Equality of opportunity must for prosperity

   By Power Corridors ,  09-Nov-2019
Equality of opportunity must for prosperity

Discrimination against any section of society also hurts its own well being as the talented from the victimized cannot contribute to the economy

The basic tenet of any market economy is access—equality of access and opportunity. The concept of competition assumes that everybody has equal opportunity to access the market. Also, they have equal access to opportunities to develop the required skills. Should there be a deficit in either of the two, there would certainly be skewedness and the market would lose out opportunities to leverage skills.
Let us start with an example. In the US, where blacks were discriminated against not long ago, everything happened for whites and by whites. From the 1960s, when blacks won their rights, it is estimated that one-fifth of the growth in the US economy happened due to them. Who could have thought even in the last decade of the last century that the mighty US one day would have a black president?
But the narrative goes deeper. Take the case of diamond. In its uncut form, a diamond doesn’t have the glitter. It needs to be cut and polished to gather the value it commands in the market. The case with equality is similar. Since we brought up the issue of Barrack Obama, who had spent his formative years outside the US, we need to take the example of Michelle alongside. Obama couldn’t have won the election had the country not been prepared to accept a black as a president.
On the other hand, it was the success won over decades by the likes of Michelle, his wife, which created the environment of acceptance of a black as president. The blacks had to capitalize on the access to opportunities and prove their mettle and break the stereotype built over the centuries. It was not an easy task, but they proved that beneath the skin we are humans and equal.
But as all blacks are not Obama, all whites are not presidential material. The distinction lies in the skillset that is inhered in us and in our ability to polish it to its optimum by accessing the opportunity. But if there is a barrier—e.g., blacks not allowed to the schools where whites go—we kill dynamism. The world loses skills that the society could have benefitted from. This was exactly the situation before the 1960s in the United States; the country lost huge economic opportunities.
If we do not create opportunities, and discriminate against certain castes and creeds, we cannot unlock the possibilities of prosperity. Capabilities remain unutilized because of discrimination.
If we think that this is true of individuals and doesn’t apply to the level of countries, we would be utterly mistaken. In the current spate of liberalization, along with other less developed countries, the Republic of Mali jumped into the bandwagon. It approached the global market with its primary produce. The country lacked processing industries, adequate investments in manufacturing, and skill.
Mali opened its economic frontiers and opened its market to foreign investment. It hoped that foreign direct investment or FDI would create the skill that it had failed to nurture and thus would drive the country to prosperity. But instead things went from bad to worse. This is often blockquoted as a classic case of what an ill-prepared country may lead itself into.
Mali was rich in national resources. But with a 46.4 per cent literacy rate and with no manufacturing sector to write home about, it was open to exploitation by foreigners. The country got ripped. With only natural resources to sell, it was highly vulnerable to global fluctuations in the commodities market. Its human capital also got badly exploited; contrary to the popular belief that globalization benefits those who liberalize, it got poorer.
It happened on two counts. Mali had failed to climb the prosperity ladder step by steps. Before opening its market up to global investment, it didn’t take a universal education drive for its citizens and build up human capital to push back the negative impacts in the form of exploitation of labor by foreign capital. Neither did it systematically attempt to diversify its economy. In short, it had diamond, as per our analogy, but lacked the skill to cut and polish it for the market. Its basic dependence was on gold that accounted for more than 67 per cent of its earnings and the rest were mostly accounted for by cotton but not textile. Essentially, therefore, it produced raw materials and sold them as such in the global market without adding any value to, thereby opening itself up to the vicissitudes of the price fluctuations in two commodities in the market.
On the other hand, when India opened up, it did so after decades of diversifying its economic strength both in education and in investment. India itself is and for centuries has been a huge market. It had as its assets world-class skills in engineering and science, industries and investors, and a financial market which was almost a plug and play away from getting integrated with the global market. Even then it’s still not fully integrated.
But since the beginning of the liberalization process in the nineties, India has steadily climbed the steps of prosperity and has taken a seat among the global economic powers. It was possible because for ages the country had nurtured its human resources. The skills that the country nurtured not only led to the benefits of the country itself but also many other nations, including the US. Our poverty level started to reduce dramatically; access to institutional finance through various innovative means, including technology, created capacities in diverse field. What Mali had failed to do, Indian managed to achieve through decades of application and aspiration. FDI was brought in and bolstered our technologies; it made the insurance sector broad-based and the auto sector prosperous. Digital technology opened new windows of opportunities for millions of small and medium entrepreneur who are now the mainstay of our economy.
We started by saying that equal opportunity is not enough; it merely is the first step. If Michelle Obama legally had the equal opportunity to education as any other white person yet didn’t legal sanction to leverage that, could she have been what she is today? Could the US have enjoyed the growth that is attributed to the withdrawal of sanctions against blacks?
On the global market, the same thing applies. Mali failed to win benefits from globalization because it had singularly failed to prepare itself to fight the vicissitudes of global markets. It had failed to diversify; it sought prosperity with two primary commodities—cotton and gold.
Market access, be that global or local, does give an opportunity to entrepreneurs. But such access without concomitant prerequisites may bring in devastation and shocks. Market access, therefore, is needed both internally and globally. But empowerment and preparation are also needed to leverage the market to create prosperity.