Let's Think

Inequality needs urgent attention, but fixation on the rich not enough

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Inequality of income has become an over-heated subject in South Africa, but the country is far from alone in its battle with this problem.

Statistics tells us that inequality of income is not restricted to South Africa or other developing countries like Brazil. Rich developed nations, in a comparative context, have income disparities on a similar scale.

In South Africa, according to a recent Oxfam report,  it is calculated that  the richest 1% of the population holds 42% of total wealth in the country.

However, in what is describe as a ”salary scandal,” in the relatively rich and developed Australia, it has come to light that the top 1% of that country’s earners have as much wealth as the bottom 70%. Only two of them own more that the bottom 20%.

Interestingly, like often also in South Africa, the Australian “scandal” revolved around the income of an executive of a government-owned corporation.

Same arguments 

It is also noteworthy that much of the arguments surrounding the seeming exorbitant

remuneration of executives, remain the same, wherever or whenever thy develop.

In the case of the salary of Australia Post’s CEO, Ahmed Fahour, prof. Carl Rhodes of the University of Technology in Sydney writes: ”Overindulgent executive salaries are usually rationalised with vague arguments that eschew responsibility. Managers and their PR minions harp on about the need to compete for global talent.”

This is an argument all too often also heard in South Africa too when the sky-high salaries of top executives come under the spotlight.

At the same time, while it is claimed that these salaries are “in line with market practice”, it is conveniently forgotten that, while pure free market advocates consistently claim it to be the most cost effective economic system, it in this case pushes up cost to customers. 

And, the way the Australian furore developed, also proved that South Africa is not the only country where the “race card” is readily played.

A leading Australian financial publication reported: “Australia Post has been forced to defend the multi-million-dollar salary it paid its boss after receiving a barrage of online abuse, some racist, from livid customers.” (Our emphasis.)

Australia Post’s chief executive happens to be an Australian of Indian extraction. One post on social media read: “I don't want no terrorist having my address. Who let a terrorist-funding Muslim run Australia Post?"

Another post, which should ring quite familiar to South Africans, from someone with the surname “Kemp, suggesting that he might actually be an ex-South African, reads: "I'm absolutely disgusted that your CEO, Ahmed Fahour, is being paid nearly 5.6 million a year. Of our money… Give us back our money!" (Our emphasis.)

Inequality in history

A recent report by the US publication The Atlantic, analysing the phenomenon of wealth and income inequality, comes to the conclusion that:  “Inequality has been written into the DNA of civilization ever since humans first settled down to farm the land.

“Throughout history, only massive, violent shocks that upended the established order proved powerful enough to flatten disparities in income and wealth. They appeared in four different guises: mass-mobilization warfare, violent and transformative revolutions, state collapse, and catastrophic epidemics. Hundreds of millions perished in their wake, and by the time these crises had passed, the gap between rich and poor had shrunk.”

Of the these “shocks” that at the present, and particularly in South Africa, have the potential to “flatten disparities in income and wealth” is “violent and transformative revolution.”

We think

We think, this suggest that globally, and particularly in South Africa, leadership should, rather than being fixated on the rich, work on practical plans and programmes to ensure an acceptable quality of life for all stratifications of society a whole.

In August, 2015 we, on the issue of inequality posed the question: ”Is inequality the ‘big bad wolf’ or the natural order of things?”

We then concluded: “Reality is a lot more nuanced and extremely more complex than the notion that some people are poor because others are rich.”

More than ever, we think over-simplification of this extremely complex issue is the biggest threat to economic and social stability – domestically and globally.

by Steve Whiteman

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