By Arjuna Ranawana –

Arjuna Ranawana

Prior to the presidential election in Sri Lanka that defeated Mahinda Rajapaksa, a poll by Colombo based Social Indicator showed that the voting public was more concerned about the cost of living than the rallying cry of the opposition, which was the abolition of the Executive Presidential system of governance.

The fact that the opposition won, mainly on the strength of minority and urban voters, would indicate that somehow it had been possible to connect at least some of the electors to their own weak economic situation and to the waste and apparent corruption among the country’s ruling elite, in particular the Rajapaksa’s.

Not that Sri Lankans, or for that matter people in the developing world elsewhere, are not used to their leaders having much more than them. Culturally, Sri Lankans see a man with a bigger belly and soft hands as a person who is privileged and not having to work as hard as the average person.

But the income disparity issue appears to have triggered strong emotions in Sri Lanka this time around.

The long-standing theory of many Western economists who expounded the so-called “trickle-down” theory is discredited today, but its effects linger. The theory, popular during the Reagan-Thatcher days, believed that if the rich were allowed to make lots of money then the poor would have more crumbs off the table to live on. That theory did not work then nor does it now.

A few years ago the so-called “Occupy” movements that protested the excesses of Wall Street initially, brought income disparity in the United States to the forefront. Politicians such as Barak Obama benefited from the debate that ensued, making it possible for Left leaning Democrats to paint the Right as money-grabbers.

Internationally, however, the discussion on income inequality occupies the top spot today. World leaders, ranging from Pope Francis to economists and civil society activists are advocating a more even distribution of wealth.

Several credible studies made public last week, too focused on this topic. These studies have stripped political hyperbole from the debate and zeroed in on the facts. A survey by the NGO Oxfam titled “Having it all and wanting more” found that the 80 wealthiest people on the planet owned nearly as much as the 3.5 billion of the poorest people in the world.

A major bank in Canada – TD Bank – released a study that found that this income disparity actually stunts economic growth. This was echoed in part by a OECD study, “Focus on Inequality and Growth” which found that globally, the income gap was at a 30-year high.

That is a gap that is very evident in Sri Lanka. Though not many surveys are conducted on the topic, the fact that Sri Lanka’s population has become poorer is obvious even to the occasional visitor. In fact, the hardest hit seems to be the middle income earner!

While buses and trains are jam-packed the country’s super wealthy, a recent phenomena, travel around in some of the most expensive vehicles in the world such Porsche Cayennes, Panameras, Land Rover Evoques. Those stand out as signs of ostentation by the very few economically elite, as against the melee of three-wheelers and Marutis that the middle-class can afford.

There is a distinct difference between the Jayewardene-era where prosperity seemed to be more evenly distributed and no clear indication of a super-rich class than it is now. One could safely state that until the Rajapaksa’s came to power, there was more stable economic power amongst the middle class. It is a no-brainer that the most stable societies in the world are those with a large middle-class.

As more evidence of the apparent excesses of the Rajapaksa regime are discovered, it is clear that the opposition benefitted by income disparity and the impunity with which the country was ruled.

The Nissan NR supercar that was found in a Colombo suburb last week is listed at a price of $115,000 in North America before taxes. That is Rupees 14,375,000, an astronomical sum that only a fraction of Sri Lankans would actually earn in a year.   For most, it would take a lifetime, if at all.

Proof that the subject has caught the attention of the world’s rich came at the World Economic Forum in Davos last week, where income disparity was widely discussed. An emerging consensus was that hand outs to the poor and punishing the rich was not going to work. But most economists felt that governments had a bigger role to play in boosting the effectiveness of the public service, rooting out corruption and delivering subsidized services such as healthcare to the citizens.

That is hoped, a lesson that the Sri Lanka’s new government would adhere to. The Rajapaksa regime has been the epitome of corruption and plunder of the nations wealth, at the cost of the average Sri Lankan.

They should have adopted the American saying ‘Spread the gravy around’. That may have reduced the anger that voters expressed at the poll and they may still have been in government.