Lessons from Greece
T he expected electoral victory in Greece of Syrizia, an acronym meaning “radical coalition of the Left”, had made waves across financial markets. The victory holds an important lesson for countries across the world, including India, which is that the failure of governments to address economic inequalities will precipitate political and social turmoil. While Prime Minister Narendra Modi has been paying lip service to the need to reduce poverty and unemployment, there is no evidence so far to indicate that the businessfriendly policies that have been followed by his government will address the issues that are shaking the foundations of economies in different parts of the planet.
After the International Monetary Fund (IMF) and the European Union sought to “bail out” the government of Greece in a way in which it was supposed to revive the economy, exactly the opposite happened. In less than five years, Greece’s economy has been ravaged with national income shrinking by roughly a fourth and real wages coming down by a similar proportion. One out of three people in that country currently either lives — or faces the prospect of living — in poverty, unemployment and social exclusion.
As the new government in Athens fights against the imposition of so-called austerity measures and seeks the renegotiation of the country’s debt burden, it is certain to run into huge opposition, especially from Angela Merkel of Germany, the European Central Bank, the “eurocrats” in Brussels and, of course, the IMF. There is likely to be greater economic, social and political uncer- tainty across Europe. Only time will tell whether the 40year-old leader of Syrizia, Alexis Tsipras, was prescient when he recalled soon after his coalition’s success in the elections: “The Greeks wrote history”.
The future of the euro as a currency is again being questioned as is the contention whether it is at all possible, leave alone desirable, to attempt to bring about economic unity without political integration. These issues are not going to be resolved in a hurry. Meanwhile, thanks to the “triple dip” recession in Europe over the last six-anda-half years, the exchange rate of the euro vis-a-vis the American dollar has sunk to its lowest level over the last 11 years. Political formations on the right and the left are gearing up for bitter battles in countries such as Spain, France and the Netherlands.
Many analysts perceive the electoral outcome in Greece as a revolt by the youth against the rich elite. Greek oligarchs, especially shipping magnates, have occupied space in the popular imagination. Remember Aristotle Onassis, reportedly once the “richest man in the world”, who married Jacqueline Kennedy and courted opera singer Maria Callas?
The richest person on earth right now is Mexico’s Carlos Slim. A recent report by Oxfam calculated that if he decided to spend a sum of $1 million each day, it would take him as long as 220 years to spend his awesome personal wealth of $80 billion. The same report stated that the world’s richest 85 billionaires own wealth which is equal to what is owned by the poorest half who live on the plant. These billionaires increased their collective wealth by a mind-boggling $668 million every minute between March 2013 and March 2014.
The number of billionaires on earth has more than doubled since the Great Recession set in with the financial crisis of September 2008. During the period between 2009 and 2014, many countries across the globe sank into deep economic depression, with millions losing their jobs while the real incomes of others came down as governments cut spending on welfare schemes. India should not be moving in this direction. But the government here seems to be more keen on cutting expenditure on healthcare and employment generation than in improving the implementation of laws like the Mahatma Gandhi National Rural Employment Guarantee Act and the Food Security Act.
The Oxfam report found that inequality between countries had widened rapidly between 1980 and 2002, before narrowing slightly due to the rapid growth in China. But it said that inequality had risen within countries, so that seven out of 10 people lived in nations where the gap between rich and poor was greater than it was 30 years ago.
“Extreme inequality has exploded across the world in the last 30 years, making it one of the biggest economic, social and political challenges of our time. Age-old inequalities on the basis of gender, caste, race and religion — injustices in themselves — are exacerbated by the growing gap between the haves and have-nots,” the report said. “Oxfam’s decades of experience in the world’s poorest communities have taught us that poverty and inequality are not inevitable or accidental, but the result of deliberate policy choices. Inequality can be reversed.”
When this report was presented before the world’s rich at Davos, Switzerland, where India’s finance minister Arun Jaitley was present, all the tycoons nodded sagely. As did the bigwigs of multilateral financial institutions like the World Bank and the IMF. Some of the richest individuals, like Bill Gates and Warren Buffet, periodically talk of the dangers of extreme inequalities exacerbating tensions and creating conflicts. But little or nothing seems to be changing. If the Oxfam report is to be believed, the situation is worsening.
The anger and outrage of ordinary Indians against the previous government headed by Manmohan Singh for its inability to reduce food inflation is now common knowledge. India was always a country of contrasts, of yawning gaps in income and wealth. These have widened in recent years. It may be factually inaccurate to argue that the rich have become richer while the poor have become poorer. But what cannot be denied is that the speed at which the upper class in this country has become wealthier is very much faster than the pace at which the real incomes (after adjusting for inflation) of the poor have grown in recent times.
The Oxfam report rightly argues that “market fundamentalism” and the “capture” of political power by “elites” have contributed greatly to the rise in extreme economic inequality over the last three decades and longer. But India’s political leaders, corporate captains and influential bureaucrats seem blissfully unaware of the writing on the wall. Will they learn a lesson from Greece? Probably not. The writer is an educator and
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