Income disparities

The growing income disparities between the poor and the rich have been identified as a major risk to social stability and security.
So grave is the danger that the world economic forum in Davos, Switzerland, has made it as the theme for this year’s conference.
Davos may be far but the issue is as relevant to that meeting as it is to developing economies including ours here in Zambia. It will be remembered that the Patriotic Front got into office on the promise of more money in people’s pockets. This was a direct reference to a process of distribution of wealth in which Zambians in general would share in the distribution of resources equitably.
In other words there was a promise that Zambians would earn more from their effort and therefore accrue direct financial benefit from the new government.
This has not happened if anything the removal of subsidies has plunged more families into financial penury as inflation has eroded whatever benefits were envisaged.
Secondly, for the majority peasant farmers, the price of a bag of maize, rice or beans has remained the same, thereby making them vulnerable to the demand pull shocks.
On the other hand the proliferation of capital projects has created a new breed of elite, the ‘tenderpreneur’, who are feasting on single sourcing and irregular award of contracts. This new breed is conspicuous by consumption and display of ostentatious wealth far removed from any effort they have ever made in their lives to do a decent days work.
Therefore instead of ameliorating the situation, perception is growing that those with political influence and clout are increasingly joining the wealthy elite by using their political influence and connections to amass wealth to the disadvantage of those who genuinely seek to work and create wealth honestly and without cutting corners.
It is for this reason, among many others that the trickle down theory of economics has been largely discounted in most developing countries because it lacks the capacity to distribute evenly, in points of need.
For example our large scale contracts will create temporary jobs and then remain in some cases white elephants which will still demand public funds in order to defray the loans obtained towards their creation.
However, due to poor infrastructure and penny pinching the quality will be compromised and yet the financial cost will remain binding, to be borne by the less privileged whose social services will be curtailed.
In essence therefore, unless a direct system of ensuring equitable income distribution is found a tension between the ‘haves’ and the ‘have nots’ can be expected and this is the point that the economic forum is making.
Indeed it is the same point that Oxfam is making by stating that the 85 richest people on earth own the wealth of half of the world’s population.
The answer lies in finding a direct mechanism to kindle, promote and nurture a public investment programme that will be directed at enabling as many Zambians as possible access a decent income than making them mere spectators of high quality roads from which they will not benefit.