Beyond the “World of 70”: Inequality and the 2030 Development Goals

Beyond the “World of 70”: Inequality and the 2030 Development Goals

Dharavi, Mumbai (Wen-Yan King/Flickr)

These are heady days at the UN. The International Panel on Climate Change is initiating a new series of reports promising to make global warming harder to ignore, while national delegations in New York are replacing the Millennium Development Goals, a set of overarching international development targets, which mostly expire in 2015. So far this process has entailed near total denial of the threat of inequality, despite the organization’s call to end extreme poverty altogether by 2030.

The number “350” has proven an effective rallying point for climate activists, referring to the parts per million of carbon dioxide above which the probability of climate-related catastrophes increases. Far less well-known is the UN Habitat’s “international alert line” for inequality—a Gini number of 40. Levels above this threaten political, social, and economic instability. The figure for the world as a whole is 70, which, according to World Bank inequality specialist Branko Milanovic, means that 8 percent of the world’s population controls half of all income. Milanovic’s figures show that this imbalance significantly worsened over the past generation. It scarcely improved over the past decade, even with growth in some southern economies.

This “World of 70” is a place where a globally connected elite step over malnourished pavement dwellers on the streets of Mumbai, where apartments subdivided into coffin-like cubicles house the working classes of Hong Kong. Hardly confined to the mega-cities of the global South, such conditions also pervade the world’s traditional islands of prosperity: in Bloomberg’s New York, the city’s bottom 50 percent of poor and near-poor labors to build, maintain, and service Manhattan’s gilded zones. Beyond the expanding cities that define the modern economy, entire ways of life are being uprooted, creating the migratory class that constitutes today’s equivalent of the proletariat. In China there are pitched battles between developers and displaced peasants over the open spaces still left on urban fringes.

These days even capitalism’s most committed stakeholders have had to acknowledge the problem of global inequality. IMF economists recently pointed out that inequality undermines sustainable growth. Industrial magnates at the World Economic Forum openly fret about social instability; for this set, inequality evokes confiscatory class conflict, a nightmarish scenario in which slum dwellers demand keys to the penthouses towering over them. Yet few beneficiaries of inequality are ready to part with the source of their power.

This is a good time to call and fight for job growth outside of what we now euphemistically call “markets” (which, rather than resembling the competitive playing field of classical economists, often amount to little more than the power of investors with inordinate control over the means of production). If governments more actively generated mass employment and income, they’d become less dependent on the private sector. This would loosen the plutocratic stranglehold on many national economies, like that of the United States, where four hundred individuals now control a staggering $2 trillion in assets and congressional minorities routinely bottleneck reforms for the sake of protecting extreme wealth.

So what kind of development goals would fit into an anti-inequality agenda? Here are some ideas that the international community is not promoting for 2030:

  • Reduce the world’s Gini coefficient to 39 (the higher the figure, the greater the economic inequality).
  • Cap wealth for individuals at $1 billion by initiating a 100 percent tax on all estates, including inheritances, above that amount.
  • Cap annual incomes for individuals at $10 million using the same method.
  • Aim for full employment, and make it the responsibility of the public sector if private markets do not allocate the resources on their own. Alternatively or in addition, commit to providing citizens with a guaranteed minimum income.
  • Institute a global taxation regime that would apply taxes on short-term, speculative global financial transactions to fund development in the world’s poor countries.
  • Curb global military spending by 50 percent, with the largest spenders making the deepest cuts, and steer the money saved toward development initiatives. Simultaneously impose a 100 percent tax on profits from arms exports, devoting the receipts to the fund.
  • Replace the existing, draconian intellectual property protections regime with one modeled on India’s before it was forced to comply with the World Trade Organization, allowing northern multinationals to retain monopoly rights on finished goods while granting developing countries broad leeway to duplicate technologies.
  • Develop poor rural regions instead of making cities the primary engine of growth. This would bring improved living standards in both cities and the country, help maintain community ties, prevent the growth of new slums, and make migration optional.
  • End all corporate farm subsidies in the North that harm rural smallholders.
  • Guarantee housing, shelter, and global universal health care.
  • Guarantee leisure time, including the right to a vacation.

Implementing these or any other economic policy shifts on global or national scales would require considerable deliberation about their consequences and scope, and would only have a chance with considerable political will and organization. But, the sphere of legitimate debate in development forums has narrowed to the point of paralysis. These ideas are nonstarters not because of their merits, but because their sentiments offend the political, academic, and business elites who manage collective action on poverty.

Such ideas are nevertheless moderate enough to have already been proposed in various forms. The rights to housing, health care, employment, and leisure time are covered in the Universal Declaration of Human Rights, which most governments ostensibly agree to; Richard Nixon endorsed the guaranteed minimum income; Franklin Roosevelt called for caps on annual incomes of more than $350,000 in today’s dollars. Capping wealth at $1 billion, by contrast, would affect a grand total of 1,200 people worldwide.

Progressive on the face of things, the call to end poverty will only hold world leaders accountable to the pitifully low threshold of $1.25 per day unless there are more ambitious national poverty lines. We should not confuse an anti-poverty agenda with a pro-poor one. The latter would advance the rights of the least well off, even if their claims to humane existence come at the expense of extreme privilege. The current goals, by contrast, absolve the global elite of any responsibilities (other than voluntary ones) for realizing the rights of the poor. References to class, though present in the final panel report, are absent from the actual goals, as is a commitment to worldwide universal health care, even though the UN General Assembly called for this just last year. On the bright side, the proposed goals do include gender equality, the expansion of social services, and technology transfers in the area of renewable energy production.

While nonbinding, the final targets will nevertheless define global development policy for fifteen years. The world’s poorest countries will have to calibrate their domestic agendas with aid organizations and development agencies that incorporate the targets, and northern countries will be left completely off the hook for anything that goes unsaid. And the world’s well-to-do governments are just as responsible for the World of 70 as their poorer counterparts; the World Bank and IMF, both dominated by the Global North, play a major role in shaping economic planning in poor countries, and the global recession that stalled development in many parts of the Global South was a northern export.

The effects of inequality can be seen in virtually every aspect of social relations. Like global warming, it cannot be contained by political boundaries, necessitating collective action. Indeed, it is related to global warming itself, which is likely worsened by the long commutes of workers in economic exile from city centers, not to mention the consumption habits of the ultra-rich. Development agendas used to allow for such constellational thinking. Southern intellectuals such as Tanzania’s legendary former president Julius Nyerere took a global view of poverty, calling for ceilings on wealth for individuals and countries, and West German chancellor Willy Brandt headed a global commission that proposed a Keynesian system of transnational redistribution. Those ideas were categorically shelved in the age of Reagan and Thatcher, and we’re still haunted by the spirit of that age.

Joshua K. Leon is an assistant professor of political science and international studies at Iona College, where he teaches development. He writes on global poverty, development, health, and urbanization. His forthcoming book is called The Rise of Global Health.