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Inequality, a new frontier for post 2015 development policy

16 Dec 2014
Claire Melamed, Head of Growth & Equity Programme at the Overseas Development Institute.,
There are two global conversations going on about inequality at the moment. The first is happening in the now active debates on what might come after the MDGs when they expire in 2015. There's a strong consensus that inequality needs to take a central place in any new framework.
br /> This consensus is driven by two global trends. The first is success. Rapid poverty reduction in many middle income countries is a cause for celebration. But lots of people have been left behind. Multiple inequalities - such as between races, ethnic groups, or regions - have trapped some people in poverty even in a context of strong economic growth and rapid poverty reduction overall. Increasingly, it is inequality between groups rather than slow growth or lack of opportunity at a national level which is the driver of poverty in middle-income countries (MICs).

A second trend is an increasing recognition of the costs of inequality. Governments everywhere are learning to fear the instability and political disillusionment which comes with high levels of inequality. From the Arab spring to the streets of London and New York during the 'Occupy' protests, political and economic inequality and exclusion has become the new rallying cry for protestors. Combined with growing evidence of the economic and social costs of high inequality, this provides a compelling political reason for action.

As a result of these two trends, lots of people seem to agree that inequality is a new frontier in development policy that needs to be tackled through a post-2015 agreement. Various ideas have been put forward for doing this - from a dedicated goal on inequality, to a universal approach to all goals which would incentivise governments to reach the poorest and most excluded. But there's consensus that something needs to be done to tackle inequalities within countries between the poorest people and the rest, and a strong chance that it will be.

Compare that with the second inequality debate. This one is about how a fixed set of global resources should be allocated between countries. At the moment, there's a big inequality as developed countries and rich people use up the huge majority of the world's resources while the poorest consume very few. Many natural resources are finite, so if poor people are going to get richer and start to consume more, and if some technological breakthrough doesn't come along and save us, then some people might have to start consuming less.

That's the dilemma which has been at the heart of the climate change negotiations for many years. And it's not just climate change. Other environmental policy choices: the use and abuse of ocean resources; changing patterns of land and water use; the levels of biodiversity on the planet, are all, to different degrees, choices about how to share out finite resources between different groups of people with different needs and different claims on those resources.

The level of consensus in this debate is in stark contrast to the first. There's little goodwill and less consensus - instead, mutual suspicion and lack of understanding are the norm.

There's no surprise in that. Tackling inequality in a context of expanding resources, through increasing the living standards of the poorest faster than everyone else, might not be the easiest of tasks, but it is several orders of magnitude easier than tackling inequality in a context of fixed resources, where gains for one person or group have to come at the expense of someone else.

For a short while, these two conversations can remain separate. Increasing the living standards of the very poorest would have a negligible effect on global resource use. The starting point is so low, that even doubling, say the carbon emissions, of the poorest 10% of the world's population would have very little effect on global emissions. We should aim to end global poverty even without any changes to resource use.

But over the long term this will not be sustainable, in any sense. From the environmental perspective, increasing consumption among the poorest will at some point start to undermine any future progress on reducing consumption among the richest, unless development happens in a less resource intensive way than in the past. And from a human development point of view, the price changes and conflicts that come with growing scarcity of key resources will themselves become a driver of rising inequality unless resources are managed better and more deliberately than in the past. So the two conversations are on a collision course.

What can we do between now and 2015 to avert the inequality car crash? First, the extremes of inequality in human development outcomes need to be tackled as soon as possible. For moral, economic and political reasons, ending global poverty should be the first priority of a new global development framework after 2015. This can only be done by addressing the inequalities which act as a barrier to progress for too many people.

But the new framework could also start to build in incentives for reducing natural resource use worldwide - to address those inequalities too. Probably not in 2015 as the politics are too difficult, but eventually a new framework has to get much tougher on high income countries, and contain targets for reducing consumption of natural resources by those who currently consume the most. An agreement in 2015 could start to point the direction for that, by containing one or two commitments on reducing resource use where a consensus does exist - energy might be a candidate here, given the work that's already been done on the Sustainable Energy for All initiative.

Tackling social inequalities has been one of the most politically contentious issues of the last 100 years. It seems unfair that just as the political consensus might be slowly moving towards addressing these, the stakes have been raised with the inclusion of resource inequalities too. But that is the situation we confront, and policy makers have to rise to the challenge, for all our sakes.