Sam Pitroda was one of the most famous men in India in the 1980s. As the seer of Indian telecom, he was responsible for millions of long-distance calls by Indians getting through. He was perhaps too suave to win an election, yet he was among the most powerful men in India because Rajiv Gandhi took his advice very seriously. A few days ago, Pitroda said that India should adopt an inheritance tax and that the wealth of the rich should be redistributed. It was a very 1980s moment from a star of the 1980s. The BJP portrayed his statement as part of the Congress manifesto, which is not true.
What Pitroda said should have been one of the most unimportant statements about the future of India, but because of who he once was and because general elections are going on, it received disproportionate interest. Even so, India’s poor should have loved what he said. After all, what he said was that when the rich die, some of their money should be taken away from their kin and given to the poor. Yet, the BJP amplified his message as though this was a nation filled with billionaires; the Congress said he was speaking on his own and distanced itself from his views. Many young men and women who appeared to be from modest backgrounds went to a Congress office to protest against the idea of the inheritance tax and “wealth redistribution.”
What is useful about the controversy is the rare peek it offers us into how humane ideas arise. There is something about the way Pitroda said it, and the fact that he even said it, that tells us how such ideas may have come about in other countries. (India, too, had an estate tax, but it was abolished by the Rajiv Gandhi government in 1985.)
How does society bring in reforms when powerful people stand to lose from change?
You can say that change happens because good people bring about good things. You can say that Pitroda wants an inheritance tax because he is better than most of us and wants to change the destinies of the poor. This could be true, but what if something else is going on?
If reform is not brought about by the uncontainable good of good people, then what causes it? Why do good things happen?
The reformation of a society can be explained without giving too much credit to reformers and the naïveté of imagining that some human beings are more noble than others, and that the good guys somehow win some battles. Society changes for the better when the second rung of social power takes on the most powerful. This is usually done in the name of the poor, for a moral cause.
The other reason society changes is that children do not want to be their parents. Sometimes this includes children of rich parents with exaggerated contempt for some qualities of their parents that leads them to do what their parents would never do, especially virtuous things. But mostly, change occurs because of the first reason: Because the second rung, the aristocracy, gets tired of the royalty of their time. What could hurt royalty more than society taking away half of what these royals planned to bequeath to their genetic offspring?
Pitroda was probably never a billionaire, but he was part of the elite of a time when class and sophistication alone could take you high up social peaks. In a changing world, a very different sort of people now occupy those peaks. Even India’s new capitalists look different from his time.
What would you do if you were him and wanted to take on the new elite? You would start by doing something that would upset them. Maybe you would suggest that their children should not get to inherit their fortunes freely. They should pay a price for their luck.
Often, policy activism is a war of millionaires against billionaires. This was the origin of that celebrated document, the Magna Carta, from where modern democracy probably emerged. To fix the king, the barons of England had to say modern things. That the king would not punish a person until guilt is proven, or that the state will not usurp the land of its people, and that in peacetime England would protect merchants as they plied their trade. Even the French Revolution was not as simple as the poor revolting against the elite—it was a risky uprising of aristocrats against their bosses in the name of social reform. India’s freedom movement itself was, among other things, a kind of class struggle between the top two classes of the time, the British and the local elite.
There is a sort of inequality that looks bad in statistics. For instance, when you look at the top 1% and how much of a nation’s wealth they own. But there is another sort of inequality that never shows up in our statistics, which is far less natural but more poisonous. It does not feature billionaires. It is the imbalance that favours the upper middle class on every turf where they compete with those who are poorer than them.
Billionaires and their children are not in competition with the rest of society. Except for the roads perhaps, there is no resource, no aspect of life that they are forced to share with other classes. But if you consider millionaires or the country’s vast upper middle-class, they do compete with the rest of society in entrance exams, business startups, cinema, literature and the arts. And they have an unfair head-start created not only by ancestral wealth, but more effectively by social contacts. Seen this way, billionaires have a far smaller role in inequality than the upper middle-class.