The imbalance between rich and poor is the oldest and most deadly evil of all republics.
—Plutarch, ancient Greek philosopher
In the current Covid-19 economic environment, the call of one of this country’s largest and most powerful corporations for the privatization of public assets brings to the fore the challenge of eradicating income inequality – a critical goal first stated in UNDP’s 2005 Sustainable Development Report. Development Goals (SDGs).
This is undoubtedly a lofty and ambitious goal, but what is clear is that significantly reducing income inequality is an essential prerequisite for achieving sustainable national development.
For Trinidad and Tobago, the first version of the UNDP SDG targets undoubtedly played a major role in the development of the Vision 2020 Strategic Plan, and the updated and modified version of the Vision 2030 was no doubt similarly informed by UNDP’s most recent publication in 2015.
In a sense, this specific SDG really speaks to the essential role of government as part of its economic responsibility, in that while it facilitates the growth of a thriving market and productive sector, meaningful opportunities must also be realized. for people in the middle and middle classes. low-income groups to participate and contribute to the emergence of a strong entrepreneurial class and the creation of quality and well-paid professional jobs. However, it appears in the face of laws and policies so heavily weighted in favor of the wealthy, including the enactment of a watered down procurement system, the Trinidad and Tobago Revenue Authority, gambling legislation chance and a policy of public-private partnership. and the lower income brackets have been effectively squeezed out and prevented from competing or participating meaningfully in the socio-economic development of our country. And with a score of 41 on the Corruption Perceptions Index (CPI) – which examines levels of corruption in the public sector and where, with a score below 50, a country is deemed to have serious corruption problems – the final blow was delivered by our Prime Minister declaring about a week ago that corruption was widespread in Trinidad and Tobago.
Privatization in principle has many advantages. This can reduce inefficiencies, caused by overstaffing and wastage or lack of maintenance of key assets, minimize political nepotism and presumably the country as a whole will reap the benefits of increased taxes paid by the private sector, their business expansion resulting in quality employment opportunities and increased upward mobility. This increased business class wealth will benefit all classes according to the trickle-down theory. Simply put, the theory first adopted by Milton Friedman states that tax breaks and benefits for corporations and the wealthy will trickle down to everyone.
However, the IMF warns that when the top 20% get richer, the benefits don’t trickle down. Instead, they argue that growth is increased by increasing the income share of the poor and middle classes. Dana Sookdeo, in a January 2021 Sunday Market Network article titled “Scraping the Surface of Income Inequality in Trinidad and Tobago,” noted that when trickle-down economics was implemented in the United States United in the 1980s, it resulted in the top ten percent. 100 of the population ends up earning 9.5 times more than the poorest 10% and up to 7 times more than the rest of the population
Lebanon—A cautionary tale
Lebanon, once called the Mediterranean of the Middle East, offers a cautionary tale of the very real potential for a socio-economic crisis where a country’s wealth and income are concentrated in a few hands. Many reasons have been given for the collapse of the Lebanese economy in which Lebanon ranked 193 out of 193 countries assessed by the World Bank.
According to the World Bank (WB), GDP fell by 21.2% in 2020 and a further decline of 10.5% in 2021, with the largest contraction at 58%, the largest among the 193 countries examined by the World Bank. World Bank. The value of silver has fallen by 90%; inflation has reached 145% since last year, with more than 70% of the population living in poverty.
On January 25, 2022, the WB did not mince words as to the reason for the total collapse of the Lebanese economy. He castigated the Lebanese ruling class for deliberately orchestrating one of the world’s worst economic depressions due to its self-imposed grip on resources, with no apparent concern for the survival of the Lebanese people. In the World Bank’s Fall 2021 Lebanon Economic Monitor, he noted that the elite has long captured the state and lives off its economic rents (the role of elite capture as a constraint to development), dividing the spoils while continuing to abuse its position despite Lebanon. suffering one of the three worst global financial crises since the 1850s. It should be noted that in 2014, the American University of Beirut reported that 29% of all banking assets were held by eight politically connected families. Ultimately, the World Bank concluded that Lebanon’s long-term stability and social peace were increasingly threatened by these exploitative practices. in one of the most unequal countries in the world, where millions more have been pushed into growing poverty and social exclusion. (See also CNN’s Fareed Zakaria video, “Last Look—Lebanon’s Collapse” at cnn.com.)
There is admittedly no one-size-fits-all solution to addressing income inequality, which is becoming a growing and concerning feature of Trinidad and Tobago’s economic landscape. We all need to take some responsibility for our current economic challenges. However, what is clear is that privatization of public assets is currently not the answer in the context of a CPI score of 41; the current suite of laws and policies that only appear to be accessible or beneficial to a tiny minority who make up the wealthy in this country. Government must do more to assume proactive and meaningful implementation of policies and projects that facilitate income accessibility for middle and low income sectors so that when we quote GDP per capita it reflects a more fair. of the wealth of our country.
—The author is a former