By Mark DaCosta -The experts call it economic inequality; most of us know it as the gap between the rich and the poor. Whatever label we put on the problem, one knows that one means the difference between the resources controlled by the rich and whatever is available to the poor. Guyanese are well acquainted with this issue; a person standing on Regent Street would see the many tinted Prados of the rich driving past homeless people sleeping on cardboard on the sidewalks. And, the average Guyanese would agree that the gap is widening; economic inequality is increasing; the rich are getting richer while the poor get poorer.
This article serves to highlight the issue not to solve it. Solving the problem is the job of the people who are paid huge salaries with taxpayers’ money, and occupy the corridors of power.
Experts say that there are two types of economic inequality. Vertical inequality is the gap between the richest and poorest in a community. For example, the Pradoville people and the homeless Guyanese on the pavement. Horizontal inequality is the gap between poor communities and rich ones. For example, coastal communities are generally richer than hinterland villages. Experts say, too, that the decisions, policies, and programmes of a government is the biggest single determinant of how resources are distributed.
Guyanese know that there are two Guyanas. People in rich Guyana do not need to worry about paying the rent because they live in their own mansions and drive Prados. They consult expensive private doctors. They don’t worry about blackouts because they have automatic generators. And generally, those people don’t have to worry about obeying laws because they are close to the ruling clique. Those people can do anything; they can even rape poor teenage girls and nothing will happen to them.
On the other hand, there are the rest of Guyanese – poor people – who struggle daily to make ends meet.
Experts say that the reason that the gap is widening is because income on investments is always higher than general economic growth. And because rich people have investment portfolios – but poor people do not – no matter how fast any economy grows the rich people will always benefit the most unless affirmative action is taken to tackle inequality.
This extraordinary discovery was first definitively proven in 2013, when French economist Thomas Picketty rocked the economic world with his book entitled, “Capital in the 21st Century.” The book became a New York Times best seller. To prove his idea, the economist used and analysed painstakingly-collected data for the past 250 years.
The affirmative action of which economists speak may take the form of higher taxes on the rich. The problem in Guyana is, the rich people are the same people who control the tax structure; they are the Pradoville people and their closest friends and cronies. Does anyone expect them – the Pradoville people – to raise taxes on themselves? Most definitely not!
American economist Dr Clara Martínez-Toledano explained the matter in the following way, she wrote: “Differences in the composition assets across groups is key. The richest people tend to own financial assets such as stocks and bonds, while the middle income groups tend to have a house as their major asset. But even with a big growth in house prices, the stock market prices will [always grow faster].” And the rich will always grow richer.
Incidentally, experts have a way to measure economic inequality, they call it the gini-coefficient. It is a number between 0 and 1, with 0 representing total equality, and 1 being maximum inequality. In other words 0 is good, and 1 is bad.
Guyana has a gini-coefficient of 0.45. That is bad. Also bad is our unemployment rate of 16.4 percent, and our poverty rate of 38.8 percent.
Guyana’s economy is growing, and, based on what the experts say, the faster and bigger it grows, the richer the Pradoville people will become, and the wider the economic gap will expand.
Finally, since we now know that the government or rulers of a country must necessarily intervene to close the gap between the rich and the poor, and since we know that the People’s Progressive Party (PPP) regime would never do that, Guyanese should expect that for as long as the PPP remains in power, economic inequality can only get worse.
