Distributional justice is the coinage of economists
who seek to explain how income is distributed, and why some
people are rich, and the majority are poor. Per capita income
is a statistic that doesnt recognise the disparities.
Commonly per capita income is measured in a widely used
currency, and ours is measured in terms of United States dollars.
In Europe it may be measured in terms of Euro dollars.
It is calculated by taking the personal incomes of all individuals,
and dividing that total by the total number of people in the
population. It is closely tied to GDP, in the way we measure
Recent Central Bank statistics reveal a GDP per capita of
almost $14,000. It has risen from some $6, 970, a few years
ago to new heights, measured in US dollars. But what does
that mean for all of us?
Per capita income is really a reflection of an average.
However, it is used as a measure of the wealth of a country.
A small group of the very rich in any one country can significantly
slant the statistic. And this truism could blow the distributional
justice theorists into the realm of wishful thinkers.
The fundamental question is what causes the overall rise
in per capita income. Are we as a group of workers earning
higher incomes, or is it that more people are now earning
an income, as reflected in the fall of the unemployment rate
from some 8.4 per cent for October 04-March 05, to 6.8 per
cent in a corresponding period for 05-06. This is also projected
to reach six per cent by December.
It could also mean that in certain sectors wages/salaries
have increased. While other sectors may have not benefited
from such an experience. For example, what was a brick layer,
earning in 2001, and what is he earning today? Compare that
with your own increases.
The next fundamental question is who is saving as a result
of higher earnings?
There is a perception that the people who are benefiting
from the increased cash flows, are either bent on spending
it off quickly, or else they belong in a different category.
At some extreme, is the excess accumulations being sent abroad
and invested there? And what does that do for us locally?
Our local statistic shows a decrease in the saving rate
in the country, and that does not auger well for long term
stability. But can investments abroad help us?
The short answer is yes. Remember that GDP refers to domestic
production, and the other economic indicator is GNP. This
statistic is our gross national product and it includes those
investments and factors of production that are located outside
of the country.
The assumption is that we benefit when the gains realised
abroad are returned home to the benefit of the economy.
I take a lot of the comfort that one of our major investments
abroad is bundled in the human capital, which has gone forth
to expand their dreams and benefit from the global impetus
in trade and training, across borders.