Some thoughts on the politics of economic inequality

The ironic tragedy is that while Burma’s economic system has been decimated by decades of sustained political mismanagement, the country’s education system has also produced some of the world’s most prominent and influential economists, including Hla Myint*, Ezra Solomon*, and Ronald Findlay*, all of whom were educated at Rangoon University. (All subsequently established academic careers outside the country, at world-class institutions like London School of Economics, Stanford University and Columbia University.)

* Solomon served as one of President Nixon’s economic advisors; Findlay is a foremost thinker on international trade, especially direct foreign investment; Hla Myint is renowned for his work and theories in developmental economics.

Yesterday, I was fortunate enough to hear Joseph Stiglitz, a Nobel Prize winning economist (perhaps most well-known for coining the term “the one percent”) speak about America’s growing economic inequality divide. The sad truth is that the United States is home to the developed world’s most serious gap between the rich and the poor. It was an enlightening talk, one that brought together these troubling economic trends with the contemporary rise of anti-establishment presidential candidates like Bernie Sanders and Donald Trump. Quite honestly, I felt Stiglitz, based on his delivery, was only a few words shy of endorsing Sanders’ platform of democratic socialist policies. #feelthebern?

In a May 2011 Vanity Fair piece, Stiglitz writes:

“In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.”

The argument he drove home was that human-crafted policies, not prevailing market forces, are the main drivers of income inequality. That the American perception of the country as a ‘land of opportunity’ is now a myth, a conclusion that’s especially palpable among my millennial peers. That the fable of the long-gone American dream was built upon the socially progressive policies of the mid 1900s, embraced by both Republicans and Democrats.

Now, I’m incredibly fortunate to have a solid career with a stable income far exceeding the median income for someone of my age and educational level. But this isn’t the case for so many Americans, who have not benefited from the same opportunities I benefited from.

For one, I was raised in a family that prioritized educational success. My parents ingrained in my sister and I the value of education, regularly reciting Burmese proverbs that extol education, such as ပညာရွှေအိုး လူမခိုး (‘knowledge is like a pot of gold others can’t steal’) and the trinity of success, ကံ၊ ဉာဏ်၊ ဝီရိယ (‘karma, intellect, and perseverance’). My dad constantly retold stories of when he first immigrated to America, catching up on sleep in a beat up Ford Pinto, in between a day job at the hospital, night classes at a trade school and a graveyard shift at another hospital. And my mom, of cleaning toilets at the Carl’s Jr., where she and her siblings worked while attending community college.

Moreover, I grew up in a working class and immigrant, but high-achieving community,  where I was afforded the advantage of attending public schools filled with ambitious kids like myself, coming from families of humble means, but dead set on gaining admission to top tier universities, and nurtured by amazing teachers vested in our success. But my story is an anomaly in modern-day America.

Stiglitz concluded his talk with the following thoughts (paraphrased for convenience):

“Incremental changes will not suffice. A comprehensive policy agenda is urgently needed to significantly reduce inequality and increase equality of opportunity, because the decisions of today will affect inequality decades later. The key is rewriting the rules once again.”

While Burma and the United States are obviously in different stages of economic development, Burma is in an excellent position to learn from the mistakes and lessons learned of the developed and developing countries.

Stiglitz’s conclusion highlights the utmost importance of politics, not free trade and reliance on the market, in driving sustainable and equitable economic growth. The story of the United States’ economic inequality is the direct consequence of man-made actions: the country’s political polarization (the absence of political compromise, where ideological purity is prioritized over pragmatic action), the tremendous influence of shadow money in political decision-making (through super PACS and lobbying arms funded by enormous corporations and the wealthy, for instance), and misguided political and campaign platforms (e.g., ‘trickle-down economics’ often dubbed ‘Reaganomics’ here in the States).

My fear is that the societal foundation that Burma is built upon makes the country particularly susceptible to following the dangerous footsteps of neighboring Thailand, where income inequality has risen in recent decades, especially tangible in the lower middle classes. (This income inequality has manifested itself in Thailand’s fractious and violent political rift between so-called ‘yellow shirt’ monarchists and ‘red shirt’ rural Thais).

Why do I say this? First, Burma, like Thailand, still operates on patronage and nepotism, based on existing connections and arbitrary preferences, not merit and evidence-based track records. Secondly, Burmese consciousness, even today, is surprisingly urban-centric, even though 2/3 of the country lives in rural areas, as evidenced by domestic media coverage, political rhetoric and platforms and government investments. Third, Burma, like Thailand, is an inherently age-oriented and top-down hierarchical society (read: tunnel-visioned), where age and social status translate to disproportionate societal and political influence. Fourth, like Thailand, Burma’s university education system has historically emphasized the arts and pure sciences, not the technical and professional trades needed to transform the country’s economic structure. And lastly, Burma’s policymakers lack the requisite knowledge capital and expertise to analyze, devise and implement savvy economic policies based on the best available evidence of what South Korea, Taiwan, China and Vietnam all did to transition their economies.

But I’m hopeful that I will be proven wrong. That my fears are misguided. That the NLD-led government will look toward its Asian neighbors and build upon what works, and reject what doesn’t. Burma’s state of arrested development is the cumulative outcome of deliberately human-crafted policies and decisions. And the future of its people rests upon undoing these decades of lost progress and destruction.

In the words of Stiglitz himself, “Inequality is a choice.”

– A. Kyaw

4 thoughts on “Some thoughts on the politics of economic inequality

  1. Shrey Srivastava says:

    Thanks for this blog post regarding the politics of economic inequality; I really enjoyed it and am definitely recommending this blog to my friends and family. I’m a 15 year old with a blog on finance and economics at shreysfinanceblog.com, and would really appreciate it if you could follow, read and comment on some of my articles, and perhaps follow, reblog and share some of my posts on social media. Thanks again for this fantastic post.

  2. Wagaung says:

    A wise old head on young shoulders. I doff my hat to your good parents for the traditional Burmese and Chinese upbringing for all their authoritarian and hierarchical elements on far distant shores. I’ve always thought it’s a wonderful mix of Chinese ambition and drive to succeed and prosper tempered by Burmese compassion and generosity.

    Stiglitz is like a modern day messiah that many can hear but a voice in the wilderness on the Left to many others, perhaps even a traitor to those masters of the universe that continue to lead the way. He was given a hearing in Yangon but was he listened to by the generals?

    He hit it on the nail when he said inequality is a choice. Now democracy as we know it and currently practised is all about choices made in the name of the majority with its inevitable consequences – choices denied. India is reputed to be the world’s largest democracy where private opulence and public squalor exist cheek by jowl. Whilst economic determinism which in postmodern discourse is known as market forces, beloved of Reagan and Thatcher, may be the final agency but it remains politics or conscious considered choices that set the framework. It’s a chicken and egg question.

    Capitalism’s appeal, bright lights big city, with its control of the media, remains powerful and won many a convert, not least from the Left, under the aegis of Reagan and Thatcher, despite civil society countercurrents the world over, especially among the elites both ruling and aspiring to rule. And the result of course is a far more unstable and unequal world for all to see. But many will still not see the wood for the trees which has worked effectively in favour of the elites whose control of the media plays a crucial part in this state of affairs even in the digital age.

    You are absolutely right that Burmese leaders, the NLD today in particular, have no excuse for not learning a whole raft of lessons from the recent decades, from the mistakes made by others before in following the Washington Consensus with the IMF and the World Bank as its watchdog and enforcer, today also by the WTO. I won’t hold my breath however as the NLD also wants to join the club, a mission more or less already accomplished by the generals.

    • Aung Kyaw says:

      Your observations are well stated. I think I’ve been fortunate enough to experience the best of both worlds, so to speak. Perhaps the underlying “underdog” mentality has something to do with the ambition of overseas Chinese. And I’ve always admired the ‘old school’ Burmese spirit of genuine altruism and kindness shared by my parents’ and grandparents’ generations, although I feel it may be fading from the national ethos, based on my most recent visit to Burma.

      As for Stiglitz’s prescient remarks, Burma’s decision makers would do well to revisit some of the presentations he’s made in the country, including those in 2009 and 2013, both of which echo many of the same conclusions drawn in a fascinating book I’m currently reading, How Asia Works: Success and Failure in the World’s Most Dynamic Region. It highlights the mistakes that many developing countries, including Indonesia and Thailand, have made in blindly following the incorrect assumptions of the Washington Consensus, the same free market principles espoused by IMF, the World Bank and other agencies… “Those who cannot remember the past are condemned to repeat it.”

  3. Wagaung says:

    Free trade the precursor of colonialism and imperialism has shown its relentless drive in recent times in the proliferating treaties across oceans. Prof Stiglitz has mentioned TTIP a good reason for Brexit from the EU.

    The various and diverse states are merely microcosms of the global village in inequality inherent in the prevailing socio-economic order, and globalisation as we know it today only exacerbates the situation. The future at least in the short term is dire.

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