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Business News/ Opinion / Online Views/  Opinion | What the discomforts of the rich signify

Opinion | What the discomforts of the rich signify

The real soul-searching needs to be done by those who have gained the most from present growth patterns

Illustration: Jayachandran/Mint (Jayachandran/Mint)Premium
Illustration: Jayachandran/Mint (Jayachandran/Mint)

If the story of the awakening of Siddhartha, later known as Gautama Buddha, were to be reprised in our time, the boy prince would not need to leave the confines of his opulent palace to be exposed to the miseries of life. Breathing in the toxic air would be sufficient to alert him to the fact that all was not well in the kingdom of the Licchavis.

Indeed, the situation has become so dire in northern India that well-heeled folks, ordinarily accustomed to hectoring hoi polloi about the need to make sacrifices for “development", are now out on the streets. In June 2018, I attended a panel discussion in New Delhi railing against the construction of government flats in colonies abutting the All India Institute of Medical Sciences and Safdarjung Hospital. Many of the attendees with worried countenances and furrowed brows looked suspiciously like consultants with the Big 4 companies. Today, Gurgaon school children, corporate executives, and business school professors are up in arms about a proposed six-lane highway that would cut through the Aravalli Biodiversity Park, a 153.7 hectare plot that is home to much of the native flora and fauna of the Aravallis.

I’ll grant that the majority of the rich are not yet joining the picket lines, but don’t think they are sitting idle. Those not inclined to agitation are actively considering migration. The destinations of choice are Goa, neighbouring hill stations, and of course, Western shores. Even if the rich are not migrating themselves, their children surely are. Once the children settle down overseas, a manageable two-country solution swings into operation.

Those who aren’t agitating or migrating are retreating. They are moving further into their air-purified spaces and their high-walled apartment complexes where the movement of people is controlled, although panic still finds a way in.

I may be wrong about this. My father, who knows more about these things than I do, believes that the rich have nothing to worry about. He says that while money cannot buy happiness (or talent), everything else is up for grabs. Hence, my views may just be a reflection of schadenfreude.

Yet, over the last two years, I have begun to feel that something has really changed. Not just in the national capital region, or in India but all over the world, there is a systemic upheaval that could mark the beginning of the end of an epoch.

But first the good news. With the explosion of fields such as artificial intelligence, robotics, the Internet of Things, biotechnology, and quantum computing, the world stands at the cusp of the fourth industrial revolution. This new revolution offers enormous possibilities for improving the quality of life for populations around the world. Klaus Schwab, the executive chairman of the World Economic Forum, has laid out the prospect of a “supply-side miracle, with long-term gains in efficiency and productivity".

However, as automation substitutes for labour across the entire economy, the revolution could yield greater inequality than we see today. The job market could increasingly get segregated into low-skill, low-pay and high-skill, high-pay segments.

Beyond a certain threshold, inequality presents not merely an ethical conundrum but a serious systemic concern. From an economic point of view, it leads to a demand constraint on growth, given that there is only so much the rich, who have most of the income, can consume, and only so much money that can be pumped into technology ventures in advanced economies or infrastructure projects in the developing world. The proliferation of household debt in western countries and corporate debt in emerging economies has, for some time, stemmed the problem of aggregate demand. However, it has created a world of increasing macroeconomic volatility.

The rich do not escape unscathed from this volatility. The hedge fund manager who lost his millions in the 2008 financial crisis, the promoter of the infrastructure company in a developing economy whose business turned into a non-performing asset, the partners of companies whose crores disappeared overnight with the crisis at Infrastructure Leasing & Financial Services, understand that downturns can be tided over but volatility reaches into the fortresses of the high and mighty.

From a social point of view, inequality creates increasing tensions as the middle class, the repository of a society’s value systems and the bulwark protecting the rich from the poor, gets whittled away. The spate of gun violence in the US and the rising cases of crimes targeting children and the elderly in India are just a few symptoms of this underlying malaise. The rise of rabble rousers, so loathed by the liberal elite for their illiberal ideologies of nativism, chauvinism, communalism, racism and jingoism, is yet another natural corollary of the systematic elimination of the middle class.

Finally, as is well known, the spectre of climate change threatens the rich and poor alike. In short, our system appears to be in an existential crisis, a crisis that seems to be cutting off escape routes for all sections of the population, including the rich. This juncture could be an opportunity to recognize that today, more than ever before, we are in the same boat.

The real soul-searching needs to be done by those who have gained the most from present growth patterns. We need non-governmental organizations protesting against illegal mining in Chhattisgarh to join the Aravalli protest. More importantly, the Aravalli protesters need to make common cause with victims of development everywhere.

Rohit Prasad is a professor at MDI, Gurgaon. Game Sutra is a fortnightly column based on game theory. Read Rohit’s previous Mint columns at www.livemint/gamesutra.

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Published: 14 Nov 2018, 09:32 PM IST
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