The Pri­va­ti­za­tion of Wealth in the Rich Coun­tries

Bhutan Times - - Editorial - (AK Mishra) MD, MHPA

If we look the trend of last 10 years around the world, you will find that there is a very sharp in­crease in the pri­vate wealth in the rich coun­tries i.e. for ex­am­ple Europe and to some ex­tent Ja­pan.

Dur­ing the pe­riod 1970 – 2010, largely due to slower growth in the Europe cou­pled with con­tin­ued high sav­ings brought dis­tinc­tively two things which we can say the phe­nom­ena of grad­ual trans­fer of pub­lic wealth into pri­vate hands and the other one is catch­ing up the as­sets prices over the long run. These two have hap­pened as a com­pli­men­tary to each other.

Data in­di­cates that in Italy, pri­vate cap­i­tal rose from 240% to 680% of Na­tional In­come be­tween 1970 – 2010, while pub­lic cap­i­tal dropped from 20% to (-)70%. The plot­ted se­ries of the above be­hav­ior can be traced at piketty.pse.ens. fr/cap­i­tal2IC. The pro­por­tion of pub­lic cap­i­tal in Na­tional Cap­i­tal has dropped sharply in last 10 years.

Ex­am­ples with re­spect to above can be checked up with data in case of France and Ger­many where net pub­lic wealth rep­re­sented 25% to 33% of to­tal Na­tional wealth be­tween the pe­riod 1950 – 1970, whereas to­day it rep­re­sents just a few per­cent. Now the sit­u­a­tion is that the pub­lic as­sets are just enough to bal­ance pub­lic debt. This is al­ready hap­pen­ing in the lead­ing de­vel­oped economies. Si­mul­ta­ne­ously, the ra­tios i.e. pub­lic cap­i­tal to na­tional in­come de­creased while the pri­vate cap­i­tal to na­tional in­come in­creased in the same pro­por­tion.

The above re­ferred phe­nom­ena among the Euro­pean Na­tions in­di­cated the re­viv­able of pri­vate wealth due to pri­va­ti­za­tion of Na­tional wealth. Na­tional wealth is mea­sured in terms of yearly in­come of the na­tion. The na­tional in­come in­creased over the years less rapidly in com­par­i­son to growth of pri­vate cap­i­tal owing to pri­va­ti­za­tion.

There­fore, the above phe­nom­ena is a les­son for the de­vel­op­ing economies where only gov­er­nance may bring a check on the bal­anc­ing of pub­lic ver­sus pri­vate cap­i­tal growth. The real ad­van­tages will flow to the gen­eral pub­lic/res­i­dents of the coun­try if the bal­anc­ing is con­trolled by the Gov­ern­ment. Those who ad­vo­cate to­tal pri­va­ti­za­tion against pub­lic fund­ing for the devel­op­ment should ex­er­cise cau­tion as the concentration of wealth in the fewer pri­vate hands is dan­ger­ous.

Newspapers in English

Newspapers from Bhutan

© PressReader. All rights reserved.