The premise of Getting Even: Public Policies to Tackle Inequality in Asia — edited by Mustafa Talpur and featuring scholars from across the continent — is that inequality, after a few decades, has come back on the policy agenda as an issue that needs to be tackled.
The experience of most Asian countries over the last few decades has been similar in that privatisation, liberalisation and globalisation have led to higher economic growth. This is especially true for China and India. In most countries, poverty rates have also declined quite rapidly in parallel with the higher growth but, at the same time, inequalities in income, wealth and other areas have increased significantly. So, where hundreds of millions of people have moved out of ‘poverty’ — especially extreme poverty and deprivation — inequalities have also grown. Inequality is not neutral to other markers of identity. There are strong historical, ethnic, religious, gender, disability and geographical markers in inequality trends.
Growing economies create opportunities for growth for individuals. But those who have prior assets — in the form of health, education, skills, wealth or relevant networks and connections — are better able to benefit from such opportunities as compared to those who do not. A rise in inequality seems inevitable in such cases. There also does not seem to be much evidence that eventually opportunities will allow all to rise: the infamous ‘trickle-down’ sort of arguments. People can, and do, get ‘trapped’ in specific situations from where it might not be possible to escape even if the overall economy is growing at a reasonable pace. In other cases, it might take too long for trickle-down to work and policy interventions could help shorten the time period before the marginalised get access to opportunities.
Illiterate or barely literate persons, with little or no physical capital, might find themselves unemployed even when the economy has a reasonable level of growth. Without human or physical capital, how are they to get gainful employment or create avenues for self-employment? How will they get an opportunity to acquire human or physical capital if the state does not step in?
A new book argues that well-designed and implemented public policies can indeed have significant impacts in reducing inequalities
In recent times, most growth and job opportunities for most economies have come through the service sectors, not manufacturing and/or agriculture sectors. Service sector jobs, at the lower end, tend to be low-skill, low-paying and do not have significant career-development paths. Many of these are also not formal sector jobs. A person could have a full-time job, but earn a very low (even below minimum wage in case it is a non-formal sector job) salary, have no access to labour law protections and few, if any, prospects for career development. In such cases, again, without interventions through education, health, skill and/or credit markets, it would not be possible for even these fully employed individuals to move to better jobs and/or initiate entrepreneurial activities.
The rise in inequality has also left many specific populations behind. Trade routes, coastal areas and urban centres might benefit more from growth opportunities than others. Without targeted programmes, certain populations — such as ethnic, caste and religious minorities, women, senior citizens and/or persons facing disability — might struggle more than others.
After quickly highlighting some of the trends and issues mentioned above in the first two chapters, the book goes into specific case studies of policies implemented in Pakistan, India, the Philippines, Thailand, Indonesia, South Korea and China.
These policies, by and large, fall in the areas of health, education, skill provision, labour and employment, social protection, taxation, and political empowerment and active citizenship. Facilitating access to quality education and skill development is a major contributor to the development of human capital. Most Asian countries have ensured that education up to high school is free and accessible to all, or have made moves in this direction. The Philippines recently legislated to make even tertiary education free. In most places, the provision of education, till tertiary, is mostly through the public sector.
Access to healthcare — preventive as well as curative — covers for one of the major economic shocks an individual or family can receive, as healthcare is quite expensive. Professor of economics Jayati Ghosh explains how Kerala’s health provision system stands out in terms of achieving impressive outcomes through public sector provision of services.
Growing economies create opportunities. But those who have prior assets — in the form of health, education, skills, wealth or relevant networks and connections — are better able to benefit.
Promoting inclusive growth through creating more productive jobs for a wider population and strengthening labour market laws and institutions is very important. Guaranteeing minimum wage to all, providing guaranteed employment for at least some minimum period (India’s minimum employment guarantee scheme is an example) and ensuring wage parity across genders are some policy options that have been used effectively. Professors Shi Lin and Mengbing Zhu describe how China has actively tried to reduce the urban-rural income gap through interventions in labour and agriculture sectors.
Social protection policies are very important to ensure certain safety nets and services for specific populations. Legislation to improve healthcare access and minimum income thresholds for senior citizens in the Philippines is an impressive example in this area. The Benazir Income Support Programme (BISP) of Pakistan, and conditional cash transfers in Thailand, have had impressive results in enhancing the incomes of very poor households and senior citizens respectively. India’s minimum employment guarantee scheme for rural populations is another impressive intervention. All of the above have allowed effective targeting and provision of safety nets below the very vulnerable groups.
Changes in taxation structures have allowed countries to reduce burden on certain groups and/or cross-subsidise others. Widening the tax net and increasing taxation on the rich, on both income as well as wealth, have allowed some countries to have more fiscal space to fund education and health for all as well as provide for specific programmes targeting specific groups.
Last but not least, redistributive policies often require taking on entrenched and powerful interest groups from within the society, while groups targeted for relief tend to be ones with the least political and socio-economic voice. Successful and sustainable policy implementation, in many domains, has been accompanied by raising the organisation and participation of marginalised groups; the organisation of senior citizens in Thailand and the Philippines, as well as legislation on the minimum number of women in elected houses in Pakistan, are some examples.
Generalising from the examples, we can say the book argues that public policies can have significant impacts in reducing inequalities. But for this to happen, the policies have to be implemented effectively and well; they must have adequate financial commitments to back them up; they should address inequities of power and ensure the effective voice, ownership and participation of affected groups; and they have to have the strong political commitment of the powerful, usually termed ‘political will’, to make sure they survive political opposition from strong interest groups.
The need for political support and the voice/participation of the affected notwithstanding, the case studies also show that country context — in the design, implementation and sustainability of policies — also matters. The policy has to take account of the fiscal, social and political reality of the country quite seriously and has to be designed so that it achieves objectives within set constraints. What might work in one country might not be appropriate for another. The case studies featured in this book have managed a fair amount of success, and every country in the region has some examples of such policies. But what has been tried in each country has been a larger menu. So the lesson, from the book, is not about specific policies; it is more about the possibilities and the success that can be achieved if carefully calibrated policies are implemented and then, with feedback, improved over time.
With the case studies, the book is able to marshal enough evidence on the effectiveness of policies to tackle inequality issues. The case studies do not provide causal connections and implications, but that was neither the purpose of the case studies nor the intention of the book. Instead, the idea is to show examples of a whole range of policies that the state can follow, depending on its own particular situation. The book also brings out general lessons on what made these policies more effective and, so, serves as an important read for academics, policymakers and activists.
The reviewer is a senior research fellow at the Institute of Development and Economic Alternatives and an associate professor of economics and education at Lums
Getting Even: Public Policies to Tackle Inequality in Asia
Edited by Mustafa Talpur
Published in Dawn, Books & Authors, March 15th, 2020