A reader writes: “Your column on Brazillionaires was fascinating (Sept. 9, 2016). It is sad to see that in countries like Brazil and the Philippines, inequality is getting worse. But even in developed countries like the US and Europe, the same thing is happening. The gap between rich and poor is getting worse—just look at the many malcontented young people who are desperate enough to turn to terror. I wish society will take care of its poorest people more, starting with basic health and education. What do you think?”
My Reply
It is tempting to agree with you that inequality is increasing around the world, but since I am not an economist, I will have to rely on what experts say. Allister Heath, the deputy editor of the UK’s “The Telegraph,” debunks the myth that inequality is the main problem.
In a provocative article entitled, “Yes, Some People Really Struggle, But Inequality Isn’t the Problem,” Heath cites figures from the West.
In the UK, income inequality is practically the same as it was 30 years ago. In fact, a decade ago, the incomes of the bottom tenth increased by almost eight percent; the middle group, by a bit more than two percent; and the top tenth, by—Surprise!—zero percent.
The situation in the US is similar. Heath quotes Emmanuel Saez, a University of California-Berkley professor, who says that the top income earners made 13 percent less, compared to the rest, who made around eight percent less than before the recession, narrowing the gap significantly.
When government benefits are included in the calculations, Heath quotes figures from the Congressional Budget Office showing that inequality in 2013 is almost five percent lower than before the recession.
The real problem, contends Heath, is not inequality per se, but not enough income for most people because of slow economic growth.
“The genuinely problematic inequality that does exist in our midst does not show up in the usual income statistics,” says Heath. “Large groups of people across the West are suffering from inadequate education, family and community breakdown and a deep, tragic cultural poverty.”
In a way, you are right. The developed nations appear to be suffering the same problems of many developing ones. In the UK, Heath enumerates inadequate education for children and adults, and lack of access to manufacturing jobs; in the US, decreasing employment for poorer workers with less education, and lower life expectancies for Caucasians for the first time due to suicide and alcohol problems.
I agree about the value of education for everyone, and so does Heath.
“We will need hugely improved education for children and adults alike, a cultural and social renewal, an entrepreneurial rebirth and a pro-growth economic policy.”
Lifelong learning
In our graduate school in psychology a decade ago, a feisty and smart lady was well-known, not just for her stellar academic performance, but for the fact she was taking tough courses during her fifties and sixties.
But unfortunately, she is an exception. Many students cannot wait to get out of school, without realizing that in today’s competitive world, learning has to be a lifelong process, in order for them to stay competitive in the workplace.
“[Education] is no longer just confined to schools and institutes of higher learning,” Singapore Acting Education Minister Ong Ye Kung says, “but is a lifelong pursuit of mastery and excellence.”
The Singapore government introduced the SkillsFuture program to encourage people to go back to school to retool their competencies and become more flexible as workplace requirements became more fluid.
Several universities, including some in the Philippines, have ramped up their graduate courses, especially part-time diploma subjects for adult learners to take after work. Links between industry and academe have also multiplied, with interns doing not just low-level tasks, but facing actual challenges.
The implications for family businesses are clear. When founders anoint their children as successors right after college, the move will likely backfire, unless the former have been working alongside the latter all their lives, and unless the skills needed are low-level and routine.
Businesses will not grow, and will probably not even be sustainable.
Most successful family businesses require their children to develop their skills in other workplaces for several years after graduation. Some even go on to take master’s degrees. But MBAs may no longer be enough in our fast-changing world: regular short courses, plus training seminars and workshops, which target specific skills, need to be a staple of employees today.
Queena N. Lee-Chua is on the Board of Directors of the Ateneo de Manila’s Family Business Development Center. Get her book “Successful Family Businesses” at the University Press (e-mail msanagustin@ateneo.edu). E-mail the author at blessbook.chua@gmail.com.