Dear All,
Less Gini Coefficient means relatively more equality. India has high 30s whereas UK 34 and US
45. If one looks as an example the income the employees getting under 6th Pay Commission
varies from Rs something like Rs 15000 pm to Rs 1.5 lakhs.
The reliability of Gini Coefficient, therefore,needs further in-depth studies.Please see one
such article.
Let me further point out that before Lenin about 2000-3000 years ago similar philosophy was
in vogue in Gurukul System and society at large, namely: to one according to one's needs and
from one according to one's capacity/potential. The best example is: Sudama and Lord Krishna
were the disciples of the same Guru Sandipani, same thing about Kauravas and Pandavas.
One more thing, look at the concepts like Trusteeship observed in ancient India, till today
existing; may be in a very diluted form, the philosophy of Swami Vivekananda "Jansewa is
Ishwarsewa", Karma Siddhanat (especially the mind set up of common man that I am suffering in
this birth because of my sins in previous births!),etc. Such and similar concepts of
compassion, love for humanity help reduce the brunt of inequality, the recession, etc.
Regards.
Yours,
____________________________________________________________________________
On Mon, 06 Jan 2014 21:03:26 +0530 wrote
> Nice article.
Let us not forget Vladimir Ilyich Lenin's good old formula for the USSR:
From each according to his ability; to each according to his need.
Best wishes.--------------------------------------------------------The great aim of education
is not knowledge but action. ~ Herbert Spencer
Dr Vinod
DumblekarMANTISManagement Simulation Gamesdesign | development | deliveryPh :
+91.9818631280www.mantis.co.in
From: Jagan Mohan Reddy
To: join_mtc@googlegroups.com
Cc: Vinod Dumblekar
Sent: Monday,
January 6, 2014 4:27 PM
Subject: [MTC Global] Why equality is better for all
Why equality is better
for all
There is every reason to believe that India's income inequality,
already above European levels, is a foretaste of a winner-take-all society to
come.
by Tim Harford, Business Today,Jan 19, 2014
Inequality has become a hot topic, but what's really going on?
Let's start by looking at rich countries. The figures vary depending on who is
measuring and when, but France's Gini coefficient (a statistical measure used
to assess income distribution in a country) is around 33 per cent, Finland's 27
per cent. It is 34 per cent in the UK and 45 per cent in the US. To put this in
perspective, a Gini of zero implies total equality of income, and a Gini of 100
per cent means that one person has all the dough.
Let's move to Brazil, China and India, which are often lumped
together, especially by European and American analysts, but of course are
hugely different in many ways.
Improve social programmes, make them as generous as resources
allow, and target them better. The stories I'm told are of waste, duplication
and fraud
Brazil is a notoriously unequal society, so one might expect it
to have a high Gini coefficient. The CIA's World Factbook reported that
Brazil's Gini coefficient was 61 per cent in 1998 - the sort of extreme
inequality that we might expect, given the country's reputation. But here's the
thing: Brazil's Gini is now down to 52 per cent. That's still high but it's a
big fall, a quarter of the way to becoming ultra-egalitarian Finland in just 15
years. It shows that in the right circumstances, inequality can be tackled:
Lula da Silva, Brazil's president from 2003 to 2010, was regarded as a
revolutionary firebrand when elected, but turned into a pragmatist who was
happy to court international investment, yet was keen to redistribute some of
the rewards of Brazil's commodity boom.
China is still ostensibly a communist country, but it is rapidly
taking over from Brazil as the poster child for income contrasts. The CIA
Factbook puts the Gini coefficient there at 48 per cent. That is higher than
the level in the US, and given that China is still much poorer than the US,
such income inequality implies tremendous hardship for poorer families. A more
recent study found a Gini coefficient of 61, which, if true, is pretty serious.
No wonder China's leaders are nervous about social unrest.
Finally, India. India's Gini coefficient seems stable in the
high 30s. Notorious examples of glaring inequality, such as Mukesh Ambani's
billion-dollar house in Mumbai turn out to be the exceptions, not the rule.
Inequality Possibility Frontier
Should we conclude that all is well in India, then? Not
necessarily. The latest concept in inequality economics is the "inequality
possibility frontier". Here's a way to think about it: in a subsistence
society, significant inequality is impossible: if resources are unevenly
distributed, people will starve. The richer a country gets, the greater the
proportion of resources that could go to a small number of people, and the more
unequal it could become. There's every reason to believe that India's income
inequality, already above European levels, is a foretaste of a winner-take-all
society to come.
But Indian policymakers must not panic. Consider the attitude
summed up by China's first great economic reformist, Deng Xiaoping, who took
power in 1978 following the end of the Maoist era. One of his much-quoted
maxims was "Rang yi bu fen ren xian fu qi lai" (Let some people get
rich first).
Deng had a point. Economic growth isn't a steady, automatic
accretion of wealth. It comes from replacing old ways of doing things with
something new. Such creative destruction is likely to create inequalities in
the short term. China's growth model has been experimental, loosening different
restrictions on different industries in different parts of the country, and
creating globalisation-friendly industrial zones on the coast. It is almost
inevitable that such experiments, if successful, will produce winners and
losers. (If unsuccessful, of course, they produce only losers.) Not every place
can develop at the same rate. India is going to have to embrace similar
experiments and inevitably, inequality will be the result. What, then, is the
right response?
The more unequal the society that surrounds us, the higher the
stakes: the more we have to invest in giving our children that tiny extra
advantage
The first is to give Indian business some space to grow. The
World Bank's Doing Business project, which measures regulatory burdens, places
India 134th among 189 economies, and slipping in the rankings. Obviously, the
rule of law is necessary, and businesses cannot be entirely untouched by
government, but there is tremendous room for improvement in making it simpler
to set up a legal business, register property or get a construction permit in
India. It is hardly a surprise that India's growth industries have been those
that were hard for government officials to even imagine existing. If you can't
be imagined, you can fly under the radar until you're big enough to defend
yourself.
The second is to focus on primary education to help Indians take
advantage of new economic opportunity. India's best universities are legendary,
but its primary and secondary education does not enjoy the same glowing
reputation.
The third element is to improve social programmes, make them as
generous as resources allow and - importantly - to target them better. I am no
expert on the Indian welfare state, but the stories I am told are of waste,
duplication and fraud. This is a triple tragedy: people who desperately need
help aren't getting it, the state is spending money it cannot afford on people
who may need no help at all, and the welfare state, which should be a bedrock
of any developed economy, is discredited.
Role of Cash Transfers
I'm fascinated by the possibilities of direct cash transfers .
Recent trials of cash handouts to low-income entrepreneurs in Sri Lanka after
the 2004 tsunami, poor women in post-conflict Uganda, and even homeless petty
criminals in Liberia, suggest good results. At a bare minimum, the money tends
to be spent on useful consumption: food and clothes rather than alcohol and
drugs. In many cases, it is used to buy investment goods with good rates of
return. In most cases, the most effective welfare programme is going to be not
free rice or milk, but cash. The question, then, is how to distribute that cash
properly in India. Mobile phones are making electronic transfers feasible, but
a fundamental issue is identifying the correct recipient. It's encouraging to
see India pioneering an ID system for the entire population, the scale and
ambition of which is unprecedented. Well-wishers across the world are watching
and hoping it will work.
Of course, some people ask why inequality matters. Who cares if
the super-rich get super-richer, as long as the poorest are enjoying some
increase in living standards too? I have a degree of sympathy with this view:
certainly I don't think it's intrinsically harmful for Mukesh Ambani to get a
little richer, as long as it is at nobody else's expense. My priority is poverty
rather than inequality.
But that said, I don't think we can dismiss inequality entirely.
For one thing, the money now accruing to the richest members of societies
across the world is not trivial. The vast majority of income gains in the US,
for instance, have gone to the richest, leaving most Americans suffering
limited income growth for the last 30 years or so. That's not to say that the
rich "stole" the money - economic growth doesn't work like that. But
it does make the point that the sums involved are substantial. It's not just a
matter of envy.
Inequality Can Be Costly
Research suggests inequality has harmful effects on crime,
mental health and growth. I don't find it totally convincing, but one has to
consider it a risk. Some intriguing recent research from the IMF suggests that
episodes of strong growth are more likely to end quickly in highly unequal
societies. One possible explanation is the political economy of highly unequal
states. The more unequal a society, the more resources an oligarchic elite can
deploy to seize political control and defend its wealth. Oligarchs don't like
free markets. They like barriers to entry. Even the relatively saintly Bill
Gates, who has devoted much of his fortune to economic development, built his
billions on the back of his (perfectly legal) monopoly of the Windows system,
backed up by global intellectual property law.
Many other plutocrats have less laudable intentions and rather
starker ways to maintain their wealth. Almost one in 10 of China's richest
1,000 people sit in the National People's Congress - a body of almost 3,000
lawmakers. Their average net worth is four times that of the richest
politicians in the US Congress, despite the fact that the US itself is a far
wealthier nation. If the US is subject to too much influence from plutocrats,
then the situation in China looks even worse.
At the very least, one must recognise that there's likely to be
some degree of redistribution from the rich to the poor that will improve
welfare as a whole.
A final point: inequality isn't just a case of the super-rich
versus the super-poor. It has its impact on the middle classes too, and on the
way we conduct ourselves. I consider myself middle-class and I expect most
people reading this article do too, so I hope they empathise with my position.
The more unequal the society that surrounds us, the higher the stakes: the more
we have to invest in giving our children that tiny extra advantage, or to
defend ourselves from crime.
We find ourselves devoting disproportionate effort to choosing
the perfect neighborhood, the perfect school or tutor. More equal societies -
we look with admiration at Denmark, Finland and Sweden - have lower stakes.
Middle-class families relax, knowing that any school is likely to be good, and
that the gap between the highest achiever and the also-ran is not great. The
tragedy of inequality for the poor is obvious, but inequality is also a prison
for the middle classes too. No society can be truly prosperous unless people
feel that their economic lives are secure. That is something to which India -
and every other country - should aspire.
(Tim Harford is an economist, journalist, broadcaster, and the
author of The Undercover Economist)
--
Dr A Jagan Mohan Reddy
Associate Professor (HR) & Placement Coordinator,
Institute of Public Enterprise,
Osmania University Campus,
Hyderabad - 500 007.
Ph.No. 040-27095483 / 9392414243
Email : adamareddy@yahoo.co.in
drjaganmohanreddy@gmail.com
Hands that serve are holier than the lips that pray
--
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Regards,
Dr P H Waghodekar
Advisor (HR), IBS & PME (PG)
Marathwada Institute of Technology,
Aurangabad: 431028 (Maharashtra) INDIA.
(O) 02402375113 (M) 7276661925
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Re: Re: [MTC Global] Why equality is better for all
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