DNA Edit: A No Man Left Behind Economy

In Ruchir Sharma’s The Rise and Fall of Nations, the analyst says the world has largely assumed since the 1950s that countries grow more unequal in the early stages of their development, and less unequal in later stages.

However, Sharma writes, “Today, inequality appears to be rising at all stages of development: in poor, middle-class, and rich countries”. He attributes some of it to pre-2008 globalisation that depressed blue-collar wages.

Outsourcing and technology replaced the kind of jobs that were lifting people out of their class silos. “As inequality spreads within countries, at every level of development, it is increasingly important to monitor the wealth gaps in all countries, all the time” he says.

However, in India, this appears to be a tad difficult because more of us think of ourselves as worse off than we actually are, according to the Household Survey on India’s Citizen Environment & Consumer Economy Survey 2016. It indicates only the top 3 per cent of Indians think of themselves as rich. The rest of us, a majority who do in fact comprise India’s wealthy, think of ourselves as middle class, if not poor. While, according to number-crunching by Baillie Gifford Fellow and Economist Pramit Bhattacharya, “What these statistics suggest is that in our country, only a very small fraction of middle India has middle-class characteristics” and while most of middle India is not middle class, it is they who will contribute most to the consumer market.  

So there are two essential streams here: an assumed equality and an actual inequality. The assumption that things will be better than they truly will, and the assumption also, that one is worse off than one actually is. The corresponding actualities only truly catch up with perception much later.

Typically, aspects like the age of a workforce, GDP, tax and regulatory policy interventions help control inequality. So, does the perception of whether one is less equal than others, or not matter?  

In a new paper published last week by economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman, it emerges that, among other things, the bottom half of America had been shut out from growth for the last 40 years, that women in the workforce mitigated inequality, but the glass ceiling obstructed this.

India’s new move towards financial inclusion—every home with a bank account, mobile connectivity, cashless payments and the weeding out of black money for a GDP measuring only white—are inclusive of our weakest links. If we must take those steps backward, to correct our trajectory, and include, so be it.  

Let no man be left behind.