This year will be marked by frenzied discussions of a ‘post-2015 agenda’, around the legitimate ambition to get multilateral commitment on a new set of Sustainable Development Goals (SDGs). In this respect, it is important to stress the need for a clear and concise set of SDGs, moving beyond poverty targets and a North-South (read donor-recipient) dichotomy, towards a more universal agenda.
The call to emphasise equity in the SDGs echoes widespread concern about rising inequality, as expressed by citizens and civil society, but also among political leaders and business people. The media buzz created by the Oxfam report on inequality is just the most recent example, showing that the richest 1% in the world own about as much of the global wealth as the 99% of the rest of the population. At the same time, US President Barak Obama’s 2015 State of the Union Address is the latest example of high-profile politics in favour of a fair and equitable system, arguing that a “country does best when everyone gets their fair shot, everyone gets their fair share, and everyone plays by the same set of rules”.
Another encouraging sign is the increasing awareness among the business community of the challenges caused by rising inequality. Interestingly, Thomas Piketty’s bestseller Capital in the Twenty-First Century, on the history and causes of inequality, was awarded the Financial Times and McKinsey Business Book of the Year in 2014. The World Economic Forum identified deepening inequality as the key challenge and most significant trend of 2015.
The arguments used in favour of tackling inequality and championing equity are often made on moral grounds. But there is also the notion of a trade-off between efficiency and equality. That is, redistribution of wealth can be desirable but costly: by reducing the incentive to work hard and seek additional wealth, redistribution policies are thought to limit growth and hence total wealth. Such tensions are well-illustrated by the debate surrounding Obama’s State of the Union address.
The good news for the SDGs agenda is that tackling inequality is not only morally right but can make very good economic sense.
Recent analysis by the International Monetary Fund on redistribution, inequality and growth points in that direction. Building on previous studies, the IMF shows that countries with lower inequality tend to experience faster and more durable growth. But that is not all: there does not seem to be a trade-off between redistribution and efficiency, as redistribution does not affect growth except in extreme cases. So tackling inequality is on the whole pro-growth!
In that context, can and will the SGDs effectively tackle inequality with a universal agenda? I doubt it! The Millennium Development Goals resulted from a strong North-South, donor-centric approach, which is somewhat losing its significance, attraction and relevance. The post-2015 agenda tries to build on the MDGs ‘acquis’, as perceived mainly by the development community, broadening the agenda (169 targets have been identified so far, compared to 18 for the MDGs) and trying to entice emerging and developing countries’ ownership.
The intentions are good and the UN-driven post-2015 agenda has so far managed to stimulate a most welcome public debate while garnering some political momentum. With 2015 as the European Year for Development, the European Union is fully on board. But discussions remain captured by the development community.
Seriously tackling inequality will require a broader range of stakeholders, including from the business and finance community
not traditionally involved in development debates. And besides an all-encompassing universal agenda, much more pointed international actions are needed, on such issues as taxation or illicit financial flows. Only by seeking traction beyond the UN-led SDGs can we have hope to better tackle inequality.