What we observe on our roads in and around Colombo today is disturbing. Sleek motor vehicles costing anything between ten and twenty million rupees have become commonplace; on the other hand, entire families ride on rickety motor bikes exposing even small children to dust, toxic fumes, scorching sun or heavy rain.
People with money buy blocks of land in and around Colombo, clear even the last blade of grass, let alone the trees, and build three storyed houses leaving not even a foot to separate the house from the neighbour’s fence or wall. With inadequate natural ventilation, the owners usually install air conditioners to make the house habitable. These air conditioners pollute the micro-environment around house, making life miserable for the not-so-rich neighbours.
What is described above is indicative of the kind of social inequality that has emerged in the country over the last few decades. Economic liberalisation created opportunities for many people to make money and amass wealth, leading to conspicuous consumption among the affluent. This is not unexpected. Capitalist development leads to highly-unequal distribution of income and wealth unless the state imposes higher taxes and takes effective measures to redistribute income. Marx predicted social polarisation as an inevitable outcome of capitalist development but the rise of welfare states in much of the capitalist world in the latter half of the 20th century contained inequality within tolerable and reasonable limits.
The more recent new wave of capitalist development across the world promoted by neo-liberal policies is producing gross income inequalities not only within countries but also across different regions of the world. Emerging consumption patterns are indicative of such growing inequalities. Several decades ago, people talked about millionaires. Today we talk about billionaires even in countries like India and China where poverty has been the rule until recently.
Though billionaires have sprung up in these countries, poverty is still the biggest social issue there. Unlike in the early European capitalist societies where, accordingly to some historians, the wealthy were embarrassed about their unprecedented riches, the new rich today indulge in often obscene conspicuous consumption and display of wealth, no matter how they have accumulated their fortunes.
As it is well known, neo-liberalism radiated from the United States of America and spread across the world with the active support of global financial institutions. Though the orthodoxy faced some resistance in some of the European countries, the competition for global commodity and labour markets forced most capitalist countries to fall in line. Corporate taxes have been slashed to attract foreign investment, labour laws have been relaxed to cut labour costs and public investments have been cut back to contain budget deficits. Developing countries have followed suit by even declaring tax holidays for foreign investors and establishing free trade zones where casual and low wage employment is the general pattern. Recent tragedies in Bangladesh illustrate this clearly.
Economic liberalisation in Sri Lanka led to an increase in private sector employment relative to public sector employment. Yet, casual employment has increased faster accounting for about two thirds of the economically active population. Casually employed people do not enjoy many of the privileges of formal sector employment such as job security, fixed wages, paid leave, and retirement benefits. Their earnings fluctuate depending on a whole range of factors such as weather conditions and availability of work. It is due to these circumstances that most people prefer public sector employment. On the other hand, the same liberalisation policies have created opportunities for a minority to earn higher incomes by engaging in various activities largely due to an unprecedented expansion of the money supply in the country. While some of these activities are legitimate, others are shady. Bribes and corruption constitute a major source of income for many people that include some of the law enforcement officers, school principals and politicians. There are some people in all parts of the country engaged in overseas labour recruitment business. Those who provide various professional services such as lawyers, doctors, engineers, consultants and tuition masters, earn large sums of money. Private firms also pay very high salaries to higher managerial staff in addition to providing various other perquisites.
Rapidly-increasing incomes of a sizable minority of people, largely concentrated in urban centres have led to an unprecedented expansion of private consumption in such areas as health, education, transport, housing and leisure. International schools, private schools, private hospitals, high rise condominium complexes, luxury cars, five star hotels, etc. are manifestations of increasing private consumption. Those who rely on private institutions do not need publicly provided services such as public transport, government schools and public hospitals. On the other hand, low income groups have no choice but to rely entirely on these public services, irrespective of their quality. Yet, it is increasingly difficult to depend entirely on public services due to their deteriorating quality, particularly in rural areas. Hence the increasing demands for private tuition, private medical treatment, private transport, etc. All these put increasing pressure on low income groups, forcing them to earn higher incomes by migrating to urban areas or overseas.
Some resort to illegitimate means such as bribery, theft, robbery, extortion and commissions. Even poor villagers complain that some rural school principals demand money to admit their children. It is common knowledge that drivers are often compelled to pay bribes to police officers regulating traffic in all parts of the country.
Living under the conditions described above, many people, in particular those who are poor and powerless, feel that society is already dehumanised, that there is no social justice and that the government is either helpless or indifferent towards the prevailing state of affairs. Some do not have much hope and strive to leave the country in search of places where more decent living conditions exist. Others suffer in silence but find solace in places of worship. Still others explore possibilities to bring about change, either peacefully or violently.
It is by adopting sound, evidence-based public policies that some of the negative effects of neo-liberal policies can be ameliorated. Given the scarcity of public resources, the implementation of such policies would require some form of rationalisation of public expenditure based on a set of national priorities. This is too vast a topic that cannot be discussed here for want of space.
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