To protect democracy, remove inequality
Earlier this month, the American President, Joe Biden, invited 110 world leaders to participate in a virtual summit to discuss democracy. The meeting was part of his attempt to stem the rise of authoritarianism and demonstrate that democracy does deliver. In his speech, Biden warned about the impact on democracy of “autocrats [who] justify their repressive policies as a more effective way to address today’s challenges.” Those autocrats draw much of their support from their countries’ inequality. The poor resent the gap between them and the prosperous.
In his speech, Prime Minister Narendra Modi described Indian democracy as “a story of unprecedented socio-economic inclusiveness in all spheres.” However, The World Inequality Report, published by The World Inequality Lab at the same time as the summit, described India as “a poor and very unequal country with an affluent elite.” According to the report, India is one of the most unequal countries in the world in economic terms. But two of its fellow BRICS countries — Brazil and South Africa — are found to be even more unequal.
Inequality is not just a problem for developing countries. The world’s two largest economies, the United States and China, suffer from it in roughly equal measure. America’s inequality is more significant than any of the other G7 rich nations, the world’s wealthiest nations, and the level of inequality is still rising. It is a significant cause for the rise of Trumpism. The Chinese leader, Xi Jinping, has warned that his country’s wealth gap is not only an economic but also a political issue, and could threaten the Communist Party’s legitimacy. In Britain, resentment at inequality fuelled Brexit, the campaign to leave Europe. Joblessness in the deprived areas of the north of England, traditionally almost a no-go area for Boris Johnson’s Conservative Party, won the last election for him.
For all the evidence that inequality is a threat to democracy, some economists argue it is not a priority. They say concern about inequality diverts attention from the prime task of ensuring that everyone is provided with the necessities for living a full life. There is a saying: “A rising tide lifts all boats.” But then why do some boats lift more slowly than others? The tide argument is that achieving Gross Domestic Product growth is the overriding necessity for economic development and that considerations like growth for whom and growth at what cost, for instance, environmental cost, are very much secondary issues.
What can be done about inequality? That seems to be a riddle no one has yet solved. America has tried the market and private ownership route. Although China has had decades of pro-market reforms, the State remains heavily involved in the economy. In both countries, severe inequality persists. Income redistribution through high taxes has been tried, but has been found to drive away investment, stifle growth, and encourage corruption. Welfare certainly helps those who receive it, but it does not make them more equal.
India would be a more equitable country if the barriers to social mobility erected by caste, religion, social status, ethnicity, and sex were lowered. Governments should realise their limitations in achieving this and seek advice and help from civil society. But recently India’s national security adviser said: “The new frontiers of war — what we call the fourth-generation warfare — is the civil society”. A leading member of civil society described this statement to me as “declaring war on your own people”. To protect democracy, the war should be against inequality. Biden’s summit has made it clear that democracy must be seen to deliver greater equality if it is to win the battle against authoritarianism.