Tackling inequality is key to the post-MDGs development agenda

In stark contrast to the simplicity and clarity most stakeholders had hoped for, the UN’s draft Sustainable Development Goals (SDGs) comprise over 150 targets. Making the successor to the Millennium Development Goals (MDGs) so chock-full of priorities turned global target setting into a pointless exercise, because it will be impossible to monitor so many nebulous targets. 

The SDGs, like the MDGs before them, constitute a “global” deal between north and south. That means specific performance targets for developing countries alongside a few vaguely-formulated delivery targets for developed nations. But a truly “universal” agenda would transcend the north-south divide by setting performance targets for all countries and forgoing unnecessary dichotomies. That said, an agenda that starts with a focus on extreme poverty, people living on less than $1.25 a day, cannot be considered universal. A good example of this distinction would be nutrition – a “global” deal focuses on hunger, whereas a “universal” agenda would also include obesity and the overweight. The SDG list makes no mention of obesity, but sets a 2030 target for ending hunger. Global targets for eliminating extreme poverty and hunger are not universal because they don’t affect high-income countries, while topics of a truly universal agenda would include youth unemployment, gender discrimination and overweight.

Whether developed countries are ready to commit to a universal agenda is moot as the EU’s view is that “the principle of common but differentiated responsibilities is not useful to address the wider challenges of the post-2015 framework”. A focus on extreme poverty and hunger is obviously more convenient, but even if the post-2015 agenda were universal, neither poverty nor climate change should be the centre of attention, but inequality.

The inequality issue quickly raises an ideological spectre. On the right of the political spectrum it is often dismissed as the “politics of envy” or “class warfare”. On the political left, inequality is seen to stem from greed, and so raises provocative questions about economic structures. Michael Sandel, a professor of government at Harvard University, offers a more nuanced view when he maintains that “if the only advantage of affluence were the ability to buy yachts, sports cars and fancy vacations, inequalities of income and wealth would not matter very much. But as money comes to buy more and more – political influence, good medical care, a home in a safe neighbourhood rather than in a crime-ridden one, access to elite schools rather than failing ones – the distribution of income and wealth looms larger and larger”.

The need to place inequality as the top priority requires four main clarifications to explain its urgency. First, concerns about inequality are not synonymous with calls for equality. It is all about equity, differences inevitably exist because people pursue different priorities in life, so it is whether these differences are based on a fair playing field that’s the real question. The second is not whether inequalities are being reduced, but whether society itself is equitable. A majority of countries around the world now either exceed or are approaching the inequality-mark beyond which a society can no longer be called equitable. Third, inequality between countries may have decreased in recent decades thanks to the progress achieved by emerging countries, but it is domestic inequality that counts. People perceive inequality in terms of disparities within society, not between societies. Surveys show that well-being is more related to relative wealth than to absolute riches. The relevant benchmarks are therefore national, not global. This explains why middle-income countries don’t score lower on the happiness scale than high-income nations.

Last, and far from least, the distinction between “equality of opportunity” and “equality of outcome” is only valid up to a point. Most people consider the latter an utopian idea because it would negate the different drives and talents of individuals. The two are, however, not quite as distinct as they might at first seem. Equality of opportunity would give children a much the same starting position, but isn’t a child’s starting point largely determined by the parents’ income? In other words, if one really cares about equal opportunity, one cannot ignore the inequality of outcomes. It is obvious that inequality of opportunity entails outcome-inequality, but it is equally the case that high income inequality will thwart equality of opportunity. It is the latter causal link that makes high inequality so harmful to society, making it wrong to argue that pursuing equality of opportunity is enough to ensure equitable outcomes. It may be a starting point, but it’s certainly not enough.

Human progress has in recent decades, by and large, by-passed the poorest segments of society. The majority of countries have witnessed growing disparities in people’s outcomes because of the gaps in incomes and wealth, education and health. Why, then, has human development been characterised by such a systemic discrimination? Inequality is the short answer, because it has made the ladder of opportunity much steeper to climb. When high inequality exists, family backgrounds begin to determine outcomes rather than individuals’ efforts and talents. Studies confirm that the incomes of parents and those of their children correlates most positively of all in unequal countries; meaning that high inequality reduces social mobility.

We can therefore postulate that Gresham’s law, which states that bad money drives out good money, is also applicable to inequality. Bad inequality – which entrenches privileges – drives out good inequality – which creates incentives – because high inequality has a corrosive effect on equality of opportunity.

The conventional view is nevertheless that good inequality creates incentives for people to work hard and take business risks; and this generates economic growth whose benefits should eventually trickle down. It is therefore argued that equity is the problem because it will lead to slower growth and fewer jobs. Since the 1990s, however, another view gradually to have emerged is that bad inequality is causally related to slower economic growth and fewer jobs. So, contrary to perceived wisdom, it is high inequality that has become the problem.

It is vitally important to revive the philosophical idea that equity is a common good. It is in essence not that some people have more wealth than others, it is that high inequality creates major barriers to equal opportunity. Rather than a quest for a more utopian distribution of income, it is that in many societies the equal treatment of citizens is no longer a practical reality. High inequality entails hierarchical societies which invariably engender discrimination, marginalisation, exclusion, exploitation and abuse. Powerful interest groups perpetuate their privileges, and in the end come to live separately from the rest of society. When equality of opportunity becomes a fiction, that inequality becomes a poverty trap.

What’s really needed as we look beyond 2015 is a universal agenda that has equity at its forefront. Equity is far more important than poverty because inequality will have such far-reaching consequences in rich and poor countries. The attention to be paid to inequality in the post-2015 debate should reflect a deep-seated human sentiment regarding fairness. The EU has proposed that “lower income groups should benefit equally from growth”, but this is exceedingly timid and woefully inadequate. Equity must come first.