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Post-2015 and income inequality: more of the same?

Casper Rutting | 16 June 2014

Income inequality features prominently in the debate on the design of the post-2015 development agenda. Yet, so far, states have confined themselves to window-dressing, failing to come up with far-reaching proposals to deal with the issue. The odds are that policy-makers will shy away from transforming existing power relations and thus from addressing the issue of widening income gaps. Neither between individuals, nor between states.

Income inequality is a hot issue. With mounting evidence of soaring income disparities around the globe and of its detrimental impacts on society, more and more people are concerned about the issue. Even the World Bank and IMF, which were, until very recently, staunchly opposed to marking inequality as a priority issue, seem to have slightly changed their heading. IMF managing director Christine Lagarde, for instance, recently characterized rising inequality as a pernicious issue that ‘can tear the very fabric that holds society together’.

Unsurprisingly, income inequality is also extensively debated in the post-2015 discussions. In these, two fault lines emerge: one between non-state stakeholders and states (on within-country inequality), and one between the developed and developing world (on international inequality). For both, the obstacles are the same: the interests of the mighty.

Political claptrap

The existing MDG agenda pays scant attention to inequality. While it was identified as one of the priorities by the Millennium Declaration, the issue was all but neglected in the ensuing framework. With this experience in mind,  a wide variety of non-state stakeholders – ranging from aid organizations to think tanks and academia – have struck a blow for making inequality a priority issue in the post-2015 development agenda. The UN System Task Team, for instance, holds the view that addressing inequalities should be at ‘the heart of the post-2015 agenda’. According to these stakeholders, a stand-alone goal on inequalities in the broader sense should include a target on reducing income inequality. A letter from 90 academics to the High-level Panel (HLP), for example, called for a ‘top-level goal to reduce inequalities’, based on the Palma index.

While states seem to co-opt the inequality discourse, they shy away from spotlighting the issue of income inequality. With flowery rhetoric, all country groups confirmed the importance of inequality during various sessions of the Open Working Group (OWG) on Sustainable Development Goals (SDGs). The troika of Australia, the Netherlands and the United Kingdom for instance, asserted that ‘promoting equality and achieving social equity will be central to a successful post-2015 agenda’, and that rising trends pose ‘a threat to the economy, to good governance, to social stability and public safety in any region of the world’.

The difference between these country groups and the abovementioned non-state actors becomes clear in light of the concrete proposals they come up with. States confine themselves to measures aimed at equalizing economic opportunities, sometimes coupled with the provision of social protection. However, notwithstanding the calls from non-state actors, virtually no country group explicitly supports a stand-alone goal on inequalities in the broader sense, let alone a concrete target on reducing income inequality.

Of course, this behaviour is not surprising. Might and wealth tend to coincide. Consider the case of emerging economies, in which income gaps have been widening fast. China, for instance, saw its tremendous economic growth accompanied by nearly as immense growing income inequality. China’s leadership is genuinely concerned about this trend, since it fears its adverse consequences for social stability. But with 87 out of 358 of its billionaires having senior political associations, adequately addressing economic inequality amounts to queering their own pitch.

North-South quarrelling

Despite the fact that the country groups in the OWG are in agreement regarding their reluctance to incorporate the issue of inequality as a stand-alone goal in the post-2015 agenda, they differ as to which type of income inequality has to take precedence. OECD countries point to within-country inequality and focus on equalizing opportunities for individuals. The Group of 77 plus China, by contrast, views international inequality as the most pressing form of inequality and favour creating a level playing field for countries. During the 10th session of the OWG from 31 March until 4 April 2014, it explicitly stated that ‘the OWG must place priority to the issue of international inequality between countries and not just within countries’. Therefore, it is remarkable that while in OWG-11 the two aspects of inequality have been separated1,  they have been merged under proposed goal 10, to ‘reduce inequality within and among countries’  in the OWG-12 document.

These differing conceptualizations of the inequality question came to the fore in the discussions on the first cluster, which was labelled ‘Poverty eradication, promoting equality’. Almost all developed countries limited themselves to within-country inequality in their statements. They pointed to measures such as providing equal access to basic social services and good governance. By referring to their ‘right to development’, developing countries, by contrast, alluded to imbalances between countries, and came up with measures to create more favourable external conditions for developing countries in order to allow them to better pursue their development objectives. Brazil and Nicaragua, for instance, pointed to UN studies which reveal that ‘the Gini Coefficient gap among countries is higher than the gap at the domestic level within almost every single country.’ According to these two countries, ‘states are more unequal at the international level than they are at the national level’.

Post-2015: Old wine in new bottles?

Thus, in spite of income inequality being hotly debated in the post-2015 discussions, the chances are slim that the eventual framework will genuinely depart from the existing MDG agenda. This is likely for both forms of income inequality. States affirm within-country inequality’s importance, but recoil from dedicating a self-standing goal to the issue. In the end, it looks like the post-2015 agenda will actually be another way of ‘simply’ helping the poor, veiled by a rhetoric of addressing inequality. Moreover, the issue of international inequality marks a bone of contention between developed and developing countries and time will tell whether this matter will be treated differently in the post-2015 agenda as compared to the existing MDGs. Addressing both forms of inequality is impossible without contravening the interests of the powerful (be they individuals or states). Will the post-2015 agenda be the appropriate arena to settle these issues?

1  In OWG-11 within-country inequality was grouped with poverty eradication, while among-country inequality was included in focus area 9: ‘ industrialisation and promoting equality between nations’

Photo credit main picture: mSeattle via Flickr

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Casper Rutting

Casper Rutting previously worked as a project editor on Post-2015 for The Broker.

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