It is always worrying when governments and academics raise a hue and cry about how inequality is rising and something or anything must be done to stop it.
This is the idea behind the news headline “Outwardly rich, inwardly poor” in a local paper recently.
Well, I read and thought, there’s nothing very unusual about it at all and also that it’s actually a thoroughly desirable and inevitable event for growth.
But there’s a much bigger problem which they allude to and then ignore. First of all, they, like all too many people and organisations, are confused inequality and poverty.
It’s important to keep in mind the distinction between inequality and poverty.
The distinction should be simple: poverty is when people don’t have very much and inequality is when some people have more than others. A society in which some people have millions of ringgit a year to live on and others only tens of thousands might well be very unequal.
But as long as people do have those tens of thousands then there’s going to be less poverty than in a society where everyone is more equal but only has RM1,000 a year to live upon.
We do have some degrees of inequality. I assume it’s entirely possible that poverty is really inequality in a new guise to give the policymakers to whine about and solve the problem.
But here is that claim being made again, that inequality is what ails us all.
The study pointed out that Sarawak is among the top three richest states in Malaysia but ironically has seven of the 10 poorest districts in the country by Gross Domestic Product (GDP).
The state’s GDP per capita stood at RM49,327 in 2017, only behind the top three of Kuala Lumpur (RM111,321), Labuan (RM65,949) and Penang (RM49,873).
GDP per capita is not income. But it is at least a guide to incomes. So if we say GDP per capita is RM3,000 a year then we cannot all live at RM5,000 a year. It means the majority of the population cannot have lifestyles higher than that per capita figure.
Of course, places with high GDP per capita are notably nicer places to live in; people have a better life in them, than places with low GDP per capita. What I am trying to say is it’s not the level of GDP per capita; it’s the change towards a better life over time that matters there.
And while you might think that is a silly thing to say, remember it the next time when someone starts talking about low wages in some places. Why? Because that actually is the demand in that places. This is what being poor places mean – that poor people receive poor wages, poor productivity, if they are getting poor wages then it is a poor place.
As Nobel Prize winning economist Paul Krugman has pointed out, the reason for low wages is that everything else in the area pays even less which explains Pakan becoming the poorest district in the country with income per capita of RM2,760. Other districts in the list from Sarawak are Lubok Antu, Song, Kanowit, Selangau, Simunjan and Daro
What matters is we would all like to see everyone making more than that. At least we all should congratulate them on being a little less poor than they used to be.
Whether that is a matter of effort or simply of random good luck, it doesn’t matter. The change towards a better life means that there’s more of whatever it is being produced that other people can consume. That makes them better off. So, why do we care?
It then goes on to fail a rather basic further test, which is what inequality are they actually measuring?
We all know that the sharp drop in commodity prices especially oil palm, pepper and rubber has affected the income of the rural populace badly, making poverty eradication in Sarawak not very effective.
Sure, commodity prices are pretty important. This is also something not to be worried about. Why? Because they are always volatile in price and we always expect them to start falling in the near future.
Furthermore, price volatility goes both ways. For the word itself does not mean going up and down more quickly, it means going up and down more often.
We’ve the next harvest approaching, we think it’s going to be a good one; food prices will come down or up again. But which way should we read this?
Higher commodity prices benefit the very poor because the very poor out there are almost all farmers and food producers. So we should celebrate higher food prices then?
Even if the farmers are badly affected by the low commodity prices, it only means having less income than others in society; yes, that is indeed income inequality not poverty.
What the researcher has actually done is go out and ask people what it would be nice for people to be able to afford. And less than nice is now defined as poverty.
Or they take one or two pictures with their smartphone where they shed tears of sorrow with poor families in the background. Their caption: “Progress?” If looking at them once makes us feel bad, it must be hell to actually live here.
Bit of scrambling of the concept, isn’t? The research work should be just strictly observation; choice is a moral one, which cannot be entirely invented in their heads.
As if the poor people are not making meaningful contributions to their society’s improvement. I’m not sure that’s true. But even if it is true, what does that have to do with inequality? I think in all honesty, whatever they’re doing is meaningful.
It’s not going to be the death of society in Pakan district if we don’t do something about it. So when Tan Sri William Mawan assured that none of the local people had to starve or beg for food from people, he is reasonably right.
To someone like me, his response is not controversial or surprising. But then, he is a politician. The politics is that the poor people will always favour the policy to reduce the gap between the rich and the poor.
My guess is that if the gap between rich and poor falls, it’s because the poor are better off when it seems to care more about reducing the gap than about making the poor better off. Sadly, this isn’t going to work.
Please do note what I’m not saying here. I’m not insisting that everything is just fine or that I am directly accusing anyone is deliberately misleading us. I just think that it’s not too much for me to question and agree that it is entirely valid to hold a different view on this matter.
I’m not even trying to state that the poor should be happy with their lot. I’m very much a believer in the idea that whole thing is to make poor people better off.
But what they are complaining about is simply part of the natural order of things. A little bit strange to be whining about, doesn’t it?
The views expressed are those of the author and do not necessarily reflect the official policy or position of the New Sarawak Tribune.
