Continuity, consistency and dedication

Inclusive Economy,Poverty & Inequality16 Jan 2013Wieck Wildeboer

In the on-going discussion on inequality, “new” seems to be the magic word. Unfortunately we still have the old problem, being that 1,3 billion people have to live on less than a dollar a day.

The Broker has started a discussion on the desirability to include equality targets in future international development goals. Most participants in the discussion seem to share the analysis that a more equal distribution of income, happiness and wellbeing (between and within countries) is a condition to secure sustainable economic growth and to prevent a rise in the number of internal conflicts. Somewhat artificially, the participants try to find scientific arguments for their moral conviction that inequality is bad. We know that inequality is rising within the present growth model, but at the same time evidence is lacking that more equality leads to sustainable growth; for the moment, we don’t have any experience with sustainable growth. Indeed the question of causality and correlation remains.

Apart from this theoretical issue, one will find quite different political and moral views on equality. A Tea Party Republican in the United States will have different views on equality than a Swedish or Dutch Social Democrat. A high-cast Indian Hindu will stress the religious basis of inequality, while the followers of Fidel Castro will say they prefer general poverty (with exception of the nomenclatura of course) over inequality. The Chavistas made great progress towards more equality, but are killing the economy of Venezuela in the process. In China, inequality is growing fast, corruption is rampant and human rights are ignored; at the same time, economic growth has pulled millions out of the misery of absolute poverty. In the United States and Europe, inequality is on the rise, but in view of the high level of development, this will not lead to an increase in the number of people living on less than $1.25 or $2 a day.

This is not to say that inequality is unimportant, but for now there seems to be a trade-off between the capacity to decrease absolute poverty and a more equitable distribution of income. That at least is the reality in Russia, China and India. One should also keep in mind that the income distribution we find in today’s Europe was only achieved after a prolonged struggle by labour unions and civil society organisations. Why do we expect today’s rulers in developing countries to be different from the European rulers of the past? Because they know what sustainable development means? Even today this struggle continues in the West. The new Dutch government tried to introduce a system linking the price of health insurance to income. The resistance to this redistributive proposal was exceptional. Not to mention the fact that some call President Obama a socialist (still an insult in the US) because he wanted every American to have health coverage.

In the on-going discussion, “new” seems to be the magic word. A new framework for action; a new benchmark for bilateral aid; probing new prospects. Unfortunately we still have the old problem: 1.3 billion people having to live on less than a dollar a day, a problem already identified by the ILO Conference of 1976 and again discussed at the Summit on Social Development in 1995. The MDGs were internationally accepted and progress is being made on their implementation. Adding objectives like sustainable growth, inclusive growth, environment protection, income equality, corruption and good governance to the MDGs will only complicate matters. What is needed is continuity and consistency which will not be provided by “new” development models, but can only be achieved by dedicated national leaders.

Finally, any explicit target for redistribution of income and even for the creation of equal opportunities, or the obligation to invest in social security is highly contentious and will only lead to disagreement on the future development agenda. Stephan Klasen made some very valuable remarks in his contribution to the discussion on this issue. Let us focus on the eradication of absolute poverty, which as such may have a positive effect on equality. As long as 1.3 billion people still live on less than a dollar a day development objectives are sufficiently clear.