Inequality: an issue for the 2015 agenda, but also for the aid agenda?

Inclusive Economy,Poverty & Inequality23 Jan 2013René Grotenhuis

There are two critical issues in this inequality debate: there is no global benchmark for inequality and no global goals in absolute terms; and the instruments for tackling inequality lie outside traditional aid intervention models.

In an article I wrote with Jan Gruijters, published in November 2012 issue of Internationale Spectator, we argued that in the future, in the post-2015 era, we will have to look at poverty from the perspective of inequality. Together with fragility and (in)security, inequality will become a key issue on the international poverty agenda. And rightly so: for poor people in India, Indonesia or Brazil, life has not changed that much. The fact that their country has become an emerged power, a middle income country, a member of the G20, has not had much impact on their daily lives. Most people in these countries are still lacking access to basic social services, women are still seen as second class citizens, and they are still exploited by landlords or in sweatshops. For those who are committed to the struggle against poverty, there is no reason to leave them to their fate and to pretend that the job is finished. The fact that we are talking about poverty in the Netherlands (or in the US) confirms that poverty and inequality are closely linked. I believe it is important to see the linkages between poverty and inequality. For this reason, Cordaid still has a domestic programme, focusing on poverty, inequality and exclusion in the Netherlands.

But there are two critical issues in this inequality debate: the first is that there is no global benchmark for inequality and no global goals in absolute terms, as we had in the MDG agenda. And secondly the instruments for tackling inequality lie outside traditional aid intervention models.

No global benchmark and goals. Inequality is in essence a question of comparison and measuring inequality is always a relative measurement. Unlike the $1.25 a day yardstick, we do not have an absolute figure. Poverty as inequality is quite a different reality in the Netherlands than it is in Chile or Bangladesh. That has to do with levels of income and wealth, but also with culture, religion and social patterns. And besides this geographical diversity there is also historic diversity: norms of equality and inequality change over time. Where the MDGs aim to provide every world citizen with basic necessities, an inequality agenda will be much more diverse.

The inequality agenda does not fit the traditional aid intervention models of financial support for projects and programmes. Middle income countries are reluctant, if not hostile, to foreign intervention in what they see as domestic issues. And in donor countries people and politicians are questioning support to middle income countries. Key for an intervention model that addresses the issue of inequality is strengthening and improving institutions. Making sure people have access to basic social services, justice, decision-making and information requires strong institutions.

That poses a challenge at both national and international level. A well-functioning state bureaucracy that guarantees accessibility, affordability and quality of basic social services like education, health, water and sanitation, a judiciary and police that apply the law instead of providing justice to those who pay the most, a system of property registration that protects small farmers and craftsmen, all these factors are essential for achieving the basic conditions for equality. On the international level we have to work as hard as possible and be fully committed to strengthening global governance, which is essential for more equality. Standards on corporate social responsibility, the ILO’s decent work agenda, transparency in international financial flows and taxation, and international agreements on fighting corruption are concrete instruments to enhance equality at international level with, in our globalized world, a clear trickle-down impact on nations and communities.

For the countries of the bottom billion (fragile, conflict and post-conflict, land-locked, climatologically vulnerable countries) the question of poverty will have to be framed according to more or less the same logic as in the past (see also the ODI Horizon 2015 report). In contexts with limited resources and institutions ODA money is necessary to provide basic human dignity, and we have proved that we can make it happen (see Charles Kenny ‘s Getting Better). For (lower) middle income countries, where basic institutions are functioning and domestic financial resources are increasingly available, the question of poverty should be framed as inequality with new instruments and strategies. But both approaches have the same ambition: to guarantee a life of dignity in which humanity can flourish.