Page 8 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.73, # 2, 2016, pp. 4-20

Obviously only governments can undertake income redistribution programmes.
Some governments carry out this programme with toughness, some do it in a relaxed
pace. Unfortunately in a democratic environment a government cannot achieve any
significant success in a redistribution programme. People at the top from whom the
governments are supposed to collect heavy taxes are politically very powerful. They
use their disproportionate influence on the governments to restrain them from taking
any meaningful step against their interest.
I don't think addressing income inequality is a real answer. We will have to
address the cause, not the manifestation of it. We must address the wealth gap which
is the cause of the income gap. If we keep the wealth base unchanged any reduction
in income gap will be ineffective. On top of that, governments' cash transfer
programmes are usually charity programmes. Charity programmes are excellent as
temporary relief, they cannot give permanent solution to the problem. Rather they
hide the problem. Democratic governments committed to the rule of law find it
extremely difficult to embark on wealth redistribution. Land distribution seems to be
the only successful wealth distribution programme undertaken by some democratic
governments.
While governments should continue with their redistribution programmes, I
am proposing to bring the citizen's power to transform the wealth-pyramid into a
wealth-diamond. Central point in my proposal is to redesign the economic
framework by moving from personal interest driven economics to both personal and
collective interest driven economics.
I want to tell you why I think redesigning of economic framework is the
essential task in achieving an egalitarian society.

My Personal Journey
As I look back, I see how circumstances pushed me into doing things which I
knew nothing about. Famine of 1974 pushed me into growing an irrigated third crop
in the village of Jobra. This introduced me to the money lending operation in the
village. I wanted to help the victims of money lenders. In 1976 I offered to lend
them from my pocket to protect them from money lenders. My money was running
out as I gave loans to more and more people. I went to the bank, Janata Bank,
located in the Chittagong university campus inviting them to offer loans to the poor.
They refused. Finally I persuaded them by offering myself to become the guarantor.
I called the project Grameen Bank Project. Then came the Krishi Bank to help me
because of the personal interest taken by its Managing Director. They opened a
special branch in Jobra with me as its de facto head, operating with staff that I
recruited for the branch, all of whom were my students. I called it experimental
Grameen branch. Later Bangladesh Bank wanted to expand it to Tangail because of

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