A just economic order

Social deprivation amongst a majority of the world’s inhabitant has led to a divide that is now threatening to wipe out the status quo. Millions across the globe feel these inequalities are rooted in the attempts of the rich to feed off the poor in their struggle for power. In this context, the geography of poverty has changed drastically over the last few years. In figures that are striking to say the least, more than 70 per cent of the world’s poor now live in middle-income states. The fact that this pattern will in most likelihood continue over the next few years poses some significant questions. As economies progress, as they embark on a road to prosperity, are these advances made keeping in mind human development and poverty reduction? While aggregate incomes may rise, the divide between the rich and the poor is widening at more or less the same pace.
A good place to start my analysis would be South Asia, where figures indicate that 60 per cent poverty rate in 1981 dropped to 40 per cent in 2005. While there has been a percentage drop in poverty, over the last many years, there has been an aggregate rise in the number of people who are now living below the poverty line. In South Asia, according to figures from 2005, 46 million people during this time slipped into poverty despite a so called improvement in poverty. Three quarters of South Asia’s poor are living in India, and the number of people below the poverty line in India has increased from 420 million to 455 million.
Merely matching global trends, merely focusing on indicators and not real solutions is not sufficient in the fight against poverty. It needs to be understood that poverty is heavily dependant on the degree of income inequality. A reduction in inequality therefore benefits the poor and vice versa. When growth trumps inequality, the fight against poverty loses steam.
Health indicators have also not kept up with the rise in income. What is most disturbing is that South Asia has the highest rate of malnutrition with perhaps the greatest number of malnourished children. Because of these indicators, they have high mortality rates, low cognitive performance, and more chances of dropping out of school.
What is most striking in South Asia is the fact that social inequalities have decreased on the whole, however the situation has not improved fast enough to reduce the cumulative number of people living in poverty. Moreover, these indicators are representative of a general pattern of discrimination. What policy makers should focus on is a direct intervention that aims at accelerating social progress, with an increased focus on human development coupled with greater gender inclusiveness.
Increased gender equality has the ability to turn the tides in favour of economic growth. With changing global scenarios there is a need to achieve a just social order that aims at bridging the divide between the rich and the poor. While these are big challenges they are not impossible to overcome given a human centric approach is incorporated in the prevalent social setup. In the absence of these policies, rising discontentment among the masses may lead to revolt and political instability that will present itself as a hurdle to economic progress.

The writer is a professional banker and financial commentator