Real peo­ple and ac­tual things

Un­earned wealth creates havoc in the global econ­omy. It’s a far cry from how the UAE’s In­dian bil­lion­aires made their money

Arabian Business English - - FIRST WORD -

THE UK’S HOUSE OF COM­MONS pro­duced a re­port ear­lier this year with a re­veal­ing statis­tic: if trends since the fi­nan­cial crash con­tinue, one per­cent of the global pop­u­la­tion will pos­sess 64 per­cent of all wealth by 2030.

This is the di­chotomy of the 2008 cri­sis. A cat­a­clysmic event that re­sulted in lost growth of over $10tr should have led to a re­think about the vi­a­bil­ity of the en­tire sys­tem. But in­stead it re­sulted in the wealth of the world’s rich­est one per­cent grow­ing at six per­cent a year since then, com­pared with three per­cent for the re­main­ing 99 per­cent.

Wealth in­equal­ity is a vastly com­pli­cated sub­ject, of course. Even ex­perts such as Thomas Piketty, au­thor of Cap­i­tal in the Twenty First Cen­tury, are much bet­ter at de­scrib­ing the prob­lem than they are at pre­scrib­ing a cure.

In­vented wealth

But one un­doubted is­sue is the rise in un­earned wealth. Our fi­nan­cial sys­tem is now so com­plex and opaque that vast amounts of money can seem­ingly be plucked out of thin air.

The re­sult is that if you are al­ready wealthy, then it is very pos­si­ble to make al­most unimag­in­able gains thanks to the speed of the mar­kets and the abil­ity to move money across ju­ris­dic­tions, un­moored from any tan­gi­ble as­set, tax in­spec­tor, govern­ment or reg­u­la­tor.

I would say good luck to those for­tu­nate enough to be in that po­si­tion. But as we know from 2008, when the mu­sic stops and the too-bigto-fail in­sti­tu­tions are left hold­ing the debt par­cel, it’s the lit­tle peo­ple who suf­fer.

In Amer­ica, for ex­am­ple, the net worth of the work­ing class de­clined 34 per­cent from 1998 to 2016. You might not think that is rel­e­vant to the Mid­dle

East, but their protest votes gave us a pres­i­dent called Don­ald Trump. There are far-reach­ing con­se­quences to poor peo­ple get­ting poorer.

And closer to home, we need hardly talk about the dis­as­trous con­se­quences of the Arab Spring, which be­gan with a poor Tu­nisian fruit ven­dor, Mo­hamed Bouaz­izi, set­ting him­self on fire in re­ac­tion to the govern­ment es­tab­lish­ment.

From the ground up

This might seem like a strange way to in­tro­duce a col­umn about our lat­est In­dian Rich List, but there is a se­ri­ous point to be made. The vast ma­jor­ity on this year’s roll call are self-made men. In fact sev­eral of them, such as Yusuf­fali MA, started out with vir­tu­ally noth­ing. The Lulu Group founder was pen­ni­less when he came to the UAE in 1973 on a small boat to work in his un­cle’s tiny dis­tri­bu­tion com­pany. His com­pany now has a turnover of $7.4bn and a work­force of 46,000.

Dr Ravi Pil­lai, mean­while, set up his first busi­ness aged just 14. His con­glom­er­ate now spans con­struc­tion, in­fra­struc­ture, re­tail, hos­pi­tal­ity and health­care.

Rizwan Sa­jan was forced to flee Kuwait amid the Iraqi in­va­sion. He worked for his un­cle be­fore es­tab­lish­ing a vast bro­ker­age buy­ing and sell­ing build­ing ma­te­ri­als. Sunny Varkey’s par­ents were both teach­ers who trav­elled to Dubai in 1959 seek­ing a bet­ter life. Dr Dhanan­jay Datar was so poor that he walked bare­foot to school.

Read through the list and you’ll also see that these men are run­ning old-school in­dus­tries. These range in ev­ery­thing from food­stuffs and chem­i­cals to in­dus­trial equip­ment and lo­gis­tics – and of­ten in fron­tier mar­kets that present chal­leng­ing con­di­tions. They are com­pa­nies that, taken to­gether, em­ploy hun­dreds of thou­sands of peo­ple. Of course, many of them have diver­si­fied into new high-tech seg­ments, but the bedrock for their suc­cess is still founded on real peo­ple and ac­tual things rather than dis­tant al­go­rithms or spec­u­la­tive trades.

So even though this col­umn started off by rail­ing against global in­equal­ity – and bear­ing in mind the to­tal wealth of this year’s 20 rich­est In­di­ans in the UAE surpasses $50bn for the first time – I con­grat­u­late them on their suc­cess in con­tribut­ing to the de­vel­op­ment of this re­gion. Hard work and old-fash­ioned busi­ness smarts got them to where they are to­day. Good luck to them all and may they en­joy their suc­cess.

IN AMER­ICA, THE NET WORTH OF THE WORK­ING CLASS DE­CLINED 34 PER­CENT FROM 1998 TO 2016. THEIR PROTEST VOTES GAVE US A PRES­I­DENT CALLED DON­ALD TRUMP”

There is money to be made Stal­lion Group chair­man Su­nil Vaswani had seen the huge op­por­tu­ni­ties for in­vest­ment in the African con­ti­nent

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.