Does the richness of the few benefit us all?

Nicole Curato

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27 years since the World Economic Forum was first held, the state of the world is far from improved

Every year, 2,500 of the world’s wealthiest chief executives, political leaders, royalty, intellectuals and celebrities meet in the Swiss Alpine town of Davos for the World Economic Forum (WEF). 

The WEF is often described as an “elite jamboree.” It is a “velvet rope club” of a by-invitation only delegation who can spend US$70,000 to be in the world’s most expensive gathering. The weeklong event is conceived for politically and economically influential people to develop a global agenda that can “improve the state of the world.” 

Twenty-seven years since the WEF was first held, the state of the world is far from improved. On the contrary, delegates of this week’s meeting are made to face the ugly reality of increasing levels of global inequality. WEF’s annual assessment of risks warns leaders of widening gaps between the richest and poorest people of the world. These gaps, the report states, weaken “social cohesion within countries, which threaten political stability.” 

This is hardly new information. In 2000, the World Institute for Development Economics Research reported that 10% of the world’s richest adults owned 85% of global wealth, while the bottom half owned 1%. On the eve of this year’s WEF, Oxfam released a report revealing that the bottom half of the world’s population owns as much as the richest 85 people in the world. As global plutocrats acquire sprawling estates in private islands, 1 billion people – a third of the world’s urban dwellers – live in slums. 

These global realities are felt in the Philippines. 

Data from the National Statistics Office show that families in the country’s richest decile earn 10 times more than families from the poorest decile. Put another way, a poor family’s annual income is almost equal to a rich family’s monthly income. The combined wealth of the country’s 40 richest families increased over 40%, accounting for the bulk of the national income’s growth. Viewed this way, it is unsurprising that in spite of the Philippines’ supposedly strong economic performance, poverty rates, unemployment and self-rated hunger remain unchanged. 

The ideology of inequality

A serious discussion on the morality of inequality is warranted. How can some have so much while others have so little? What justifies a CEO making 380 times the salary of an average worker? Do rich families work 10 times harder than poorer families to justify their income? Does the richness of a few benefit us all? 

Some have justified inequality on the grounds that those who contribute more to the economy – the so-called “job creators” – deserve more financial reward. Their income is their prize for taking the risk of investment and ensuring employees have jobs. But, as Joseph Stiglitz points out, the men who brought the global economy to the brink of collapse are the same people who walked away with millions of dollars. Top executives of big businesses in both the Philippines and abroad are now rewarded not for securing jobs but for squeezing wages of contractual workers and declaring hoards of employees redundant.

Often, these practices are justified by invoking the principle of meritocracy. Those with talent and specialized skills deserve a secure and highly-paid job in a competitive workplace while those performing “non-essential tasks” are left behind. 

The trouble with meritocracy, however, is it only works if everyone starts on an equal footing. This is rarely the case.

We live in a society where opportunities for prosperity are rigged in favor of those who are already privileged. Parents of rich children engage in an “educational arms race” by investing in expensive primary education, private tutorials for exam-taking in prestigious universities and other enrichment activities that allow their children to get ahead in life. This produces a “diploma gap” where privileged kids acquire skills and resources that give them a head start in the workplace while children born in underprivileged families – those whose parents need to take out loans to pay for school fees – are left with almost zero fighting chance to get a ticket to a good life. 

There is something morally bankrupt when economically vulnerable citizens are considered undeserving of job security and respectable wage, particularly when their “unskilled” labor is undervalued for the sake of executives’ exorbitant paychecks. And, interestingly, these are the same people disparaged for voting traditional politicians, as if they have immediate access to alternatives to politician-sponsored scholarships and free breakfasts from patronage-inspired feeding programs.  

At the heart of the issue of inequality is a social judgment – a scorecard on human decency – on how we, as a society, are willing to support a system that gives privileged citizens the economic freedom to buy designer coffee and luxury cars while systematically depriving our fellow human beings from living a decent life and having a fair shot at a good life. 

What can be done?

Numerous alternatives have been put forward by activists, non-governmental organizations and progressive scholars to put an end to this global trend. One concrete alternative is the campaign for a living wage. This means paying wages that meet the basic cost of living which goes beyond the legally required minimum wage. A living wage enables workers to address basic needs including shelter, clothing, food, transportation, healthcare, education, retirement savings and some form of recreation. This also gives workers the political freedom from patronage by addressing their economic vulnerabilities.  

The campaign is based on an ethical principle that an honest day’s work should be rewarded with enough wages to live a decent life. It recognizes the interconnectedness of labor – that professionals are able to fulfill their jobs because there are cleaners, caterers, nannies, drivers and messengers who ensure the smooth functioning of their lives at home and at work. It acknowledges that increasing profits should be fairly shared by all those who contributed to its success instead of concentrating profits to a few. A handful of companies have heeded the call of paying living wages and made a compelling case for other businesses to do the same.  

Some advocate scaling up current policies of wealth redistribution through conditional cash transfers (CCTs) and human capacity building programs as means to address the poor’s economic vulnerability. These interventions may have noble intentions but, as recent research shows, these have no impact in dismantling an economic regime that supports unfair pay structures – a regime that says a hardworking sleep-deprived bank executive is 10 times more deserving of a wage than a hardworking sleep-deprived toilet cleaner working two shifts. Assuming CCTs produce a workforce of healthy and well-educated citizenry, what happens to them when they enter the workforce only to be paid a meager wage? 

It is very difficult to take the WEF or other elite-only forums seriously. No reasonable spectator expects a gathering among business and political leaders to create meaningful changes that compromises their position in the global economy. Without serious commitment from the world’s elites to restore workers’ dignity by giving them a living wage and restoring fairness in society, London Mayor Boris Johnson’s description of the forum remains most accurate – the WEF is nothing more than a “constellation of egos involved in massive orgies of mutual adulation.” (Note: The title of this piece is borrowed from Zygmunt Bauman’s book published in 2013.) – 

Nicole Curato is a sociologist from the University of the Philippines. She is currently a post-doctoral research fellow at the Centre for Deliberative Democracy and Global Governance at the Australian National University. 

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