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Food for a cynical thought?


Human Rights Reader 285


Inequality is at the root of human rights (HR) work. Should I thus find it cynical that only in 2011 has the IMF ‘come out of the closet’ in a big way to say that inequality is bad… for Capitalism? The IMF’s F+D (Finance and Development) Volume 48, Number 3 of September 2011 carried feature stories under the title “All For One: Why Inequality Throws Us Off Balance”.


Here below is what I found. Although probably in some cases out of context, I quote or paraphrase and I annotate:


Only so much disparity is ethically and politically acceptable.


1. For decades, ‘trickle down’ was the unspoken bargain of the market system. (But it does not seem to have worked; instead, economic growth brought us growing inequalities).


2. Growing inequality breeds social resentment and generates political instability; it also fuels populist protectionism and an anti-globalization sentiment. (Is this what worries the IMF?).


3. Globalization, on the other hand, can be blamed for rising inequality. (A vintage IMF contradiction here?).


4. It is thus a big mistake to separate analyses of growth and income distribution since, over longer horizons, reduced inequality and sustainable growth may be two sides of he same coin.


5.  More equal societies have a greater likelihood of sustaining longer-term economic growth. (Or is it here that the IMF shows its real colors?).


6. Individual-centered social norms are enforced by the dominant class as their members have internalized them early-on in life; it is collective social norms that are the missing matter. (Thank you, IMF. This is particularly applicable to HR work; something additional is thus needed for duty bearers to start cooperating in a HR spirit).


Let the Gini out of the bottle. (The Gini Coefficient is an index of income inequality between different income groups ranked by income in a population; an index of 100 denotes maximum inequality).


7. After declining in the first half of the 20th century, income inequality has made a come back particularly in the last quarter century. (We knew this, didn’t we?)


8. In 2005, global inequality had a high Gini coefficient of 70 which was 10 points higher than the Gini Coefficient of the most unequal country in the world. The richest 1% of people in the world receives nearly 14% of the global income while the poorest 20% receives just over 1%. In the US alone, the top 1% earners captured more than half of the overall economic growth experienced between 1993 and 2008. (They said it, not me…).


9. Inequality has risen both in China and in Vietnam (non-capitalist states), as well as in 16 out of 20 rich OECD countries. China’s inequality has surpassed that of the US. (Good tables and graphs on these distributions are found in this issue of F+D).


A bigger slice of the growing pie.


10. One traditional way to splitting the economic pie in favor of the haves against the have-less has been to cut wages to increase profits. The poor are ill prepared to deal with any income decline…. (Oh!, really?)


11. Budgetary spending cuts (as the ones the Republicans are asking for in the US Congress), ultimately slice the portion of the pie that goes to wage-earners, i.e., they hit wage earners more than others.


12. The reduced power of trade unions is responsible for the rising skilled-unskilled wage gap. Also a lack of unemployment benefits and a lack of guaranteed rural employment greatly contribute to inequality. (No news to most of us here either).


13. Inequality is not the product of impersonal forces though; it widens when society permits it and can be limited through conscious government policies. (Really?…an IMF late discovery?).


14. In other words, inequality matters in itself, not just as a proxy for other factors. ( I am flabbergasted…)


15. Failure to redistribute income is the result of the disproportionate influence of the rich over policy since they contribute more to politicians. Political decisions thus coincide with the preferences of the rich. The political system has moved to a ‘one-dollar-one-vote’ system away from the ‘one-person-one-vote notion. (…This said by an IMF publication!).


16. The top groups never reduce their consumption (there is only so much a person who ‘has it all’ can consume), but they increase their wealth accumulation. The bottom group receiving lower wages can only continue consuming by indebting itself…from loans given by the top group (as has been shown in the mortgage crisis in the US). Budget interventions do not directly confront the sources of inequality (such as declines in the collective bargaining power of the bottom group or shifts in the tax burden towards the bottom group), but are rather supplemented by policies that cut the cost of borrowing… so that the rich can continue lending at a profit. (Nice ‘catch-22’ situation, isn’t it?).


Decreasing global inequality is an epochal urgent imperative. (The IMF says it. Not this Reader!).


17. Are social justice and a focus on economic growth at war with one another?  Is there a trade-off between equality and efficiency? (You bet! x2).


18. As a social justice issue, universal access to health services and to education, for example, is difficult to achieve unless society has a more even income distribution.


19. Because too much inequality is destructive to growth, countries will find that improving equality will improve economic growth efficiency. (…The IMF’s neoliberal drive for economic growth shows trough here).


20. In the long run, there is therefore simply no way to avoid addressing the income inequality problem head-on. Financial liberalization buys time, but at the expense of an eventually much longer debt problem. (Again, their words, not mine).


Claudio Schuftan, Ho Chi Minh City



Intelligent movements need time to gestate. Such is the movement –for justice, fairness and equality– we actively pursue in human rights work. Metaphorically speaking, a new intelligent edifice has to have a roof before people will abandon the old one en masse; it requires a critical mass of new formulations that give practical insight into current burning problems. Generating this critical mass, we stand with John Maynard Keynes who tells us that sooner or later, it is ideas, not vested interests which are dangerous… for good or for evil. We stand with John Stuart Mill’s Collective Utility that tells us that we need to pursue the greatest good for the greatest number. And we stand with Adam Smith who tells us that human society is held together by principles of benevolence and self-restraint. (Should I say “Amen”?).



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