Columnists

Reset the poverty line

THE United Nation’s special rapporteur on extreme poverty and human rights, Phillip Alston, caused quite a stir recently when he said that official figures on poverty in Malaysia are inaccurate, and do not reflect the reality on the ground.

While the Economic Affairs Ministry (MEA) might not agree with Alston’s prognosis, we should nonetheless pay heed to some of his observations.

Setting the national poverty line unchanged at RM980 for decades is unrealistic simply due to the fact that the rate of inflation has increased over the years and this has invariably affected the purchasing power of households in the country across the board.

There is no doubt that extreme poverty has been greatly reduced in Malaysia.

But the onslaught of globalisation and the volatility of the global economy, especially in the financial sector, have exacerbated the inequality between the top-income earners and the low-income earners.

This is happening in an economic system that privileges the few at the expense of the many.

At the global level, the development charity Oxfam’s latest report has confirmed what most people have suspected all along: that the wealth of more than 2,200 billionaires across the globe had increased by US$900 billion in 2018.

The 12 per cent increase in the wealth of the very richest contrasted with a fall of 11 per cent in the wealth of the poorest half of the world’s population.

Without a doubt, the widening gap between the super-rich and the poor is hindering the fight against poverty.

At the national level, Malaysia’s success in creating a sizeable middle class is now in jeopardy. A new approach to wealth redistribution is needed, and the current government’s focus on shared prosperity must address the growing income inequality in the country.

Our economic system has to be revamped as it has been proven that wealth is not trickling down to the masses. This phenomena is not unique to Malaysia and is happening across the globe.

In the US, for example, the three wealthiest men — Bill Gates, Jeff Bezos, and Warren Buffett — own more wealth than the bottom half of the population combined, a total of 160 million people.

Meanwhile, an alarming 47 per cent of Americans cannot put together even US$400 in the face of an emergency.

Apart from skewed wealth distribution, our economic system is literally destroying the planet by depleting natural resources at more than one and a half times the earth’s ability to regenerate them.

Soil depletion has destroyed one third of all arable land.

Nearly two thirds of all vertebrates have disappeared from the earth since 1970, part of a sixth mass extinction that is terrifyingly underway.

Mankind is razing the only home civilisation has, yet we remain caught inside a system designed to perpetuate that razing, in order to feed wealth to an elite.

An economy of the one per cent, by the one per cent and for the one per cent, as Joseph Stiglitz put it, is surely unsustainable because the world economy has at its core a capital bias, a favouritism towards finance and wealth holders that is woven invisibly throughout the system.

The world economy is also known as an extractive economy for it is designed to enable a financial elite to extract maximum gain for themselves, everywhere on the globe, heedless of damage created for workers, communities, and the environment.

Capital bias is often advanced by policy — as with lower taxes on capital gains than on labour income, bailouts for big banks but not ordinary homeowners, or tax breaks given to large corporations that put small locally owned companies out of business.

Yet capital bias also lies more deeply in basic economic architectures and norms, in institutions and asset ownership.

Speculative investors holding shares for minutes enjoy the rights of owners, while employees working at a corporation for decades are dispossessed, lacking a claim on the profits they help to create.

These kind of policies are fuelling inequality and set the economic agenda for the future.

They get beyond tax-and-spend transfer measures, which today are being dismantled by tax cuts and austerity.

They get beyond the regulatory state, today being crushed beneath the onslaught of deregulation, privatisation, and the dismantling of government.

Capital bias has become the epitome of the extractive economy. We’re all caught in this system. The problem is that people by and large don’t see this, not even the people who are part of it. Pointing fingers won’t change the system.

But we need to understand the dynamics of the extractive economy which is responsible for today’s multiplying economic and ecological crises.

We can see this in the way the financial elite wields its wealth to overpower the masses, the way wages are held down and jobs automated out of existence, the way the growth mandate overpowers the planet’s resilience.

The time is ripe for our government to reset the poverty line and to think in terms of a living wage as opposed to minimum wage.

The writer is director of Centre for Policy Research and International Studies, Universiti Sains Malaysia

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