Saturday, 16 December 2017

Some very unfortunate results of growing income and wealth inequality in the USA in past three to four decades; Few observations of mine about India in this regard

This post was triggered by this Guardian article: A journey through a land of extreme poverty: welcome to America, https://www.theguardian.com/society/2017/dec/15/america-extreme-poverty-un-special-rapporteur, 15th Dec. 2017

This journey is that of a UN monitor on human rights who is making a fact-finding study over two weeks of extreme poverty in the USA, the richest country in the world today, and perhaps in the history of the world!

The article claims that USA wealth and income inequality is already the "most extreme" in any industrialized nation in the world, referring to a Stanford University, Center on Poverty and Inequality document titled, "State of the Union";"The Poverty and Inequality Report 2016", http://inequality.stanford.edu/sites/default/files/Pathways-SOTU-2016-2.pdf.

Also see the US Bureau of Labor Statistics produced graph here: https://commons.wikimedia.org/wiki/File:US_productivity_and_real_wages.jpg, showing that while productivity kept increasing from 1945 to around 2011, the real wages of goods-producing workers rose in tandem only from 1945 to sometime around 1972/73. From 1972/73 till around 2011, very extraordinarily, while productivity of major sectors in the USA continued to rise, the real wages of goods-producing workers did not grow (the graph plot is more or less flat for this period)!

The Guardian article also states that three men in the USA - Bill Gates, Jeff Bezos and Warren Buffet - own "as much as half of the entire American people". Note that Bill Gates and Jeff Bezos are tech entrepreneur guys (Microsoft and Amazon being their major tech companies respectively) while Warren Buffet is an investor. It should also be said that Bill Gates is a very big philanthropist today with his philanthropy having worldwide impact and recognition. Perhaps Jeff Bezos and Warren Buffet too utilize significant portion of their wealth for philanthropic activities - I don't know about this aspect of their lives.

A small paragraph from the Guardian article is given below:
California made a suitable starting point for the UN visit. It epitomizes both the vast wealth generated in the tech boom for the 0.001%, and the resulting surge in housing costs that has sent homelessness soaring. Los Angeles, the city with by far the largest population of street dwellers in the country, is grappling with crisis numbers that increased 25% this past year to 55,000.
--- end small paragraph from Guardian article ----

Ravi: I think this surge in housing costs in particular, and cost of living in general, is the very scary part of growth of wealth in cities and surrounding areas. I have experienced that in my life in Mumbai and surrounding areas where I lived the first four decades of my life (till 2002). But somehow, democracy in Maharashtra state (Mumbai is capital of Maharashtra state) and Mumbai and surrounding areas municipalities have found a way to provide some paths to lower middle class and middle class (working) people in such areas to buy either state-subsidised low-cost housing  or using govt. subsidized housing loans to buy homes. [For details, see https://mhada.maharashtra.gov.in/, "MHADA is an apex public body constituted under MHAD ACT 1976, established in 1977 under Housing Department Government of Maharashtra and integrated the activities and functions performed by statutory bodies to provide comprehensive, co-ordinate approach to the problems of housing." and https://en.wikipedia.org/wiki/National_Housing_Bank, "National Housing Bank (NHB), a wholly owned subsidiary of Reserve Bank of India (RBI), was set up on 9 July 1988 under the National Housing Bank Act, 1987. NHB is an apex financial institution for housing. NHB has been established with an objective to operate as a principal agency to promote housing finance institutions both at local and regional levels and to provide financial and other support incidental to such institutions and for matters connected therewith."]

I am not saying that during my life in Mumbai and surrounding areas (till 2002) that housing was easy. But for hard-working lower middle class and middle class people there were some options that worked out over years. Of course, the solutions were typically small apartment flats (and NOT individual houses) but that was fine as most people in Mumbai, except the very rich, lived (and, I am quite sure, still live) in apartment flats.

Cheap options for food and clothing were available to the poor and lower middle classes. Right outside the biggest railway station (terminus) in Mumbai, Mumbai CST (earlier known as Mumbai/Bombay VT), was a big Jhunka Bhakar stall serving local Maharashtrian fare of Jhunka Bhakar as well as Bhaji Pav, at affordable prices for poor and lower middle class people (though not extreme poverty people as they needed some money to buy the food). As a college going student in a family that was having significant financial challenges, I have eaten many times at this Jhunka Bhakar stall in the late 70s and early 80s. I think this stall had govt. subsidies that enabled it to sell food at low cost. Low cost clothing were available in roadside shops. [This article in 2012 states that the Jhunka Bhakar stall was shut down in 2012: https://timesofindia.indiatimes.com/city/mumbai/50-paisa-jhunka-bhakar-stall-shuts-shop/articleshow/12916086.cms. A small extract from the article: "Authorities say the stall is a front for a commercial restaurant, and another extension would be irregular in the absence of fresh tenders. They are likely to initiate a proper bidding process for the site." Ravi: So perhaps the management got into commercial greed and so the govt. wanted some changes. Don't know what the picture is now.]

So life in Mumbai was not bad for lower middle class working people. I think the state and municipal government bodies played a vital role in ensuring this.

Today in cities like Chennai and other areas of Tamil Nadu state we have Amma food canteens, https://en.wikipedia.org/wiki/Amma_Unavagam, which are government subsidised low cost food outlets [somewhat like the Jhunka Bhakar stall I mentioned above]. This concept seems to have caught on with other states in India trying to replicate it. Andhra Pradesh state in which I live has also started its govt. subsidized food canteens though I don't know how many such canteens are running today. For more see http://www.hindustantimes.com/india-news/inspired-by-amma-naidu-launches-anna-ntr-canteens-in-andhra/story-ygWrezPW4SkdTf0ovhggnJ.html.

Given all this happening in some Indian states, I am disappointed to see that one of the richest states of the USA, namely California, home to Silicon Valley which has created great wealth for techies and tech investors through their awesome tech. innovations, seems to have not been able to cater to their poor who are willing to work if given a chance. Down-and-out people with serious problems like drug or alcohol addictions or serious health issues are far more challenging scenarios to handle. The Guardian article does mention that some of the homeless the UN monitor encountered do face these drug and alcohol addiction problems.

The Guardian article mentions St. Boniface church in San Francisco helping the homeless and has a pic of the homeless sleeping on church pews/benches. That is wonderful and inspiring.

The UN monitor Mr. Philip Alston is quoted in the article as saying, “My role is to hold governments to account” .. “If the US administration doesn’t want to talk about the right to housing, healthcare or food, then there are still basic human rights standards that have to be met. It’s my job to point that out.”

I am quite sure that Mr. Alston's reports about poverty in India would be much starker and challenging as India is a much poorer country (a developing country) as compared to USA. But the point is that for a country that is as rich as the USA, it needs to do more for its poor and lower middle classes. Indian democracy forces its elected government representatives to put welfare schemes for the poor and lower middle classes as a very important part of their governance. If not, they would simply get voted out of power in the next elections, and also have to face the fury of the poor and lower middle classes whenever they visit their areas. The poor and lower middle classes of India, who form the majority of the voters, know the power of their vote now, seven decades into Indian independence and democracy, and will not continue to support political parties who make significant cutbacks into their welfare schemes (some reorganization would be tolerated but not an overall and significant cutback). An important exception to this is a financial/economic crisis, https://en.wikipedia.org/wiki/1991_Indian_economic_crisis, like the one India faced in 1991, at which time almost all, if not all, political parties would understand the need to do drastic reform/change to put the country's economy and finances back in good shape. Austerity/welfare spending cuts would be tolerated at such times.

[I thank theguardian.com, maharashtra.gov.in, wikipedia and indiatimes.com, and have presumed that they will not have any objections to me sharing the above small extracts from their website on this post which is freely viewable by all, and does not have any financial profit motive whatsoever. Also, please note this post is about getting society to better serve the poor.]

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