Justice in Wealth Distribution: Between Failure and Rectification — Part Two

·       Part Two.....

-        People in most developing societies point to the injustice of disparities between social classes… when the "market economy" is viewed as the best solution to advance the country economically and socially. In reality, it is the new conventional expression of capitalism, which was intended to sound benign… at least linguistically..!!. Proponents of the new capitalism, the "market economy," demand that the public sector not intervene in market mechanisms…and to refrain from involvement in private-sector activity which they claim can achieve balance and harmony among the interests of the parties in that market..!! As a result of supply and demand factors that govern its activity, or the “invisible hands” that are fair – according to their concept –..!!... Moreover, the public sector must not intervene in production mechanisms, such as by setting ceilings on incomes or wages, or prices. In their view, that would harm the market if done and would increase the exacerbation of disparities and injustice in the distribution of wealth… They adopt the market principle “let it work.. let it run”!!

-        The private sector may, in some of its market practices, be behind some of this injustice that increases gaps between social classes, in order to preserve its interests in the activities it conducts in the market. The private sector is concerned with the profits of its businesses… for example, it may not view unemployment as a problem but rather as an opportunity to offer low wages to queues of workers seeking jobs, choosing according to its preference… We see that even the current minimum wage in Palestine, which is 1,450 shekels, is not respected in some cases in the private sector… in the presence of unemployment, because the private sector seeks to reduce its operating costs. Ultimately, and to maximize its wealth!

-        The truth is that the private sector sometimes, in its calculations to cut expenses, relocates its factories and production to a place outside the country, where it sees lower workers’ wages… and therefore moves some of its capital abroad to invest in another country because of lower production costs. This happened in China and even when some Arab businessmen, including Palestinians, moved to countries other than their own to benefit from wage differentials and other objectives; this sector expects greater security in its new location than in its home country because of political and social unrest in the country of origin….. Also, some segments of the private sector, some investors and the wealthy transfer part of their capital abroad for what they claim are safe investments, and they open secret accounts to deposit their profits from foreign investments in banks abroad… These are scourges that most developing countries suffer from, led by Arab countries including Palestine. Consequently, when part of the national wealth—the wealth of the wealthy—is extracted to other countries, especially under the prevailing principle of globalization in international economics, the market is deprived of one of the main factors of production and of developing the local economy, which is capital, in addition to the loss of tax revenue that could have been collected if this migrating wealth had remained in the country of origin, and which would have been spent on state projects benefiting all citizens. I also note here that some politicians and influential figures in developing countries and other states plunder national wealth through deals, commissions, or bribes…and transfer it abroad, such as to Switzerland, where they open secret accounts without names, only special codes… These stolen amounts are deposited for them in those secret accounts, and many problems occur when such politicians are toppled or die, so their countries cannot recover these assets except rarely. It is clear that the losses to the homeland from these groups, including the behavior of some segments of the private sector, increase poverty rates in a country already afflicted by inequality... I add here that some private-sector segments, for example, may resort to seeking safe tax havens in multiple countries around the world where money and investments are not subject to taxes, and you find some private-sector companies making those places their haven… It has been said that the private sector has no homeland, especially in the age of globalization. Some businessmen and some Arab and developing countries invest abroad in bonds and shares in global financial markets or in the debt instruments of an advanced economy such as the United States, by purchasing its Treasury bills from these investing countries or individual investors… Wealth remains accumulated abroad as deposits with foreign banks… Some events have occurred where countries tried to recover their deposits and the returns on investments back to the country, but did not succeed under the pretexts of freezing them due to the classification of a given country as supporting what is called terrorism. In addition to all that, even if the private sector remains in its homeland, it seeks modern technology that enables capital owners to replace some workers with robots or automated production lines… to reduce production costs, because the private sector’s priority list is its business… and private interest is first in care. This may be true, and some segments of the private sector do not fulfill their social responsibilities proportionally to their accumulated profits and wealth… In this context, some wealthy investors may partner with businessmen from a country hostile to their own… and see no objection in that… This happens repeatedly… in Palestine.

-        However, this behavior by the private sector is not the only main player in the country’s economic, social and political life… Rather, many segments of the public sector cooperate with and support such behavior in exchange for private interests among them. Cells of corruption in the public sector exist in all countries but at different degrees and proportions. The public sector has the authority to enact laws that regulate the economy… and it has taxation tools among these laws and exemptions and favoritism…. It is observed that some decision-makers in the public sector in the country, instead of establishing justice and reducing inequality in society, are involved in assisting the private sector to protect its interests, and this is a form of corruption that is rampant in most countries of the world, including Palestine.

-        The public sector may not be free and unfettered in organizing economic activity and implementing projects through enacting laws… rather, it may sometimes be constrained in some developing countries at least, especially countries that suffer deficits and public debt that sometimes equals the gross domestic product… This results from conditions imposed by creditor countries in classifying and listing developing or borrowing countries on borrowing lists prepared by developed creditor countries and affiliated international funds, where the first injunctions are to let the borrowing countries’ private sector operate freely!!.. Consequently, income gaps between classes increase and levels of injustice rise…. The inequality in the distribution of wealth is evident.

-        Based on the foregoing, concentration of wealth in the hands of a few in any country will affect the distribution of wealth and income and increase the gap between the rich and the poor,
And in reality, we face equations that must be well managed.. The relationship between the public sector represented by the government and the private sector is very important in all countries… Appropriate understandings must be reached…and the public sector must intervene in the private sector in a process of monitoring its behavior, such as prices and wages—by setting a minimum—imposing fair taxes and fees that reduce gaps between classes… The principle of a mixed economy may be suitable for our countries… where the public sector retains strategic projects in the country and public services as well, and does not sell them to the private sector in what is known as privatization… in addition to monitoring any behavior of the private sector in its operations and its resort to monopoly…and unjustified prices… that create more poor and more problems among social classes… before the ruling class and the public sector
...for “the masses see and hear all that goes on around them...and no one can silence their anger.”..

-        30-1-2019