Who Bears the Pain?

By N. Gunasekaran

The two-year-long recession is still haunting the world. On the sluggish economic progress in the US, President Barack Obama said, “the hole the recession left was huge and progress has been painfully slow.” Indeed, the use of the word “painful” is frequent now.

In Greece, hovering on 300 billion-euro debt, Prime Minister George Papandreou told Greeks that painful economic reforms would “unleash the country’s creative potential.” Really, the state of the economy is grave, but the pertinent question is, for whom it causes pain. And the ruling elites were depicting the scenario as if it was the handiwork of some unnatural forces.

Austerity measures implemented by the Greek government have lowered the purchasing capacity of the working people. Those measures were the stipulation of the 110 billion-euro bailout from the IMF and the EU. The government increased value-added tax on goods by 4%, to 23% and now they are planning to impose a new indirect tax on gas. Ongoing massive protests are the response to the unprecedented fall in the living standards of the Greeks.

In both advanced and developing countries, working people were the targets of the so-called “economic recovery” and “austerity measures” that deprived workers of many social programs including jobs, wages, benefits, housing, health care, education etc. Increasing poverty is one of the painful effects of “the economic recovery.” In India, the proportion of poor is 55% in terms of the Multidimensional Poverty Index (MPI) of the UN Development Programme (UNDP) and on the basis of the World Bank’s $1.25 per day measure, it is 42%.

On the other side, the painful period has witnessed the growth of corporate assets. Those who are responsible for the 2008 financial meltdown and the global economic crisis have been awarded bailouts while the top managers and the executives of corporate houses such as Goldman Sachs received huge bonuses and perks. According to the 2010 Forbes Billionaires list, the world’s billionaires have an average net worth of $3.5 billion, up $500 million in 12 months, and the number of 10-figure titans has increased to 1,011, from 793 a year ago. The number of India’s billionaires in 2009 was 27 and in one year it almost doubled to 52. Even the severe economic crisis is favorable for corporate executives; the poor are bearing the brunt, whereas the rich are reaping the boom.

A recent IMF report on the global economic prospects claimed that the major emerging economies like China, India, Indonesia and Brazil are leading the global economic recovery by “strong domestic demand and the recovery of global trade.” For over two years, the ruling establishments and their cohorts have been in the habit of presenting rosy pictures of economic recovery. How can the domestic demand pick up while most of the countries in Asia were affected by the high inflationary pressures and soaring unemployment?

In India, the index based on wholesale price of food items has risen 11.47% in August, endangering the food security for the poor. Asia has some 60% of its population under 25 years of age and India has half of its population under this age. The guaranteed minimum income and social welfare protection for this segment of the working population is still a distant dream since employment is created predominantly in the informal sector, which is underregulated.

In fact, even the overstated claims of economic recovery are achieved through marginalization of the poor. While the social programs for the poor were drastically reduced, the strong domestic demand among the corporate and high-income sector that constitute the upper strata of the society was increased through providing them with the huge tax concessions. For example, in India, the government lost revenues through various subsidies and tax sops to the corporate and the rich, amounting to 2% of GDP.

Working people across the world have already been suffering, not only due to the global economic crisis, but also due to the corrective measures undertaken by the ruling elites. Everywhere those measures are effecting disastrous results.

The agenda of economic recovery from the global economic crisis is actually to further strengthen the stranglehold of the corporate global system. Just as the Iraq war and the devastation of Hurricane Katrina created vast opportunities for corporations, the current crisis and its international trauma has increased the possibilities for them to further exploit the common people.

Working people have to be alert and critically question the governmental measures and their policies to tackle the economic crisis. Raising the collective voice against anti-poor and pro-rich retrograde policies is highly important at this moment.

N. Gunasekaran is a political activist and writer based in Chennai, India.

From The Progressive Populist, October 15, 2010