This is the dichotomy of the 2008 crisis. A cataclysmic event that resulted in lost growth of over $10tr should have led to a rethink about the viability of the entire system.
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Wealth inequality is a vastly complicated subject, of course. Even experts such as Thomas Piketty, author of Capital in the Twenty First Century, are much better at describing the problem than they are at prescribing a cure.
But one undoubted issue is the rise in unearned wealth. Our financial system is now so complex and opaque that vast amounts of money can seemingly be plucked out of thin air.
The result is that if you are already wealthy, then it is very possible to make almost unimaginable gains thanks to the speed of the markets and the ability to move money across jurisdictions, unmoored from any tangible asset, tax inspector, government or regulator.
I would say good luck to those fortunate enough to be in that position. But as we know from 2008, when the music stops and the too-big-to-fail institutions are left holding the debt parcel, it’s the little people who suffer.
In America, for example, the net worth of the working class declined 34 percent from 1998 to 2016. You might not think that is relevant to the Middle East, but their protest votes gave us a president called Donald Trump. There are far-reaching consequences to poor people getting poorer.
And closer to home, we need hardly talk about the disastrous consequences of the Arab Spring, which began with a poor Tunisian fruit vendor, Mohamed Bouazizi, setting himself on fire in reaction to the government establishment.
This might seem like a strange way to introduce a column about our latest Indian Rich List, but there is a serious point to be made. The vast majority on this year’s roll call are self-made men. In fact several of them, such as Yusuffali MA, started out with virtually nothing. The Lulu Group founder was penniless when he came to the UAE in 1973 on a small boat to work in his uncle’s tiny distribution company. His company now has a turnover of $7.4bn and a workforce of 46,000.
Dr Ravi Pillai, meanwhile, set up his first business aged just 14. His conglomerate now spans construction, infrastructure, retail, hospitality and healthcare.
Rizwan Sajan was forced to flee Kuwait amid the Iraqi invasion. He worked for his uncle before establishing a vast brokerage buying and selling building materials. Sunny Varkey’s parents were both teachers who travelled to Dubai in 1959 seeking a better life. Dr Dhananjay Datar was so poor that he walked barefoot to school.
Read through the list and you’ll also see that these men are running old-school industries. These range in everything from foodstuffs and chemicals to industrial equipment and logistics – and often in frontier markets that present challenging conditions. They are companies that, taken together, employ hundreds of thousands of people. Of course, many of them have diversified into new high-tech segments, but the bedrock for their success is still founded on real people and actual things rather than distant algorithms or speculative trades.
So even though this column started off by railing against global inequality – and bearing in mind the total wealth of this year’s 20 richest Indians in the UAE surpasses $50bn for the first time – I congratulate them on their success in contributing to the development of this region.
Hard work and old-fashioned business smarts got them to where they are today. Good luck to them all and may they enjoy their success.
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