Society’s equalizers
Life can be unfair. He who holds the gold, makes the rules—according to the satirized version of the golden rule we all learned in grade school. It seems that gaps in society have a way of growing wider if things are left alone. It is often tempting to believe that this is the reality of life.
Education, supposedly the “great equalizer,” often leads to the opposite outcomes, where realities in the educational system usually perpetuate and even widen the gap between rich and poor. Children of the rich and powerful can get the best education abroad or in the most expensive private schools. But children of the poor are limited to the public school system, where more often than not quality is inferior—if they are able to attend school at all. Even more ironic is that the cost incurred by society to provide public education per student has been estimated in past studies to be significantly higher than the corresponding cost of private education, and yet outcomes turned out to be better in the latter. The privileged education obtained by the powerful further perpetuates and reinforces their advantaged position in society. Meanwhile, the rest must settle for largely inferior education from public schools or cheap “diploma mills.” And as the rich and educated intermarry, just as the poor and uneducated do, family income gaps further widen through time.
One finds more of such unfair realities in the financial sector, with the system giving undue advantage to the rich while handicapping the poor. Large and rich borrowers can borrow much more easily from banks, with the lowest interest rates and no physical collateral requirements. On the other hand, struggling but otherwise bankable small enterprises and small farmers—those in most need of cheaper financing—face the highest rates from the banks, under rigid requirements for collateral—if the banks would lend to them at all. The big and rich get the best terms because banks consider them better credit risks. But are they really? Aren’t most of the nonperforming loans in bank portfolios those that were made by bigger businesses? And aren’t the microfinance loan programs dealing with the smallest of borrowers consistently showing close to 100-percent repayment rates (especially when it’s women who contract the loans)?
Technology, including information and communication technology (ICT), is yet another potential equalizer that in reality has led to the opposite effect in developing country contexts. Computers and access to the internet can be powerful instruments for creating wealth. But where the rich have the advantage in access to computers and high-speed internet, the poor who are unable to buy even their basic needs, much less computers, get left even farther behind. The result is the so-called digital divide, where the gap between the ICT haves and the ICT have-nots gets even wider.
Nothing about the above-described gap wideners in society is inevitable or unavoidable. The problem lies primarily in governance and management. Public education need not be inferior to private education; we just need to ensure that the public funds going to it are properly and competently managed. What is needed is a determined and unrelenting effort to curb the traditional massive leakage of public funds in the public education system. The digital divide can be bridged if public ICT facilities are provided in every village. India and Thailand, for example, have made great strides in widening ICT access to the common populace, especially in rural areas. The proliferation of smartphones has also put the internet within the fingertips of common citizens. On access to finance, the need is for a change in mindset and a change of heart among bankers themselves. Credit for SMEs and for the poor are not necessarily the bad investments bankers have always presumed them to be, but government must put up the support systems and delivery mechanisms that would give banks greater confidence in this.
Life can be unfair, but it doesn’t have to be so. We just need the right governance and enough private sector players with the right hearts.
