We have seen how an angry 99% of the population can cause havoc throughout the world. From the Occupy Wall Street movement, to the many other copycat Occupy movements around the world, and to a certain extent the ‘Arab Spring’, we have seen how the majority can cause much disturbances, both politically and economically.
With the wake of the 2008 financial crises, and the current on-going European crisis, many have put the blame of the massive income inequalities experienced worldwide, squarely on Capitalism. Globalization has also come under attack. More and more people want economic protection by their governments when faced with challenges posed by emerging markets. The poor want to penalize the rich in one way or another. With the increasing spread of the internet, people are able to compare their standard of lives to the rest of the world and to voice their anger and unhappiness loud and clear.
A widening income gap between the haves and have-nots is the main driving force behind the anger displayed in these outbursts. In a 2011 report, the OECD said that the level of income inequality in the 22 member nations it studied increased by 10% since the mid-1980s, with conditions deteriorating in 17 of them. Another recent report further highlighted this point. Conducted by the Institute for Policy Studies, a Washington based think tank, the report found that CEOs at large US firms earned, on average, $10.8m in 2010, a 28% increase from the year before, while the average worker took home $33,121, a mere 3% more. At that level, CEO’s paychecks are 325 times bigger than their employees’.①
So, what can a responsible government do to address the concerns of the majority? As Kishore Mahbubani in his book ‘Can Asians think?’ wrote, “Societies should ultimately be judged on their ability to deliver most of their citizen’s human needs: food, shelter, health, education, a clean environment, a sense of community, and a sense of purpose in life.” A good government should do just that. In other words, keep the 99% of a nation happy. Only when the majority is happy, will a society be peaceful and prosperous.
A legitimate government, which wants to continue to remain in power, must rule with the majority in mind. This can only be done through a good mix of democracy, capitalism and meritocracy. Let me explain. A democracy is described as a form of government in which the majority has a say in who should hold power and how it should be used. On the other hand, capitalism, often than not, brings about a society which is controlled by a minority of elites and privileged through a meritocratic system. At the end of the day, a meritocracy can only reward a small number of people to keep its rewards attractive. If a whole society is equally ‘rich’, then nobody will be encouraged to work harder. The basic idea behind meritocracy is the premise of a ‘privilege and elite’ status if one shows merit. Capitalism, being a system controlled by the private sector driven by results, must at the end of the day, results in the formation of a small circle of elites which are in control of things.
But we are not about to dump capitalism and meritocracy for socialism yet. Capitalism has been said to have eradicated poverty by propelling innovation and growth. What I am suggesting is a good mix of these three ideals to create a society where the majority 99% is contended and the dream of becoming the top 1% continues to burn. To enable a government to keep the majority happy, it must be willing to take control of some parts of the country’s economy and resources. A democratic government should never leave all control of its economy and resources to the private sector. The private sector cannot be responsible for looking after the majority.
Just look at Fannie Mae and Freddie Mac in the US.② When left to their own devises, top management has once and again proven to be unscrupulous, folks greedy for personal wealth and are not concerned about the well-being of the average citizen. Industries as important as the mortgage industry and finance industry must be closely monitored to protect the majority 99% of the nation.
Another example of why key industries must not be run purely by the private sector can be seen in the Tokyo Electric Power Company (TEPCO), which runs the nuclear plant in Fukushima. TEPCO is a private company which has to report to shareholders and its board of directors. As in all private enterprises, its main purpose is to create profit. When the company failed to ensure the safety of the nuclear plant in the wake of the tsunamis, an entire nation has to fork out a large amount of money to help clear up the mess. Then the company turns around and raises the electricity bills of the average citizens in the name of staying afloat. The government, having spent much of the taxpayers’ money in dealing with the situation, is in the red and has to increase taxes to pay its bills. All these extra burden on the average citizen while the politicians and executives of TEPCO continue to get paid (much more than the average citizen).
In Singapore, we see the example of the failures of SMRT. In my comment on TODAYonline, I had questioned why the SMRT, which is responsible for operating the lifeline of the majority 99% of the nation, is run like a business unit, its performance measured by the amount of profit it generates. A public system should be run with the public in mind, not shareholders or management.
Having quoted the above three examples, I, contrarily, do not reject meritocracy. Meritocracy is the tonic that drives people to work hard and excel. It is the dream that keeps the young in believing in a better tomorrow. The goal of becoming the elite 1% of the population is the driving force behind a nation’s prowl. Neither do I reject Capitalism too. I will like to think that Capitalism cannot succeed by itself. A healthy nation must maintain a balance between its private and public sectors. A good government’s bottom line must be to keep its 99% majority happy by providing dependable infrastructure, affordable housing and quality education. It must then drive its citizen to excel by dangling the 1% elite status as the carrot. Capitalism, coupled by Meritocracy and government participation, must be the best answer in moving our nation forward.
①Source taken from an article written by Michael Schuman, in Time Magazine, Jan 30 2012
②Reckless Endangerment, How outsized Ambition, Greed, and Corruption led to Economic Armageddon, written by Gretchen Morgenson and Joshua Rosner.
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