Social contract ---is defined by whom we do owe and what we do owe. We owe ourselves, to our families, to our communities, to our larger society, to our states, to our nation and to our continent and ultimately to our planet and to the universe? We born in a family, our family has a neighborhood, a community which in turn is a part of our bigger society, which is a constituent of our state and nation and our nation is a small part of our planet and our planet is a tiny entity in the universe. Hence we belong to all these.
Now see, due to our own position in such entities we are responsible to them. We are answerable to them. We are creators of our system and we belong to these systems. We are bound to respond to the ills of these systems and we have duty to correct them. Science, and social sciences have been created by us to help us live collectively. If we withdraw from our responsibilities to look after them these pillars of our syrem-science and social sciences start cracking. So to save our existence as a collective being it's imperative on our part to keep them orderly and healthy.
INEQUALITY
1. A. Economic inequality-
inequality of income and wealth in a society can not be explained and understood without dealing with socio structural set up of a society.
B. Economic inequality is not possible without understanding inequality in terms of political science, history and social sciences., Science & technology and mathematics.
C. If you think you know everything and you are right everytime it simply means you are foolish and you do nothing at all except bragging all the time. Those who are not ready to learn are destined to remain fool for whole life. And the best way of learning is discussing with those who do not agree with you. Dissenter is the best teacher.
D. Only consciousness about relativity regarding one's standing in society reveals one's position in the society. If you are not conscious of your relative status in your society you are not in a position to understand reality around you.
E. In the US workers productivity and wages continue to rise to gather from about 1946 but from about 1980s wages started falling though productivity of labours continued to rise. It is a paradox.
F. Though economy and productivity was increasing real purchasing power also simultaneously decreasing from the same years.
G.Then where does the economic gain may go
a. To the pockets of more wealthy people
b. To be used for further investment
c. To the govt programmes for poor
d. To the programmes for improvement of public education and health and other humanitarian infrastructure
e. To erect new infrastructure
F. The reality is that from 1980s median income became stagnant, poor continued to became poorer and top reach continued to became richer. This shows the major economic gain has been usurped by the people who were already richer.
G. In the US from.1946 to 1980.lower income people gained most but from 1980 trend changed and higher income group started getting more and more income whereas lower income people became poorer and poorer and in some cases became income starved group.
H. Income is a flow of earning over a certain period of time whereas wealth is the result of that flow. Wealth is an asset and income may flow from wealth as well . Fir example one man purchases a house from his income and put it on rent. Now he starts getting income in the form of rent of that house.
I. From 1980s income from wealth is increasing for the rich.
J. If flow of income becomes less it is very hard to keep owning the already accumulated wealth.
K. Wealth gap is more than income gap because wealth is accumulative.
L. Children born in a rich family has greater chance to remain rich but those born in middle income or lower income has only a little chance to be rich.
M. There are significant gaps due to caste and ethnicity in income and wealth. SCs/STs, OBCs, Females and Muslims in general in India have less income and consequently less wealth due to their social standing in the society's structure.
ARGUMENTS IN FAVOUR OF INEQUALITY
(A) Inequality helps the rich to establush more enterprises . Inequality promotes incentives for the rich who in tern focus on more innovations, enterprenuership, jobs, employment and so richness of the rich helps people to be benefitted .
(B) inequality promotes competitiveness and everyone has a chance to be rich.
(C) Inequality brings wealth and income to the rich but someone is not rich at expense of someone's poverty.
(D). We can reduce poverty without reducing inequality.
(E). Targeting the rich is socially divisive.
MOBILITY AND INEQUALITY
Inequality may be less impactful if prospects of mobility are sufficient. If people can be mobile as per their contribution to economy mobility could be more flexible.
WHY INEQUALITY IS BAD
1. If X becomes richer and Y doesn't become poorer , it is argued that inequality is not bad.
But this is bad as it is not only a question of not becoming poorer but it's a question of Fairness. If from the same economic gains X gets , say thousand times more than Z it's not fair to Z.
2.Why do consumer in us often beat Citizens in us? For example why we don't go to neighborhood shop for marketing and prefer some online plateform? This is probably due to
I) lack of adequate resources
ii) most of us do not connect our action. With common good
iii) if others are not doing sacrifices why should I ?
DO WE ALSO CONTRIBUTE?
1. As a citizen we favour availability of good job, good wages, and presence of small and medium shops in our neighbourhood.
2. But as a consumer we prefer ease of purchasing goods, cheap availability of goods and services and best deals with lowest price.
3. This contradiction between our consumer value and citizen value and consequent preference for our consumer value puts pressure on wages of workers who produce such goods, but the facilitators , like platforms on which such online business for cheap goods and best deals happens get more profits. This has widening impact on inequality.
4. This is may be due to any of these reasons--
I) lack of adequate resources
ii) most of us do not connect our action. With common good
iii) if others are not doing sacrifices why should I ?
WHERE DOES PROFIT MARGIN GO?
1.
a. To the pockets of more wealthy people
b. To be used for further investment
c. To the govt programmes for poor
d. To the programmes for improvement of public education and health and other humanitarian infrastructure
e. To erect new infrastructure
2. A large part of profit margin goes to CEOs as their salary and salary consists of mainly stocks of shares.
3. Share prices have been increasing from 1980s and so is with CEOs salary.
4. In the US
Top 1% owns about 50% of shares value.
Top 10% owns about 92% of share values.
Bottom 50% own .25% of share values.
Thus most of the wealth(shares) go to small fraction of population.
And this huge wealth is with baby boomers.
5. When these baby boomers die they leave this huge wealth to their children and grand children. This is called GENERATIONAL WEALTH TRANSFER.
RAISING PROFITS BY A CORPORATION:METHADOLOGY
I. Cut payroll cost
A. By reducing wages of employees except top executive.
B. Eleminate health care and retrial benefits.
2. Ways to accomplish this by
# Firing some employees
By outsourcing job to abroad
By software substitute
By improving overall efficiency
By weakening unions.
3. Every worker is also a consumer and if a worker is severely affected is it not going to harm consumer base?
No , because the management fails to do so some other player may enter into the scene, take over the company and sell out at higher price.
4. Other way to increase profit-sharing
Cut workers safety
Eliminate overtime pay
Fire anyone above 45
Don't promote or tain women.
Hire undocumented immigrant .
5. In the US corporates profits increases so much thatp it become bigger than national economy.
6. Wages as share of national economy continuously dropped from 2000 in US however in Europe remain more or less the same. So in the US inequality rises more than in Europe.
In India situation is
Year | Share of wages in national income (%)
------- | --------
1990 | 40.8
1991 | 39.7
1992 | 38.7
1993 | 37.9
1994 | 37.3
1995 | 37.0
1996 | 36.8
1997 | 36.6
1998 | 36.5
1999 | 36.4
2000 | 36.3
2001 | 36.1
2002 | 35.9
2003 | 35.7
2004 | 35.6
2005 | 35.5
2006 | 35.4
2007 | 35.3
2008 | 35.2
2009 | 35.1
2010 | 34.9
2011 | 34.7
2012 | 34.5
2013 | 34.3
2014 | 34.2
2015 | 34.1
2016 | 33.9
2017 | 33.7
2018 | 33.5
2019 | 33.4
2020 | 33.3
2021 | 33.2
2022 | 33.1
As you can see, the share of wages in national income in India has been declining since 1990. This decline is due to a number of factors, including the rise of mechanization in agriculture, the decline in the size of landholdings, and the lack of job opportunities in rural areas. The decline in the share of wages in national income is also a challenge to the government's goal of achieving inclusive growth.
It is important to note that the share of wages in national income is just one indicator of the distribution of income in a country. Other factors, such as the size of the informal sector and the level of inequality, also play a role in determining how income is distributed.
The share of wealth of shareholders in national economy in India from 2004 to 2022 is not available. The data on the distribution of wealth in India is not collected or published by the government. There are a number of reasons for this, including the lack of a comprehensive definition of wealth, the difficulty of measuring wealth accurately, and the sensitivity of the data.
However, there are some estimates of the share of wealth held by the richest 1% of Indians. According to a 2016 report by Oxfam India, the richest 1% of Indians controlled 58.4% of the country's wealth. This share has likely increased in recent years, as the Indian economy has grown and inequality has widened.
The share of wealth held by shareholders is likely to be a small fraction of the total wealth in India. However, it is likely that this share has increased in recent years, as the Indian stock market has boomed. In 2004, the market capitalization of the Indian stock market was around \\$1 trillion. By 2022, it had grown to over \\$3 trillion. This growth has benefited shareholders, who have seen their wealth increase significantly.
It is important to note that the share of wealth held by shareholders is just one measure of inequality. Other measures, such as the Gini coefficient, are also used to measure inequality. The Gini coefficient for India is around 0.4, which is considered to be high. This means that there is a significant amount of inequality in India, with a small number of people holding a large share of the wealth.
PURPOSE OF CORPORATIONS
It should be stakeholders capitalism and should not be shareholders capitalism only.
WHAT HAPPENED TO CAPITALISM FROM 1980'
1. More and more emphasis on best deals resulting in inequality with higher and higher wages of so called star performers.
2. Corporations are making big profit margins but at the same time though salary etc of top executives has been increasing that of the workers remains stagnant resulting in increasing inequality.
3. Most of the increase in the income of top executives come in the forms of stock of shares and there has been increasing bye back of the shares by corporations themselves, resulting into the fact that the major profit doesn't go either to workers or to the development fund of the corporations but to the pockets of the top executives and to the wealth of the corporations generating huge gap in income and wealth of top .
3. Shift of capitalism From stakeholder capitalism to shareholder capitalism from early 80s --less and less expenditure on workers and more and more in rewarding shareholders and CEOs.
............. Outsourcing the task for maximizing profits of shareholders.
SOME IMPORTANT FEATURES:
GLOBALIZATION, TECHNILOGICAL CHANGES. JOBS OF THE FUTURE
1.AS wages remain stagnant consumers have come under the pressure ,consumers are left two options-
(a) to spend on less items
Or (b) to spend less on each item
This is the pressure of demand of best deals on the part of consumers to save money as much as possible or to spend money in a way to get maximum from the same money. This is a situation of resource crunch for consumers who also happen to be workers with stagnant median wage.
2. In the environment of increasing inequality is it possible for most of the people under the pressure of stagnant or real lower income to withstand the onslaught of winds of modern tech as such people due to lack of adequate income and wealth can not technologically upgrade themselves in order to be remain relevant or in order to be able to be competitive in job markets. So people at the bottom of inequality are facing of danger of being wiped out by the new technology of machine learning and AI.
3. Corporations are under greater to pressure to maximize their return , but this is not to increase the wages of workers or to increase the investment for improving the corporations but to maximize the return of the shareholders.
4. More increase in income and wealth of investors and less income for workers.
MOBILITY AND SEGREGATION
1. CAUSE OF LESS GEOGRAPHICAL MOBILITY WITHIN THE COUNTRY
i. People of low income area don't want better jobs in high income area because of high cost of living.
ii. People in low income area have strong and extensive network of family and friends.
iii. People in high income areas don't move to low income areas as these areas have very few good opportunities.
iv. People of high income areas don't move to low income areas as latter have not good living facilities.
2. CLASS AND CASTE
GEOGRAPHICAL SEGREGATION
In the story of inequality we find
i. Class and class are intersecting each other.
ii. Class of a person in many cases carries along with it the caste status.
iii. In many other cases castes continue its status when travels to class.
3. Even in a poor area people tend to live in separate groups according to their caste status or communal identity.
And same is in rich areas of residence.
3. In urban areas population's residencial pattern is decided by caste and class.
EDUCATIONAL SEGREGATION
SOME OTHER FACTORS RESPONSIBLE FOR HIGH PRICES, LOW WAGES AND SO FOR INEQUALITY
1.Globalization
2.Technology
3.Monoplistic production and service
MARKET VS STATE
1. If fact market is not free from govt.
2. Rules regarding functioning of market are framed by legislatures, judiciary and executive branches of govt.
3.Much political power is executed in favour of market by
A.Simply keeping issues off public agenda.
B.Blocking proposed law.
C.Interpreting laws
D.Simply not enforcing law.
E.Framing the choices by hiding other choices.
MONEY AND POWER
1. Money is not not a zero-sum game. This means that if money concentrates at the top this doesn't mean people in the middle or at the bottom are not making money. They may be still money even when there is growing concentration of money and wealth at the top.
But power is a zero -sum game, thar means when there is more power at the top people in the middle and at the bottom have less power.
2. Rules of market are not the results of operation of market itself, rather these rules of market are created by power and power is not equally allocated at all levels.
3. Wealth begets power, and power begets wealth. This is a viciousl cycle. More power at the top concentrates more wealth at the top. More power makes possible to make rules regulations in favour of market mechanism which helps invrease in wealth at the top . More wealth at the top again generates more power at the top. This is the vicious cycle of power and wealth. So policies are made and enacted to favour wealthier.
4. Corporate and trade groups spending on elections have been increasing since 1970s.
WEALH-TAX-POWER
1. When wealth is maximum at the top , taxes at top are lower.
2. When at the top wealth is low taxes are higher at the top.
PROPERTY
1. Concept of property changes with time. Earlier slaves were property but when slavery abolished they were no longer property. In the US the military took over the lands of native American. Thus property is subject to political power.
2. Under Intellectual property ideas are property.
SOME SOLUTIONS
1. Ensuring easy access to vote.
2.Disclosing the sources of money received by pol parties.
3. Complete transparency of political donations.
4. Limit on political donations
5.Independent audit system for political parties.
6.Making such audit reports public.
7.Releasing of wealth from top to middle and low. Reset wealth distribution.
8. Break monopolistic economy.
9. Civil Rights legislations.
10. More freedom to people to access political, economic, social cultural tools.
When prises rise more than rise in income it means people are becoming poorer as their purchasing declines with increasing prices.
BUSINESS CYCLE
1.Businesses become too optimistic during upturns and create too much capacity, then must reverse.
2. Consumers spend too much during upturns until they are so deep in debt they must reverse course
3. Govt spends too much during upturns and they they must pull back as budget deficit mounts.
4. Pandemic come along and disrupts economy.
PRODUCTIVE CAPACITIES OF A NATION
People
Offices
Labs
Factories
Infrastructures
DEMANDS
Consumers
Government
Exports
Businesses
PRICE RISE(INFLATION)
When demand is more than Supply
PRICE DECLINE (RECESSESSION)
When supply surpasses demand. Job loss
This cycle goes on intermittently.
Job loss- First are those who are in bottom half, least skilled. And if the social structure of those who lost first is slayed we get the picture that as in the US where first losers are blacks and Hispanics in India they mainly belong to OBCs , SCs/STs.
FISCAL POLICIES--Govt spending
Creates demands, which creat jobs and boosts wages.
This may create govt debt but if economy is growing fast due to the expansive fiscal policy debt/gdp ratio is lowering .
But what when Debt/GDP ratio is increasing. Then if policy of raising taxes and cutting down govt expenditure economy slows down. This is raise DEBT/GDP ratio.
One may argue this will lead to inflation.
SPENDING
1.spending on Past obligations(social security)
2. Spending on current needs of individuals and families.
3. Spending on stabilization (to counter the effects of business cycle eg. Income support during recession)
4. Spending on future productivity like education, infrastructure, R&D
MONETARY POLICY
1.Demand is less---Interst rates are lowered
Demand is high/Inflation loom- Interest rates are increasd
Note--ONE OF THE MAJOR PROBLEMS OF DEMOCRACY IS THAT MOST PEOPLE DO NOT KNOW WHERE DOES POWER LIE. MOST PEOPLE ARE IGNORANT OF HOW POWER FUNCTIONS AND WHERE IS IT'S SWITCH.
PUBLIC POLICY AND DEMOCRACY
Democracy is a system in which those in power are duty bound to listen what the public in general are demanding. Public demands force the democratically elected leaders to act. It is true that even in a classically perfect democracy those who are at the top may try to enforce their own ideas as policies in the name of some public good but policies are not the handiwork of the governments only. Governments have to listen to voters as the governments are aware that they will have to be answerable to the voters in parliament, and on other plateform and ultimately in the next elections when they go to be reelected. So people's voice must get a space in the area of public policy.
While choosing a public policy to be implemented the steps that may involve include--
1. Identification of a problem which is a public problem
2. Identification of Possible intents and goals
3. Identification of possible alternatives to achieve those goals
4. Finalising one option as a public policy
5. Finalizing implementation strategy
6. Monitoring, improvement and reshaping.
7. Intermittent evaluation
All steps involve discussions and debates. A healthy democracy is that where voters and general public are aware of what is going on and where public have sufficient forum to express their ideas, opinions, apprehensions and suggestions.
Problem in Indian system of democratic governance is that here elite and leaders are fanciful of providing policies without acknowledging the reality that considering the dimensions of problems and size of population they have not the adequate information and skill to decide about any policy. Of course leaders must have ideas and ideologies but they should entrust the specialists the task to evaluate their applicability feasibility and utility and if every thing is all right direct them to translate such ideas and ideologies into policies. And if such leaders have something to offer about applicability and utility they should let the discussions happen and then take decision on the basis of voting. We have seen the disastrous policy implementation in many cases e.g. in cases of demonetization, lockdown, etc. These were in fact not policy decisions but they were just authoritarian whimsical decisions.
A human being is a social being and her or his personality is constructed by influences listed below
1. Genetic make up(and this is to be investigated for each individual separately)
2. Cognitive ability
3. Group memberships
4. Emotions
5. Beliefs and attitudes
6. Identity
7. Media exposure
8. Social networks
9. Elites/group leaders
10. Education
11. Life experiences
12. Institutional arrangements
13. Laws/Norms/Traditions
14. Social structure and social order
Every person has a political opinion and that is created by various factors mentioned above. So when policy areas are to be identified and policies are to be formulated policy makers must also take public opinions as their guide . If opinions are taken or discussed before hand there is greater chance of adherence and compliance. As we have seen in case of Anti farm law agitations of farmers. When Farm Laws were passed there were virtually no consultation with essential stakeholders , that is farmers and that led to intensive farmer's agitation against these laws which culminated into withdrawal of laws. Since every person is a political person and democracy calls for listening to every interested person consultations and taking stock of public opinions matter a lot.
