To Fight Inequality, Fight the Power

Thursday, September 24, 2015 - 14:48

Greetings from New York, where a small group from ActionAid is attending the Sustainable Development Goals Summit, part of the United Nations General Assembly.

We came to New York determined to talk about the importance of tackling the problem of inequality. And by “tackling” we mean confronting the powerful forces that keep inequality increasing around the world, both in countries rich and poor alike.

For many years, groups like ours have focused on improving the lot of the most marginalized, vulnerable and impoverished. We aren’t going to stop doing that. But using our “inequality lens,” we see that it isn’t sufficient to raise standards a bit for the large numbers of people struggling.

We need to change the politics, so they – everyone – has a voice in how the rules are made and implemented.

So long as large numbers of us perceive a rigged game, and so long as we keep seeing new evidence that supports our perception, our societies will remain divided.

Research from the investment bank Credit Suisse demonstrates how extreme the problem is: The combined wealth of the 200 richest individuals in the world ($3.18 trillion) is greater than the total wealth of all of Africa ($2.83 trillion), and only slightly less than the total wealth of Brazil ($3.194 trillion).

That’s not just a statistical problem. That’s not something that building more schools and clinics is going to change dramatically, nor something that some incremental tax reforms will shift. That’s a dangerous distortion in how the world values its resources and people, a failure of basic respect for human dignity.

The Millennium Development Goals (MDGs), which are now expiring, identified symptoms of poverty and aimed for better stats, some of which were reached, many of which were not. The new Sustainable Development Goals go much further: they identify the root causes of poverty, and outline what it will take to really address them.

One of the most important of the SDGs, in our estimation, is number 10, which commits governments to reduce inequality within and between countries. It almost didn’t make it into the final document, because the wealthy governments opposed it. It’s great that it survived, but it’s equally important to understand that it will not be met unless governments dramatically change the prevailing economic system.

It’s not just Africa that comes out on the short end of the inequality stick; most countries are becoming more economically unequal. Statistics from the investment bank Credit Suisse and the research institute UN-WIDER show that nearly 70% of the world’s population controls less than 3% of the world’s wealth, while 0.7% of the world’ population controls 44% of the wealth.

A group of us ActionAiders were discussing these statistics earlier today, including people from two countries with notorious inequality problems. My colleague Pooven, from South Africa, talked about the fact that economic inequality has increased since the dawn of democracy in 1994. To persuade those who didn’t quite believe him, he looked up some quick data from UN-WIDER. And indeed, in 1993, the last full year of the apartheid regime, income inequality was actually lower than it is today. Despite some successes, economic and social reforms in post-apartheid South Africa have not successfully addressed the central problem of concentrating wealth with a small group of the most fortunate. The frequent observation that South Africa has more political demonstrations per year than any other country starts to make sense!

We then turned to Brazil, and asked Adriano, our chief executive, if the Zero Hunger and Bolsa Familia programs, which ActionAid has justifiably celebrated for improving the lot of the poor, have resolved that country’s glaring inequality problems. They’ve made a real difference, he said, and indeed inequality in Brazil, unlike in many other places, has been trending downward, with the income gap reduced by 14% since 2001 (though it was unusually high to start with!). But our UN-WIDER statistics confirmed the impression that has been roiling Brazilian society in the last two years: such programs are not enough to prevent a small number of very rich people from gaming the system. The richest 10% of Brazilians controlled 65.9% of the country’s wealth in the year 2000; in 2014 they control more -- 73.3%. So even as income inequality is trending downwards - the very richest are still increasing the proportion of wealth (income + savings + assets) they own relative to the rest of the population. 

And Brazil is the best example we have of a country that has taken decisive steps to reduce inequality. It’s dauntingly difficult to challenge the increasingly secure position of the very richest, the people who ultimately control the economy and politics in most places, whether in developing or rich countries. Even at the UN, the most universally representative body in the world, it is far from easy.

SDG 10 is a victory, but in too many other cases, the rich countries have nullified such victories – either by preventing agreement, or ignoring the clear implications of the agreements made. We need to throw our energies behind saving SDG 10 from such a fate.