[Taken from ‘From Disparity to Dignity: Tackling Economic Inequality Through the SDGs’, Human Rights Policy Brief, CESR, November 2016. I found this briefing to be a gold mine of what I call iron laws. I wanted to share them with you in case you have not had the opportunity to read the full document –which I highly recommend. I do apologize for the length and compactness of this Reader].
There are (long surpassed) limits to the degree of inequality that can be reconciled with notions of dignity and commitments to human rights for everyone.
1. If economic growth over the last 30 years had been more equally distributed, the world would be on track to eliminate extreme poverty completely by 2030
• The current global indicators proposed to measure progress towards SDGs Goal 10 (‘to reduce inequality within and among countries’) are manifestly inadequate –for example, in failing to include a robust measure of economic inequality.
• The agreed indicators to measure SDG10 do not properly address the scope and intentions of the goal and targets. They do not incentivize those policy actions that have been proven effective in advancing equality in society and the economy.
• SDG10 does address a central and much-noted weakness of the MDGs, namely, that they praised and celebrated aggregate progress while masking (or even encouraging neglect-of) economic and social inequalities. But, beware, Goal 10 remains vulnerable to strategic neglect, and in some cases political backlash.
• There is a high risk that Goal 10 will remain an ‘orphan’ goal –hostage to the ebbs and flows of competing international development priorities and diverging national interests. Governments will simply need to take much more proactive and timely steps towards achieving Goal 10 –and we are not seeing this.
• SDG10 has no obvious set of institutions at the national or international level whose mandate is to drive actions and funding-to or monitoring this goal.
• Furthermore, the policies that drive inequalities between countries go largely unmeasured by Goal 10 targets.
• The World Bank’s approach to Goal 10 is shaped by its institutional priority to promote what it calls ‘shared prosperity’ rather than embracing a more comprehensive need to tackle income and wealth inequality.
2. An approach to development that pays attention only to absolute poverty and basic needs is far from sufficient if not altogether wrong
Soaring inequality is not only a development failure; it is both a symptom and a cause of the human rights crisis, perpetuating poverty, entrenching a widespread dearth of opportunity for many individuals and communities, and contributing to alarming outcomes in health, education, employment and other areas.
• At present, there are few institutions –either at the national, regional or international level– set up with the express mandate to address one of the biggest challenges of our time: economic inequality.
• Many of the key determinants of inequality –from the erosion of labor rights to the weakening of public service– can be framed as denials of internationally guaranteed human rights (HR).
• Inclusive societies are not compatible with the extreme inequality that is now undermining social cohesion, political stability and civic security.
• All countries in the world have stark and persistent inequalities, which in many cases have grown in recent decades (including in China and in Vietnam).
• ‘Leaving No One Behind’ is unfortunately more a rhetorical slogan; it camouflages fundamentally exclusionary policies.
• Sustainable development policies will need to grapple with the top end of the income and wealth spectrum, or else starkly compromise any promise of leaving no one behind.
• Vertical economic inequality (inequality in income and wealth between individuals and households) has been relatively neglected by HR bodies. Increasingly, however, the HR impacts of economic inequality are being explored, as contributors to rather horizontal inequalities (social disparities and other HR deprivations).
• Laws and policies that appear to treat women and men equally are not enough to ensure that women are able to enjoy the same rights as men. (Such a ‘formal equality’ can never be sufficient). This is due to the legacy of historical inequalities, structural disadvantages, biological differences and biases in how laws and policies have been/are implemented.
• Discrimination is often indirect and/or can be structural leading to chronic inequality; both unequal opportunities and unequal outcomes must thus be scrutinized as different treatments will be required to move towards equality in practice.
3. Inequality is not natural, inevitable or intractable
Power is an expression of wealth.
• The question is not if, but how public law and policies must be formulated to challenge the fundamental disparities found in economic opportunities and outcomes.
• ‘Neutral’ measures to reduce economic disparity can have unintended adverse effects on particular social groups; they can in fact discriminate. Therefore, robust measures to be put in place must, first and foremost, prioritize redistribution towards the most disadvantaged groups.
• Strong labor unions with the power to bargain collectively are an important factor in ensuring more equality. Moreover, joining a trade union that is allowed to function freely is a HR.
• Wage protection measures are just as important in reducing the growth of inequality. Policies to address unemployment and to create more decent jobs must, of course, also be put in place.
• Since a gender pay gap exists in all countries of the world, labor and wage policies must address wages and labor conditions in the informal, as well as the formal sector, making sure they are gender-sensitive.
• Along with well-funded childcare services, family leave is also crucial to ensure the HR of both caregivers and the claim-holders receiving care.
4. More important than attributed, financial liberalization has lead to growing economic inequality
Economic inequality is inextricably intertwined with other dimensions of social exclusion.
• Financial deregulation has invariably been linked to a more unequal distribution of income. It has exacerbated the fiscal austerity measures (antithetical to achieve Goal 10 and set to intensify in the coming years) that many governments have taken.
• Human rights principles –including participation, transparency, equality and non-discrimination and above all accountability– provide powerful tools to counter financial regulations biased in favor of the economic elite.
• In countries across the globe, economic inequality has escalated since the onset of austerity fuelling the worldwide trend of increasing income disparity and wealth concentration.
• Policy areas in tax, social protection, education and health are all redistributive especially if all implemented (They are all necessary, but not sufficient).
• Regressive taxes do cancel out the equalizing potential of healthcare spending.
• An effective action agenda against unjust inequalities will thus require an integrated approach, rather than merely measuring the distributive effects of siloed interventions, such as tax policy or conditional cash transfers alone.
• Governments are obliged to explore all fiscal alternatives before introducing retrogressive measures, such as cutting back on social spending, even in times of economic crisis.
• As regards social protection, while Brazil’s much-lauded targeted cash transfer scheme Bolsa Familia has undoubtedly played a role in tackling inequality, research has shown that it is actually the country’s pension system that has had the biggest impact on income inequality.
• Human rights-informed social protection policies must also be carefully designed to be gender-sensitive. Family and child benefits and paid maternity leave are essential planks in these policies.
• In health, interventions must go beyond past interventions that were often limited to the boosting of physical access.
• Health services are a crucial equalizer by redistributing wealth into ‘virtual income’ for all.
• The human right to health relates not only to health care services and goods, but also to the underlying determinants of health such as water, education, sanitation and housing. If implemented hand-in-hand with the commitments to allocate a minimum of 15 per cent of the national budget to health, Universal Health Coverage could provide people with a nationally determined set of promotive, preventive, curative and rehabilitative health services that will ensure the enjoyment of the right to health for all without discrimination.
• User fees and privatization of essential water, health and education services that exclude the poor clearly contradict governments’ HR duties. Actually, user fees in education or ‘low-cost’ private schools have been shown to be detrimental to greater equality and the enjoyment of HR.
• Additionally, one extra year of education is associated with a reduction of the Gini coefficient by 1.4 percentage points. Yet formal schooling between the ages of 5 and 18 is increasingly insufficient by itself to ensure equal chances for all in the modern economy.
• Early childhood education is one of the most effective ways of combatting economic inequality throughout life.
5. Taxation: no progress without progressivity
Tax policy is one of government’s most powerful tools to reduce income and wealth inequalities.
• The decline in tax rates for the top end of the spectrum has been a key factor in the growth of inequality since the 1980s.
• In order to tackle inequalities, taxation measures must be progressive in nature, ensuring the well-off contribute a larger proportion of their income.
• The value added tax (VAT), popular in many countries, hits the incomes of the poor the hardest, and particularly affect poor women.
• Governments are to also substantially crack down on tax abuse and eliminate unjustifiable tax incentives that largely benefit wealthy individuals and large corporations. Low-income countries in particular lose billions of dollars in potential revenue through these channels.
• Rich countries are most responsible for –but currently most resistant to– creating a fairer international tax system that can tackle economic inequality within and between countries.
• Also included and crucial must be improving the regulation of financial markets, enhancing the voice of developing countries in global financial institutions, in facilitating safe migration, in special trade treatment for developing countries, in tackling illicit financial flows and in encouraging official development assistance to those states that most need it.
• One of the most important ways to create more equality between countries is to stem this hemorrhaging of wealth away from the countries in which it is generated.
• Substantial reform in global economic governance is necessary in order to redress the power imbalances among states that have prevented effective international cooperation for the fulfillment of HR and the reduction of inequalities within and between states. Most high-income countries have proven very resistant to such measures.*
*: Developed countries at the Addis Ababa Conference on Financing for Development in July 2015 forcefully blocked developing countries’ and civil society’s demand for an intergovernmental tax body within the UN with the mandate and resources to create a coherent and more equitable global framework for international tax cooperation.
• Without these reforms and others like them in equally critical areas such as debt, trade and investment policy, it will be very difficult to move towards a fairer balance of power between countries.
• As discussed above, inequality is largely a political problem –the result of a conglomeration of specific decisions made by policy decision-makers with particular narrow interests in mind.
• Politics is very often a zero-sum game in which the empowerment of a small elite results in the disempowerment of the many.
• The weaker and more underfinanced the government or civil society is, the more this elite is able to lock-in its own economic privileges, creating a vicious cycle of elite capture and rent-seeking that weakens both democracy and the economy.
• Existing HR standards provide powerful tools to challenge elite capture. Equal access to remedy, justice and the rule of law, free and fair elections, access to information that affects people’s lives, meaningful participation in the design implementation and monitoring of laws and public policies –these are all HR in an of themselves.
6. Robust and inclusive monitoring and accountability institutions will be indispensable to drive actual changes on the ground
Note that the most privileged in society are largely uncaptured by official statistics.
• Wealthy families are under-sampled in household surveys while, for example, capital gains are rarely captured in income statistics, and significant amounts of offshore wealth escapes the tabulations of both tax collectors and statistical agencies.
• Yet, data does not translate into usable information without context and purpose behind it.
• It is concerning that the agreed list of SDG targets and indicators is not informed by HR considerations and is thus inadequate at present to hold governments to account for tackling inequalities.
• Given these shortcomings in the targets and indicators, the importance of using HR obligations and principles as a guide to implementation and monitoring becomes yet more urgent.
• Efforts at the national and regional levels to more robustly measure and tackle inequalities will be crucial, as much as to improve global tools, datasets and the benchmarks set for processes that need to be put in motion towards the progressive realization of HR.
• Public interest civil society –including academics and HR organizations– will be crucial in envisioning and operationalizing alternative and more rigorous measures of inequality.
• Public interest civil society organizations are to be involved in formulating and interrogating accountability plans, as well as holding governments answerable for implementing them.
• The power of the High Level Political Forum on the UN to review and hold states accountable for the implementation f the SDGs is, as of now, insubstantial and limited, especially given its reliance on voluntary self-reporting by states, and a meeting time of only eight days per year.
• Given the HLPF’s institutional weaknesses, other accountability mechanisms must also be engaged. In particular, the international HR monitoring mechanisms must be encouraged and supported to play a key role.
• Review mechanisms are to seek to examine the transnational dimensions of SDGs implementation, for example, the impact that country policies are having beyond their borders, or the impact of transnational multi-stakeholder partnerships.
• Enabling public interest civil society to meaningfully engage in shaping the structures, processes and substance of global follow-up and review of the SDGs will simply be crucial to ensure accountability.
7. Recommendations: What, at the very minimum, is needed is:
• A serious worldwide commitment to a more equitable redistribution of resources and of decision-making power over all the above is indispensible.
• This will need to be pursued via three main policy areas: taxation, social protection and universalization of public services.
• Ultimately, this can be broken down into overhauling what is pursued, i.e., i) how and from whom resources are raised, and ii) how and for whose benefit they are spent. Both questions are necessary to see real improvement in equality.
• Governments have to raise revenue for achieving SDG10 from those most able to pay, including by cracking down on tax abuses by corporations and wealthy individuals and closing loopholes which enable them to avoid paying their fair share of tax.
• Labor markets, workplaces and financial systems must be regulated to protect against exploitative practices and unfair accrual of benefits at the top end of the income spectrum.
• Disadvantaged groups, including people having been rendered poor by an unfair system, must be primarily supported and enabled to access decent jobs that pay a living wage.
• Excessive speculation must be regulated to stop accumulation at the top and against the losses to the 99 per cent, especially those already living in poverty or at risk of falling into poverty.
• Benchmarks chosen to monitor processes set in motion towards the progressive realization of the different HR are to be complemented by time-bound targets to progressively eliminate inequalities between groups by prioritizing a more ambitious rate of progress for those most disadvantaged groups.
• The engagement of ordinary people in the design, implementation and monitoring of sustainable development policy processes and outcomes is not a discretionary privilege, but a right.
• Governments are to foster citizen-led monitoring of the implementation of the SDGs, particularly SDG10.
• Civil society space for engagement in SDGs implementation must be protected and expanded.
• Revenues must be raised in ways that reduce inequality, in particular through progressive taxation; resources raised must be spent in ways that help equalize socio-economic opportunities and outcomes.
• Fiscal abuse of power must be checked.
• Governments must assess and address the gender equality effects of policies as a priority task in implementing the SDGs, as well as invest in addressing the structural barriers that drive gender inequality in the economy.
• Minimum wage thresholds are also to be tracked and regularly improved.
• National statistics offices and UN agencies are to be empowered to collect the data needed to monitor disparities on the widest possible range of relevant grounds.
• Affected communities are to be closely involved in deciding the types of data required, and the indicators and benchmarks to be/being used.
• Donor countries are to conduct HR and equality impact assessments to ensure their proposed policies and programs reduce rather than reinforce economic and other inequalities in other countries.
• National Human Rights Commissions must be strengthened and given the resources, independence and mandate to effectively monitor inequalities under the rubric of SDG10 and existing HR obligations.
• The HLPF is to move to more binding reporting, as well as complement national and regional follow-up and review mechanisms on priority issues such as economic inequality, macro-economic policy, climate change and other.
Claudio Schuftan, Ho Chi Minh City
schuftan@gmail.com