The rich will rock the 2014 vote - as they always did

Do the relatively rich matter to this general election? If we take India to be a basically poor country, they should not. Today’s Economic Times, quoting the 2011 census statistics, says the upper classes do not matter in the election since there are only 17 constituencies in the country where at least a fifth of the voters own all of these four indicators of economic class – a phone, a computer, a TV set and a motor vehicle. Most of these voters are concentrated in the big metros like Delhi, Chennai, Gurgaon, Chandigarh, etc. Statistics are meant to make asses of us. The fact that only 17 constituencies have this kind of asset ownership combo in significant numbers is actually immaterial to the impact of the richer voting classes on the elections. In fact, the stats hide more than they reveal, and even if owning all four assets is an important indicator of your economic and social class, they say nothing about the impact of the relatively richer classes on the election. There are several fallacies inherent in looking at statistics this way. [caption id=“attachment_1486651” align=“alignleft” width=“380”]  Reuters[/caption] First, they ignore the Pareto principle, which is the fundamental law of human resource distribution. In any society, no matter what its ideology - capitalist, socialist, communist - the ownership of assets tends to be concentrated in the hands of the few.  This is called the 80:20 rule (or 20:80 rule), resulting from early 20th century Italian economist Vilfredo Pareto, who observed that 80 percent of land was owned by 20 percent of the people. The idea was later generalised to mean that a few factors account for the largest share of impact. In a corporation, 20 percent of products will account for the bulk of the profits – even if it is not exactly 80 percent. The top management may account for the bulk of the wage bill. This could be because 20 percent of staff deliver 80 percent of the positive outcomes. Or vice-versa: 20 percent of staff cause all the organisational headaches. In India, Rama Bijapurkar notes in her book A Never Before World, that the top 20 percent of households account for 55.5 percent of total incomes. The per capita incomes of the top 20 percent is four times that of the next 40 percent – as perfect a demonstration of the 80:20 rule as possible. So what is the linkage of the 80:20 rule to the elections? Simple: the rich may account for a very small share of the voter base, but their impact on the elections tends to be huge. Ask yourself: who do you think is financing every party’s campaigns? The rich or the poor? Why is Arvind Kejriwal shouting from the rooftops about crony capitalism? It’s because the rich and upper classes have a disproportionate share of influence and power, including on elections. The impact of the rich on electoral outcomes is, however, largely indirect. As Samuel Huntington, author of The Clash of Civilisations, noted in another book of his (Political Order in Changing Societies), the rich trade economic benefits (i.e. their money) for  political favours (they pay taxes or bribes to get what they want by way of policy); the poor trade political benefits (their votes) for economic gain (jobs, education quotas, subsidies). The rich do not have to vote to impact an election. Second, to link the upper class with the ownership of all four assets is highly misleading. If we accept that individuals have different priorities in terms of which asset to own first, it is not necessary for someone to own all four assets to be considered among the middle or upper classes. For example, Sonia Gandhi does not own a car. Is she poor? Most government servants do not own a house – they get it gratis from a mai-baap sarkar when they are in service. Many of the rural rich may not own computers due to poor connectivity. Does this mean they are not upper class or that they do not matter electorally? Obviously not. The right way to look at asset ownership is their total numbers in the population to figure out the true strength of upwardly mobile voters. India has around 15.5-16 crore TV households. Since a household of five does not actually need more than one TV, it means nearly 80 crore Indian households have TVs. That’s more than two-thirds of the population that can be considered aspirational as defined by TV ownership – not just 17 constituencies in cities. When it comes to phones, which have now become a necessity, Indians own more than 900 million mobile phones or landlines. We will hit the billion mark in another year or two. This is an enormous asset owning class at the bottom of the aspirational pyramid. They impact elections too. India had 121 million automobile owning households in 2009. With this ownership growing 9-10 percent per annum, by now Indian households may be owning nearly 180 million two- or three- or four-wheelers. Since not every family needs more than one set of wheels, it means nearly 900 million Indians have access to motorized wheels. (I am, of course, overestimating this, since rich households may own more than one motorised vehicle, while 50 percent of the lower middle classes and the poor may own absolutely nothing. But I am trying to make a larger point, that if there are so many vehicles around, it means more people are getting better off, and they will be impacting the elections). The point is: you don’t need to have ownership of all assets to constitute an aspiring class voter. We are all middle class in terms of one kind of ownership, and poor in another asset ownership. Rama Bijapurkar has a ‘Three Indias’ construct, where the top 20 percent of households have a per capita GDP of US$ 3,982, while the next 40 percent has $980 and the bottom 40 percent $434. The income ratio of the top 20 percent to the next 40 percent is roughly 1:4. The top 20 percent of households – the relatively rich, so to speak - control huge incomes and consume resources out of proportion to their proportion in the population. Their impact is felt all across the economy. The super-rich may be very few, but the aspiring classes – some upper, some middle, some lower middle – are everywhere, and not just in those 17 constituencies that The Economic Times talks about. It is this aspiring class that is propelling the change we are likely to see in the coming election. Be assured, the relatively rich will rock the vote this time. Directly or indirectly. Don’t be fooled by their lower voting percentages. Remember what Samuel Huntington said about how the rich engage in political-economic tradeoffs with the poor through politics? The better off do not have to vote to be heard.