TACKLING THE INEQUALITY PANDEMIC- A NEW SOCIAL CONTRACT FOR A NEW ERA

THE CONTEXT: The UN Secretary-General on Nelson Mandela’s birthday, 18 July 2020 talked about how we can address the many mutually reinforcing strands and layers of inequality before they destroy our economies and societies. This article analyses the key themes in the speech.

THE KEY FEATURES OF THE SPEECH

INEQUALITY DEFINES OUR TIME: 

• More than 70 per cent of the world’s people are living with rising income and wealth inequality. The 26 richest people in the world hold as much wealth as half the global population.
• But income, pay, and wealth are not the only measures of inequality. People’s chances in life depend on their gender, family and ethnic background, race, whether or not they have a disability, and other factors.

GENERATIONAL INTERSECTION OF INEQUALITY:

• Multiple inequalities intersect and reinforce each other across the generations. The lives and expectations of millions of people are largely determined by their circumstances at birth.
• Hence, birth becomes a determining factor in deciding how much unequal a person is.

MANIFESTATIONS OF INEQUALITY:

• High levels of inequality are associated with economic instability, corruption, financial crises, increased crime, and poor physical and mental health.
• Discrimination, abuse and lack of access to justice define inequality for many, particularly indigenous people, migrants, refugees, and minorities of all kinds. Such inequalities are a direct assault on human rights.

RACIAL INEQUALITY:

• The anti-racism movement that has spread from the United States around the world in the aftermath of George Floyd’s killing is one more sign that people have had enough.
• The world had enough of inequality and discrimination that treats people as criminals on the basis of their skin colour and of the structural racism and systematic injustice that deny people their fundamental human rights on the basis of race.

INSTITUTIONAL INEQUALITY:

• The nations that came out on top more than seven decades ago have refused to contemplate the reforms needed to change power relations in international institutions.
• The composition and voting rights in the United Nations Security Council and the boards of the Bretton Woods system are a case in point.  Inequality starts at the top: in global institutions. Addressing inequality must start by reforming them.

UNEQUAL GLOBAL TRADE:

• There is a new form of colonialism based on trade and economic policies premised on the concept and practice of a market economy.
• Economies that were colonized are at greater risk of getting locked into the production of raw materials and low-tech goods – a new form of colonialism.

GENDER INEQUALITY:

• The world should not forget another great source of inequality in our world: millennia of patriarchy.
• We live in a male-dominated world with a male-dominated culture.
• Everywhere, women are worse off than men, simply because they are women. Inequality and discrimination are the norms. Violence against women, including femicide, is at epidemic levels.
• Globally, women are still excluded from senior positions in governments and on corporate boards. Fewer than one in ten world leaders is a woman.
• Gender inequality harms everyone because it prevents us from benefiting from the intelligence and experience of all of humanity.

DIGITAL DIVIDE AND INEQUALITY:

• Digital divide and climate change are the two new dimensions of the inequality that the world experience today.
• The digital divide reinforces social and economic divides, from literacy to healthcare, from urban to rural, and from kindergarten to college.
• In 2019, some 87 per cent of people in developed countries used the internet, compared with just 19 per cent in the least developed countries.

CLIMATE CHANGE AND INEQUALITY:

• By 2050, accelerating climate change will affect millions of people through malnutrition, malaria, other diseases, migration, and extreme weather events.
• This creates serious threats to inter-generational equality and justice.
• The countries that are most affected by climate disruption did the least to contribute to global heating.
• This is why the call is not only for climate action but climate justice.

THE PANDEMIC AND AN UNEQUAL WORLD

EXPOSED IGNORED RISKS: The pandemic has demonstrated the fragility of the world. It has laid bare risks ignored for decades: inadequate health systems; gaps in social protection; structural inequalities; environmental degradation; the climate crisis.

GAINS MADE BEING LOST: Entire regions that were making progress on eradicating poverty and narrowing inequality have been set back years, in a matter of months. The virus poses the greatest risk to the most vulnerable: those living in poverty, older people, and people with disabilities and pre-existing conditions.

ECONOMIC FALL OUT: The economic fallout of the pandemic is affecting those who work in the informal economy; small and medium-size businesses; and people with caring responsibilities, who are mainly women. In some countries, health inequalities are amplified as not just private hospitals, but businesses and even individuals hoarding precious equipment that is urgently needed for everyone.

EXPOSED LIES AND MYTHS: 

• The lie that free markets can deliver healthcare for all;
• The fiction that unpaid care work does not work;
• The delusion that we live in a post-racist world;
• The myth is that we are all in the same boat.

GLOBALISATION, TECHNOLOGICAL CHANGE, AND INEQUALITY-AN ANALYSIS

Globalization and technological change have indeed fuelled enormous gains in income and prosperity. More than a billion people have moved out of extreme poverty. But the expansion of trade and technological progress have also contributed to an unprecedented shift in income distribution. Between 1980 and 2016, the world’s richest 1 per cent captured 27 per cent of the total cumulative growth in income. Low-skilled workers face an onslaught from new technologies, automation, the offshoring of manufacturing, and the demise of labour organizations. Tax concessions, tax avoidance, and tax evasion remain widespread. Corporate tax rates have fallen. This has reduced resources to invest in the very services that can reduce inequality: social protection, education, and healthcare. And a new generation of inequalities goes beyond income and wealth to encompass the knowledge and skills needed to succeed in today’s world.

A NEW SOCIAL CONTRACT AND A NEW DEAL FOR THE WORLD

The response to the pandemic, and to the widespread discontent that preceded it, must be based on a New Social Contract and a New Global Deal that create equal opportunities for all and respect the rights and freedoms of all. This is the only way that we will meet the goals of the 2030 Agenda for Sustainable Development, the Paris Agreement, and the Addis Ababa Action Agenda – agreements that address precisely the failures that are being exposed and exploited by the pandemic. Education and digital technology must be two great enablers and equalizers. The critical pillars of such a strategy are explained below.

EDUCATION FOR ALL:

• As Nelson Mandela said, “Education is the most powerful weapon we can use to change the world.” Governments must prioritize equal access, from early learning to lifelong education.
• Neuroscience tells us that pre-school education changes the lives of individuals and brings enormous benefits to communities and societies. So when the richest children are seven times more likely than the poorest to attend pre-school, it is no surprise that inequality is inter-generational.
• To deliver quality education for all, we need to more than double education spending in low and middle-income countries by 2030 to $3 trillion a year.
• Within a generation, all children in low- and middle-income countries could have access to quality education at all levels.

HARNESSING DIGITAL TECHNOLOGY:

• As technology transforms our world, learning facts and skills is not enough. Governments need to prioritize investment in digital literacy and infrastructure.
• The digital revolution and artificial intelligence will change the nature of work, and the relationship between work, leisure and other activities, some of which we cannot even imagine today.
• The Roadmap for Digital Cooperation, launched at the United Nations, promotes a vision of an inclusive, sustainable digital future by connecting the remaining four billion people to the Internet by 2030.
• The United Nations has also launched ‘Giga’, an ambitious project to get every school in the world online.
• Technology can turbocharge the recovery from COVID-19 and the achievement of the Sustainable Development Goals.

TRUST BUILDING AMONG PEOPLE, INSTITUTIONS AND LEADERS:

• As there is a very high low level of trust among the people and government, trust-building is very essential.
• People want social and economic systems that work for everyone. They want their human rights and fundamental freedoms to be respected. They want a say in decisions that affect their lives.
• The New Social Contract, between Governments, people, civil society, businesses and more, must integrate employment, sustainable development and social protection, based on equal rights and opportunities for all.

LABOUR RIGHTS AND SOCIAL PROTECTION:

• Labour market policies combined with constructive dialogue between employers and labour representatives, can improve pay and working conditions.
• Labour representation is also critical to managing the challenges posed to jobs by technology and structural transformation – including the transition to a green economy.
• A changing world requires a new generation of social protection policies with new safety nets including Universal Health Coverage and the possibility of a Universal Basic Income.
• Establishing minimum levels of social protection, and reversing chronic underinvestment in public services including education, healthcare, and internet access are essential.

AFFIRMATIVE ACTION PROGRAMMES FUNDED THROUGH CARBON TAX:

• We need affirmative action programmes and targeted policies to address and redress historic inequalities in gender, race or ethnicity that have been reinforced by social norms.
• Taxation has also a role In the New Social Contract. Everyone – individuals and corporations – must pay their fair share.
• In some countries, there is a place for taxes that recognize that the wealthy and well-connected have benefitted enormously from the state, and from their fellow citizens.
• Governments should also shift the tax burden from payrolls to carbon.
• Taxing carbon rather than people will increase output and employment while reducing emissions.

A FAIR GLOBAL ORDER:

• The global political and economic system is not delivering on critical global public goods: public health, climate action, sustainable development, peace.
• The COVID-19 pandemic has brought home the disconnect between self-interest and the common interest; and the huge gaps in governance structures and ethical frameworks.
• To close those gaps, and to make the New Social Contract possible, a New Global Deal to ensure that power, wealth and opportunities are shared more broadly and fairly at the international level.

CHALLENGES IN USHERING IN AN EQUAL WORLD

UNPRECEDENTED LEVEL OF DEBT:

• The response to addressing the existing and pandemic induced inequalities requires loosening the purse strings of the nations. But this may not be possible for under-developed countries which are already suffering from very high levels of debt.
• The result will be the reinforcement of existing socio-economic divides leading to furthering extreme inequality.
• A suspension in debt payment may be supplemented by a partial debt relief programme anchored by G-20 nations as an interim measure.

NATURE OF GLOBAL GOVERNANCE REGIME:

• The central aspect of inequality is the consequence of low levels of investment in public health systems and in other aspects of the welfare state in education, in social security.
• But for the developing countries to do it, they need support, thus need a new global deal at the global level with an effective transfer of resources to the developing world for them to be able to address these issues.
• But the current global governance regime is heavily skewed against any such resource redistribution.

DATA AS THE NEW CAPITAL:

• The two superpowers, the USA and China hold power over most of the data that the people on the planet use and consume.
• Thus, digital technology as an enabler for the new social contract may not work as the power over data may be used to control the access and use of data.
•  This has implications on digital education, economy, security and the like. Hence, we need to address the power and control over data for an equal world.

LESS FOCUS ON PRE-SCHOOL EDUCATION:

• When we talk about education, generally the discourse leave behind the importance of preschool education which is the most important aspect of determining a child’s future learning capabilities and outcomes.
• While the rich can provide for quality pre-school education, the poor are left behind. Thus unless the world community stress and develops pre-school infrastructure for all, the strength of education as an enabler will remain sub-optimal.

SELF-INTEREST OF THE WEALTHY:

• To bring a more egalitarian world order, a fair taxation system need to be built which as of now is lopsided and favours the rich.
• Tax havens are aiding and abetting the rich to hide assets and fleece money from the developing world.
• As long as self-interest drives individuals and nations, the wealthy will become wealthier. Thus, for a fair and equal global order, we need “enlightened –self-interest” which is arguably the lowest in today’s world.

THE WAY FORWARD:

• A New Global Deal, based on fair globalization, on the rights and dignity of every human being, living in balance with nature, taking account of the rights of future generations, and success measured in human rather than economic terms, is the need of the hour.
• The worldwide consultation process around the 75th anniversary of the United Nations has made clear that people want a global governance system that delivers for them.  The developing world must have a far stronger voice in global decision-making.
• We also need a more inclusive and balanced multilateral trading system that enables developing countries to move up global value chains. Illicit financial flows, money laundering and tax evasion must be prevented. A global consensus to end tax havens is essential.
• We must work together to integrate the principles of sustainable development into financial decision-making. Financial markets must be full partners in shifting the flow of resources away from the brown and the grey to the green, the sustainable and the equitable.
• Reform of the debt architecture and access to affordable credit must create fiscal space for countries to move investment in the same direction.

THE CONCLUSION: Inequality exposed and reinforced by the pandemic has posed challenges to the sustainable development goals too. The world needs to take note of the disparity of unequal relationships among nations and people cutting across neatly defined categories. The direction and leadership provided by the UN should encourage all to work towards a fair distribution of resources and opportunities.

 MAINS PRACTICE QUESTIONS:

1. A fair global order requires a new social contract and a new global deal. Elaborate.
2. “The ideal of equality faces challenges from multiple fronts”. Examine the statement in the context of the UN Secretary General’s view on inequality.
3. As the pandemic has deepened and reinforced the already existing inequality in India and in other developing nations, it is necessary to redraw the contours of SDGs. Comment.

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