Capitalism and inequality

First a disclaimer from my side, I am a capitalist and I do believe that capitalism is the best economic system we have today, all other options like socialism and communism are much worse. However, this does not mean that I am not receptive to any criticism of capitalism. Rather, I think capitalism, in its current form, needs a lot of work and it also needs to evolve with time to suit the needs of changing socioeconomic situations. Increasing inequality is one of the most common and valid criticisms that capitalism cannot ignore. It is hard to explain, why women are paid less than men for doing the same work, and how in the same society, some people have so much that they don't know what to do with their resources, and some struggle even for the basic necessities of life. 

Inequality was common in ancient times when royals used to live a filthy rich life and many of their subjects used to struggle for basic needs. The royals benefited from the sweat and blood of their subjects and were rarely cared to elevate the social status of the working class. I believe we have moved away from those times, and I hope most readers will agree. I also know that socialism and communism, or any other system do not have answers to this problem, but I expect capitalism to do better than them and look for some solutions to tackle increasing inequality. Also, this is not a theoretical discussion for the sake of discussion. It sucks to struggle for money. I was on the other side, I have experienced what it means to live where money is scarce and the root of all your problems. The income gap is not just an economic issue, it becomes a social and law and order issue if not taken care of.

Until I moved to the USA, I lived in a poor neighborhood in India. Resources have always been scarce and demands were more. I remember that most of the arguments between my parents were about money, almost every problem could be traced to the lack of money. I did not realize back then that it was a structural problem, my parents were trying their best, and they worked really hard, but even after all their efforts, there was not enough to live comfortably. Even buying a tape recorder or a blender was not possible for us for many years. It seems we were trapped in a poverty trap, no matter what we did there was no way out. In our neighborhood, there were households where everyone worked, irrespective of their age and education. Even alcoholic adults and kids of all ages used to do some work that fetched some money, but they were still poor. Back then India was a socialist country and the government controlled almost everything, still, poverty and hunger were rampant, and socialism clearly didn't eliminate or even reduce poverty. There was neither enough wealth generation nor proper wealth distribution.

In most developed countries, income inequality is not the result of poor wealth generation, but a wealth distribution problem. Capitalism does a great job in wealth generation but seems to be failing miserably as far as wealth distribution is concerned. When I say wealth distribution, I am not talking about government handouts. I am not talking about so-called freebies by the government irrespective of any need or due diligence. Any populist scheme launched without proper data and due diligence is an invitation for an economic disaster. In any democracy is easy to launch beneficiary schemes, but it is extremely difficult to withdraw them as there are consequences like losing an election. 

Disparate wage structure is a glaring problem with capitalism. Proportional incentives at every level are not part of the existing pay structure. The short-term gain takes precedence due to high personal rewards to executives. Nonsustainable perpetual growth to increase stock prices has become a norm, and rewards of any market success are disproportionately distributed. True, the markets should decide the compensation, but where is the bargaining power with the workers to negotiate? The big fish eats the small fish leaving only a few big players that control and dictate the market. Competition is a hallmark of capitalism, but the presence of just a few big players and a tacit understanding between them hardly create any competition. The hourly rate of any CEO is orders of magnitude higher than the hourly rate of any temporary employee. Health coverage offered to lawmakers at the cost of taxpayers' money is much much better compared to the health coverage of many citizens who work as hard as these lawmakers. It is widely perceived that business and morality do not go together. Why can't we make money and also do the right things? Why can't we increase the stock prices and distribute the income fairly? Why can't there be job stability as well as income growth? Why can't a woman get the same salary as a man for the same work? These are some of the questions for which capitalism has to provide solutions, blaming everything or leaving everything to market is not enough anymore as it is clearly not working. I hope upcoming leaders will address these issues. While being profitable, they won't hesitate to do morally right things. If capitalism remains silent about these issues, then it has no right to complain if the society leans towards socialism, after all, if you don't offer any solution people are free to consider other options. It's not too late, capitalism can address the inequality issue, the only question is does it want to?

Thank you for reading and please share your views on this topic. 

© Vinay Thakur, All rights reserved, Vinay can be reached at thevinay2022@gmail.com  

Romanticizing poverty

"Poor people are happier," "There is more empathy and compassion among the poor compared to the rich," or "Money can't buy happiness." There are many such statements that either romanticize poverty or vilify wealth. I feel both, either romanticizing poverty or vilifying wealth, are gross generalizations. People who romanticize poverty or try to paint its rosy picture normally have never been poor in their life, or if they were, they are no more living in poverty. Most who tell rosy stories about the benefits of being poor definitely won't leave their comfortable life and live among the poor if given a choice. Of course, there will be some exceptions, but this is my general observation. It is true that money can't buy you happiness but it can give you access to resources and that's the whole purpose of having money and poverty robs your access to these resources.

I can tell from my personal experience that being poor is no fun, and no one stays poor by choice. Also, there is a difference between living a simple life and being poor. Living a simple life is a matter of choice, a simple person chooses not to use or exploit the resources that we have, but in poverty, there is no such choice, as there is no access to resources in the first place. Poverty not only affects your economic state, but it also affects your social and mental state. Many times it dictates your choices and makes you feel helpless, targeted, and angry. These feelings of helplessness and anger can manifest in many different ways. Poverty affects our personal choices, and it limits our personal and professional growth. At the same time, poverty teaches you how to deal with a lack of resources. How to live with limited access to critical resources like food, education, healthcare, shelter, and some basic enjoyment like watching movies and stuff like that. Poverty affects the entire family, kids get affected differently compared to adults and there are different effects on genders depending on the culture and society where we live. This does not mean that people living in poverty never ever feel moments of happiness. As kids, we had our moments of joy, but to generalize or paint them as a life of fun and exuberance would be a gross and unjust exaggeration. Among those rare and precious moments of joy, there are moments of extreme pain and helplessness. It is no fun to watch someone being addicted. There is no fun to watch daily physical, verbal, and sexual abuse. There is no fun to watch people dying due to a lack of decent healthcare. There is no fun to watch kids drop out of school to support their families. There is no fun to watch kids getting entangled in vicious circles of crime and addiction. And it is no fun to know that this vicious cycle will keep on repeating unless we as a society can take conscious and deliberate steps to intervene. 

Some think that poor people are poor because of their faults, laziness, or lack of effort. This is a very ignorant and superficial view. As I already mentioned, no one remains poor by choice, most living in poverty try really hard, to the best of their capabilities to come out of it, but their path is riddled with many hurdles that are difficult to understand for anyone who has not lived or experienced poverty. Looking from the outside, it's easy to find faults or provide some unpractical or ignorant solutions. One simple example is related to education. There is data that shows there is a gap between the academic performances of students coming from different socioeconomic backgrounds. Students coming from well-to-do families perform better compared to students coming from underprivileged families. Based on this if someone concludes that students from well-to-do families are more intelligent or more hard-working compared to students coming from underprivileged families, it will not only be wrong but also a socially devastating conclusion. Accessibility to resources is a huge factor in this. Factors like having enough space at home to study, enough quality food to eat, access to books, access to mentors, access to pay time or free time (yes, kids need that, they are not machines to study day and night), and a supportive peer group, they all contribute to the success of any student. As long as we don't understand the impact of each and every factor on the socio-economic development of underprivileged families we are neither going to understand their problems nor going to offer any viable solution. 

In many societies, poverty has a direct correlation with race or caste. This is the result of years of suppression and discrimination. This cannot be denied, historical facts and data both support this. People to refuse to accept this are either living in denial or are ignorant or are racist or casteist. This is not a perfect correlation, it's not a mathematical formula, but it is very clear. Therefore, equity and equality both matter equally. Our social and educational programs need to focus on equity as much as they focus on equality. There is no harm or shame in recognizing our privileges and acting accordingly. Being privileged is not wrong or anything to be ashamed of, but not recognizing it and behaving as if others who don't have access to the same resources should compete with us on the same level only shows our ignorance and lack of social sensitivity. Let's be more sensitive and compassionate towards each other. Let's try to understand each other's struggles, acknowledge the difficulties we all face, and try to help each other. Let's try not to look at everything from a political or religious angle. Let's try to be more compassionate humans.

Thank you for reading and please share your views about this topic.