Inequality makes us all poorer

Oct 03, 2004 Life & Society, Sunday Nation

We live in a poor country with an economy that’s still limping along. Yet this economy keeps throwing up some startling phenomena. Consider just a small sample. Even though real GDP per capita has been in decline for several years now, top-of-the-range vehicles keep selling like hot cakes on a cold day (and enjoy a sales boom after every election). Membership fees for exclusive golf clubs continue their upward march (and still have long waiting lists of “wannabees” eager to rub shoulders with the rich and famous on manicured greens). The market for palatial homes never seems to have a bad day, come rain or shine in the general economy.

In every major industry you will see the same trend: the top end of the market keeps roaring; the bottom end is falling out of economic contention. Choice malt whiskies sell for Sh 10,000 or more without a murmur; but former beer drinkers are steadily migrating downward to the nasty illicit liquor market. Glossy imported magazines move at a thousand bob a copy – but fewer and fewer people are able to afford a daily newspaper. Indeed it is estimated that each copy of the newspaper in your hand has more than 25 readers on average – which suggests that only 4 per cent of readers who are willing and able to read a newspaper can afford to buy one. Imported luxury biscuits in fancy boxes sell well; so does the cheap, nasty and crumbly stuff sold in very small packets on roadsides to people who can’t afford lunch.

In every sector, there are two parts of the market that keep booming: the very top and the very bottom. The underlying factor is the growing inequality in the economy. The government’s own figures, tabled at last year’s Consultative Group donor conference, suggest that the top 10% richest households earn nearly half of overall income; the bottom 10% take home less than 2 per cent. We are thought to be one of the most unequal societies on earth, with a Gini coefficient (for the blissfully ignorant, a summary measure of income inequality) of 44.5. Only the world’s most unashamedly imbalanced countries, such as mid-1990s Russia, have had worse statistics than this.

There are, in short, many Kenyas. There is a Kenya that is a playground to the very rich, where the party never stops. There is a Kenya, focused around the central highlands, where only a modest proportion of people live below the poverty line; there is another more remote Kenya, where as many as 4 out of every 5 people are pathetically poor. There is a Kenya for men, and an altogether nastier one for women.

If you think that this does not matter, or that there is anything “natural” about it, you need to reopen your history books. Any society that has ever propagated gross levels of economic inequality has always come to grief. It is easy to forget that both England and France experienced bloody revolutions when the peasantry decided that enough was enough. The revolution that overthrew the tsars of Russia started as a food riot in Petrograd. Economic elites are almost always consumed by their own greed.

Bloody uprisings are rarely in anyone’s interest. History shows us that one exploitative elite is usually replaced by another, with the poor being used as cannon fodder. Enlightened societies know this, and do not let inequality get out of hand. They take steps to provide for their poor. Economists from John Stuart Mill onwards, while cautioning against interference with market mechanisms, have argued forcefully that government policies can reduce inequality – in everyone’s interest. Germany’s Bismarck, Britain’s Disraeli and America’s Roosevelt took up the call, and introduced the various elements of what became known as the welfare state. Today, most well-off countries provide a judicious mix of measures aimed at giving access to economic opportunity to all their people.

Why do we have so much inequality in Kenya? The government itself told donors last year that our poor do not have access to productive assets; that they suffer from lack of access to social amenities; and that they are not given equal access to education. In other words, they are poor because we do not allow them to be anything else. What is not mentioned is the unbridled greed of the economic ruling classes. A chosen few sit on tens of thousands of acres of land each, acquired dubiously and with little idea about how to use it productively. Networks of patronage propagate ill-gotten wealth from generation to generation.

If we carry on like this, we will come horribly unstuck. The rich of this country need to wake up and smell their special-blend, export-quality coffee, whether they acquired their wealth through honest endeavour or not. The people at the top cannot keep growing and flaunting their wealth while more and more are falling out of the bottom every year. We will soon have a record number of unemployed urban youth in this country; does that worry you, through the smoke of your barbeque party? Do you think the recent increase in spontaneous violence across the country, in schools, universities and even churches, is not rooted in economic desperation?

To be pro-poor is not to be anti-business. Which businessperson does not want an economy in which general purchasing power is growing strongly? Which entrepreneur does not want access to a pool of well-fed, well-educated, well-motivated workers? Which industrialist does not want to live in an environment where both his capital and his life are secure? It is only those who want to snatch more and more out of a shrinking pie that think pro-poor policies harm them. Those who are concerned with the baking of the pie would celebrate the elevation of the poor.

We all know what needs to be done. Redistribution of wealth is not about handouts. It is about improving the access of the poor to economic opportunity, so that market mechanisms can function in the interests of all. The government itself emphasised this in its economic recovery strategy last year. Priority was to be given to rural electrification and telecommunications, feeder roads, agricultural product-marketing mechanisms, health facilities, and slum upgrading.

If you’ve seen any of that happening anywhere near you, do let me know: I may need to take a puff of whatever it is you’re smoking. All I can see is a leadership so consumed by the task of retaining power that all else is window dressing. All I can see is an economic elite so consumed by the task of counting its money that it cannot see the rage in the eyes of those guarding the gates. We are all busy laying out the picnic chairs on the slopes of a rumbling volcano. The wine is indeed fine, and the cuisine delectable. But what happens when the music stops?

If you can get involved in any initiative that builds the productive capacity of poor people, do it now. A poor person is just you in rags. His poverty is of the pocket; yours is of the spirit. If you choose to help, you can both be enriched.