A handful of families and dynasties preside over the destiny of the biggest conglomerates and three main political parties.
This narrow perspective significantly constricts the country’s leadership and strategic thinking acumen and its future prospects
The rise of globalization in recent decades has widened inequalities. The poor have become poorer and the rich have become super rich. There is a growing sum of economic research evidence which directly links globalization with the widening inequalities in the world. The crying conclusion among the multitude is that globalisation and widening inequalities have been detrimental to the economy and have eroded the standard of living of people.
The January 2017 Oxfam report released in the context of the World Economic Forum held in Davos shows that the widening gap between the rich and the poor is far greater than generally surmised. Oxfam highlighted that ‘eight men own the same wealth as the 3.6 billion people who make up the poorest half of humanity’. Seven out of 10 people live in a country that has seen a rise in inequality in the last 30 years. Between 1988 and 2011 the incomes of the richest 1 percent grew by 182 times that of the poorest 10 percent.
This yawning inequality is being fuelled by big business and the strategies of the richest to take full advantage of globalization and leverage their growing economic clout to influence government policies, obtain improved business facilitation measures and delocalize production in countries offering the most attractive incentives and competitive advantages. Globalization has also helped multinational companies opting to be domiciled in low tax jurisdictions to avoid paying their fair share of taxes, to further boost their wealth.
The endless craving for more
The ultra-liberal economic model which allows conglomerates to relentlessly accumulate more and more wealth unchecked at the expense of the people, a more inclusive society and a fairer distribution of the fruits of prosperity through the payment of decent wages to workers and fair prices to producers is untenable. There is growing evidence that globalization has concentrated the wealth in the world in fewer hands, increased poverty and eroded the standard of living and purchasing power of the middle class. The core object of socio-economic development has to be the people, their upliftment and the continuous improvement of their standard of living and well being. The prevailing model of development which favours the excessively rich few at the expense of the multitude is more and more widely contested in the world.
Donald Trump’s election slogan of ‘America First’ basically responded to the grievances of Americans against globalization, perceived as responsible for job losses, US factory closures, a mounting trade deficit and the delocalization of American businesses abroad. Trump is now using this slogan as a protectionist leitmotiv to ensure that all trade deals safeguard and put the interests of American workers and businesses first as well as create jobs in America. To this end Donald Trump has withdrawn the US from the Trans-Pacific Partnership and the Paris Agreement on climate change and has vowed to renegotiate NAFTA. Trump’s constituency wants the US to frame policies which encourage American businesses to invest in the United States instead of delocalizing abroad to improve their competitiveness and growth potential.
There is growing evidence across the world that inequalities continue to widen despite the government rhetoric to significantly reduce them and assure inclusiveness in line with ideals of fairness and equity. In France, for example, l‘Observatoire des inégalités flagged in its report last month that the rich are become richer and the poor poorer, that 10% of the richest earn some 27 % of total revenue, that 10 % of the richest own some 47% of total wealth, that men earn on average 34.6 % more than women, that about 18% of school drop-outs are children of workers.
For all instead of the few
We cannot have an economy that benefits only the privileged few at the expense of the multitude. We need to have an economy that benefits everyone and puts people at the centre of its development model and actions. An economy that significantly reduces inequalities and builds a fairer society for the benefit of all.
Mauritius is no exception. The dreams of the people at the time of independence to have a fairer, more inclusive and equal society anchored on the sacrosanct principles of equal opportunities for all and meritocracy have been thwarted from the outset by a watering down of ideals and ethics and political expediency.
Nearly 50 years after independence, the crying inequalities in the country are becoming worse. According to figures released by Statistics Mauritius in May 2017, nearly half (48.8%) i.e. more than 208,700 of the 427,700 persons employed in 2016 earned up to Rs 12,000 per month. This is below the median salary of Rs 12,200 for 2016. 2% of the employed or some 8,554 persons earned more than Rs 75,001 per month. In such a context, some (very privileged) earn about Rs 1 million per month.
Globalization has also caused some of the key players in, for example, the textile industry to delocalize their operations abroad. This is reflected in the worsening balance of trade statistics released recently. Delocalization and the Africa strategy pursued by Mauritius open opportunities for the local investing companies. It however also begs the question of the balance of tangible benefits for Mauritius. In short, what’s in it for Mauritius and its people?
The World Bank underlined in its February 2016 country report entitled Mauritius, Inclusiveness of Growth and Shared Prosperity that ‘owing to the rise in income inequality and lagging shared prosperity indicators, the incomes of the bottom 40 percentile of the population (the lower 40% income earners) of Mauritius have deteriorated in relative terms. There is a real risk that part of the middle classes could slip into poverty. This trend has to be reversed.
In contrast, there has been an enormous concentration of wealth in the country as well as a dynastic approach to politics. There seems to be an endless craving for more and more among the wealthy and the political leaders.
The snap sale of some 45.5 million shares representing 9.4% of the shares of New Mauritius Hotels Ltd (NMH), in swift mode at the close of business on 16 February 2016 to listed companies sharing common ownership and directors provides evidence of the endless process of concentration of wealth through the acquisition and control over prime assets. The deafening silence of the Stock Exchange of Mauritius and the regulators despite the many questions raised bearing in mind the mode and circumstances surrounding the snap sale is disconcerting.
In both the private sector and in politics, it basically boils down to a handful of families and dynasties presiding over the destiny of the biggest conglomerates and three main political parties. This narrow perspective significantly constricts the country’s leadership and strategic thinking acumen and its future prospects.
Wealth for a good cause
The greed for more wealth (or political power) can be insatiable. Why would anyone want to acquire still more wealth after amassing say US $20 million, enough to live lavishly and comfortably throughout his life? Some of the richest people in the world such as Bill and Melinda Gates and Warren Buffett, aware that it is pointless to accumulate massive wealth beyond a certain comfortable threshold, have committed to respectively give away half and 99% of their wealth during their lifetime. They have also set up the ‘Giving Pledge’ to encourage a growing number of the world’s wealthiest to donate a substantial portion of their wealth to support actions to empower people through better education, healthcare and opportunities to improve their quality of life and livelihoods. When will the extremely wealthy in the country adopt such a philanthropic and caring mindset towards less privileged fellow citizens?
There is a mounting anger against inequality and its adverse fallouts on the hundreds of millions trapped in poverty. There is also a growing revolt by the people against cuts to their health, education and social welfare services against a backdrop of eroding purchasing power whilst the super rich are dodging the payment of their fair share of taxes.
This simmering anger against inequality and globalization has been a driving factor in the election of Donald Trump, the Brexit vote and the outcome of general elections in the UK as well as the recent landslide victory of Emmanuel Macron and his party in France.
No society which privileges the few at the expense of the majority can survive. Widening inequalities have irked people. People are on a short fuse. There cannot be any way forward without an economic model which benefits everyone through gainful employment and fairer conditions of work, the safety net of a minimum salary, the fair sharing of the fruits of prosperity and land reform to enable every household to have access to land. It is time to work together to assure fair benefits for all and our shared prosperity.