
By—Girish Mishra
The present phase of the
Washington Consensus-based globalization is now almost two
decade-old. Hence it is not premature to judge what its
protagonists promised and what results have accrued. To begin
with, globalization was to generate a high economic tide that
was supposed to lift all boats, no matter whether they were in
developing or developed countries. As Richard Hornik, an
American researcher says, “Any transitional pains that the
resulting huge commercial shifts would inevitably cause would be
fleeting. Everything from the expansion of the World Trade
Organization and the European Union, to the “reform” of
government pension systems to force workers to work longer than
originally promised were sold with the same political snake oil:
“Take a bit of pain now,” politicians and pundits assured the
public from Warsaw to Washington,” and we’ll all cross that
shiny bridge to a new prosperity in the 21st century.”
After more than one and a half decades, what is the situation?
There is uncertainty everywhere. So far as working class is
concerned, no job is safe. The corporate sector has got
unrestrained power to hire and fire. Wherever the government has
not yielded on the demand for flexible labour laws, there is an
intense pressure to bend it. The threat of taking business and
investment elsewhere hangs like Damocles’ sword. All workers
whether blue collar or white collar, have to continuously worry
about tomorrow. They may be retrenched for no fault of their own
because the company wants to reduce labour costs or wind up the
business and go somewhere else. Workers are all the time unsure
about health benefits and pensions and the fate of their
children’s education. With the state’s social welfare role all
the time under attack and the financial constraints becoming
more and more acute, it should not be surprising if working
people become desperate.
Over the years, socio-economic and regional disparities have
increased. The distribution of the benefits of rising rate of
economic growth has been skewed. To quote the UNDP’s Annual
Report for 2006: “Ours is a world of extremes. The poorest 40
per cent of the world population – the 2.5 billion people who
live on less than $2 a day – account for five per cent of global
income, while the richest 10 per cent account for 54 per cent.
Never before has the goal of abolishing poverty been within our
reach: there are no longer any insurmountable technical,
resource or logistical obstacles to achieving it. Yet more than
800 million people suffer from hunger and malnutrition, 1.1
billion people do not have access to clean drinking water and,
every hour, 1,200 children die from preventable diseases.
Despite a growing world economy and significant advances in
medicine and technology, many people in developing countries are
not reaping the potential benefits of globalization.”
A report in The New York Times (June 28) by its correspondent,
Celia W. Dugger, has this to say: “It is no secret that
mosquitoes carry the parasite that causes malaria. More
mystifying is why 800,000 young African children still die of
malaria per year – more than from any other disease—when there
are medicines that cure for 55 cents a dose, mosquito nets that
shield a child for $1 year and indoor insecticide spraying that
costs about $10 annually for a household.”
The report goes on to add: “In Uganda, population 28 million,
not one of the 1.8 million nets approved more than two years ago
by the Global Fund to Fight AIDS, Tuberculosis and Malaria has
yet arrived.
“The World Bank, after pledging to halve malaria deaths six
years ago, had let its staff working on the disease dwindle to
zero.”
A recently published report by the World Bank, entitled Economic
Growth in South Asia, has highlighted the fact that in spite of
the overall rate of economic growth rising and the average
incidence of poverty falling disparities have increased.
Obviously, all sections of the society and all the regions have
not shared the gains from economic growth equitably across South
Asia.
Bangladesh, Bhutan, India, Maldives and Pakistan have grown on
an average at over 5 per cent per annum while Sri Lanka and
Nepal have grown at 4.7 per cent and 2.5 per cent per annum
respectively. The incidence of poverty on an average has fallen
by 9 per cent in Bangladesh, 10 per cent in India, 11 per cent
in Nepal and 6 per cent in Sri Lanka. All these impressive gains
pale into insignificance when one takes into account the fact
that as many as 400 million people out of a population of 1.37
billion in the region are below poverty line. In other words,
over 30 per cent people do not get sufficient income to keep
their body and soul together. The report underlines that
“Poverty is not just endemic, but increasingly concentrated in
particular, lagging regions. Not only are the regions poor, but
their growth are substantially slower than the better-off
regions.”
So far as India, the largest country in the region, is
concerned; the increasing economic inequalities in the society
and the widening regional disparities are becoming more and more
acute with every passing year. This poses grave dangers to
India’s political and social stability as well as national
integrity. Political turmoil, criminal activities and separatist
tendencies are bound to gain in strength. In turn, they are
bound to affect future economic growth and development
adversely. Already, the increasing Maoist insurgency, rising
graph of all kinds of crimes and the tensions generated by the
growing demand for reservation in jobs and educational
institutions by the downtrodden and backward castes are
indicating the more troublesome days ahead if necessary
corrective steps are not urgently taken.
One can ignore the following observations by the report at one’s
peril: “The phrase “two Indias” exemplifies this difference in
regional development outcomes. In 2002-03, all-India per capita
GDP was $480, the poorest seven states (accounting for 55 per
cent of the population) had a per capita GDP that was two thirds
the national average, while in the richest seven states (33 per
cent of the population) per capita GDP was nearly the double
that of the poorest seven states. In the two largest states
(Bihar and Uttar Pradesh, 25 per cent of total population) per
capita GDP was less than half the national average and only a
third of the richest 7 states. The four southern states, Andhra
Pradesh, Karnataka, Kerala and Tamilnadu (21 per cent of the
total population), at an average, enjoyed more than twice the
GDP per capita of the quarter of the population concentrated in
the two poorest northern states.
“Furthermore, with average GDP growth rates of 5 per cent, the
southern states are galloping ahead of the poorest but populous
northern states with growth rates of only 2 per cent. This
threatens to further increase the poverty gap in the two
regions, currently, head count poverty in the poorest northern
states and the better off southern states is 35 per cent and 18
per cent respectively.”
This report by Shantayanan Devarajan and Ijaz Nabi has
unambiguously warned about the dangers looming large on the
horizon: “rising inequality in the wake of market-oriented
pro-growth policies could elicit a backlash against these
policies, sometimes leading to distortionary policies that slow
growth… if inequality between regions rise above a certain
threshold, it can trigger a violent conflict which, in turn, can
lead to decades of reduced growth.”
It was not without much thinking that founding fathers of modern
India time and again emphasized the importance of removing
social and economic inequalities and reducing regional
disparities. All the plan documents underlined them and economic
policies and programmes were judged from this angle. It is only
after the beginning of the economic reforms inspired by the
Washington consensus that these two important objectives have
been almost discarded and a drumbeater of the Washington
consensus like Gurcharan Das in his article “The India Model”
(Foreign Affairs, July-August 2006) has the audacity to accuse
Jawaharlal Nehru and Indira Gandhi of “shackling the energies of
the Indian people under a mixed economy that combined the worst
features of capitalism and socialism.” Das seems to be so
heavily doped by his ideological masters that he forgets what
has happened to Pakistan that unquestionably followed the
American dictates. It got split into two and could never have
even a modicum of democracy. India, in spite of all the
diversity, has been able to preserve its territorial integrity
and democratic institutions. Mr. Das, please look at the
backyard of the USA, i.e., Latin America, where democracy and
independent economic development have begun prospering only
after discarding the Washington consensus. Lies and distortions
must be given up if one genuinely wants to debate and convince.
Girish Mishra,
E-mail: gmishra@girishmishra.com
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