Bangladesh suffers from ethical void: economist

A lack of ethics coupled with political patronage has led to a default loan culture in Bangladesh, said Rehman Sobhan, a noted economist, yesterday.

Sobhan and a couple of young researchers had identified the ethical crisis in the banking system in the 1980s.

“This problem has been perpetuating over successive regimes -- and down to the present day. In fact, you have got into a situation now where perpetuation of debt default is ingrained in the business practices.”Sobhan's comments came at the opening of 20th biennial conference of the Bangladesh Economic Association held at the Institution of Diploma Engineers Bangladesh in Dhaka.

At the opening ceremony of the three-day event, the BEA honoured economist Mahabub Hossain (posthumously), Sobhan and Ashraf Uddin Chowdhury with the BEA Gold Medal 2017.

'Unethical functioning of market'

The unethical functioning of markets also bothers him, he said, adding that this does not merely mean the manipulation of markets as frequently seen in Bangladesh.

“If you have a bumper potato crop it is sold for a pittance at the farmers' door steps. The produce is then sold for Tk 20 a kg in markets in Dhaka. It demonstrates not just the imperfection in the market but the breakdown of an ethical basis for the functioning of the market.”

All the value additions take place as the product goes up the value chain. As a result, the main benefits of the market are reaped by those who are engaged in the processing of the primary product or the final market.

“Here, economic theory has no solution for you beyond saying that we want competitive markets as markets are never inherently competitive. What you see is an inequitable participation in the market.” Disparity in education and healthcare

There is disparity in the country's education system as well, Sobhan said.

Those who have the opportunity to buy expensive private education become self-perpetuating elites, whereas the poor, who go to low-quality schools, have their scope for upward mobility severely compromised.

Similarly, inequality exists in the access to healthcare. “You get the health services you are willing to pay for.”

Workers get subsistence level wage

The former director general of the Bangladesh Institute of Development Studies took the opportunity to complement the garment entrepreneurs, citing their success in the export market.

“But the success has a deeply unjust and unethical foundation.”

The entrepreneurs' competitive edge comes from the subsistence wages they pay to workers because of labour surplus in Bangladesh.

“The notion that you will have a handful of owners who will enjoy first-class global lifestyles and you will have four million women workers who will get subsistence level wages is a profoundly unethical situation. This has to be recognised.”

He said the women contribute at least 50 percent to the country's GDP but they actually get a very low share of that GDP and face a variety of other inequities along the way.