Income disparity a potential problem

“DO the right things properly to succeed” ( Sunday Star Says, Oct 21) touched on the big problem of income disparity where residents in the richer states have a lion’s share of income in the country.

Income disparity in general, and poverty in particular, is not just about income.

You also have to take into account poor health, inadequate education, poor job security – in short, it is about long-term poor economic and social prospects. For example, it is not surprising that most of the students in the low academic performance category are from low-income families.

The government in its 11th Malaysia Plan review decided that policy action is needed to close the income gap, especially for those who live below the poverty line.

It seems the government will need to use tax measures to balance out this income gap, particularly among the B40 (the bottom 40%) to strive for some form of inclusive growth.

Taxes fund government programmes to improve the people’s wellbeing. Note that Malaysia’s wage share of GDP is below that of high income countries; it is the bigger share of GDP that has allowed wealth generated to trickle down to the wallets of poorer households and to bring about a more inclusive distribution of wealth in these higher income countries.

The words of the 32nd American president, Franklin D. Roosevelt, “the test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little”, are a sobering reminder that a big income disparity is a potential social and political problem that must be addressed sooner rather than later.

The ancient Plutarch’s advice that an imbalance between rich and poor is the oldest and most fatal ailments of all nations is proven with history showing income disparity leading to social and political discontent and friction, which in turn hampers economic and social progress.