Dear Arjan
 
Thank you for your comments. I may indeed have over-simplified my position in summarising my three blogs, which hopefully present a somewhat more nuanced view (though still inevitably subject to the limitations of tight
constraints on length).
 
Clearly there has been an increase in attention to inequality in recent years, and of course this is very welcome. However, to my mind, a number of serious concerns remain, and have not as yet been adequately addressed.
 
1.     Most of the attention to inequality focuses (implicitly or explicitly) on inequality within countries. In the context of climate change, global carbon emissions and economic
globalisation, the real problem is inequality among the global population as a whole. This issue, I would argue, has not received anything like the attention it deserves (or at least not beyond the level of general hand-wringing).
 
2.     At the national level, growth and distribution are still seen as separable. To my mind, this seems conceptually incoherent: policies affect individual incomes, and growth
and distribution are summary merely measures of the set of individual incomes. It makes no more sense to pursue growth-oriented policies without taking account of the implications for distribution than to pursue redistribution without considering the implications for growth.

3.     While distribution now receives greater attention, it is still generally considered as secondary to growth. In a relatively equal society with no environmental constraints, this might be a valid assumption – but with extreme inequality and increasingly binding environmental constraints, it is not. Distribution is an issue, not only
of equity, but also of the efficiency with which a given level of income is translated into well-being. And, while not readily quantifiable, the loss of well-being (given global income) due to extreme global inequality and diminishing marginal utility is clearly very considerable; and global growth which overwhelmingly benefits those whose needs are already amply met makes little sense in a carbon-constrained world.

4.     There is a tendency (explicit or implicit) to equate distribution with redistribution –that is, taxes (or similar) levied on the rich to finance transfers to the poor– or more
generally to approach it with limited add-ons (eg social safety nets) to a growth-focused overall policy approach. This is no substitute for taking account of distributional impacts in the overall design of policies. Social safety nets
only make sense if they cover a minority of the overall population; and a substantial majority of the world population is below any credible poverty line (ie a level of income which might reasonable considered to meet basic needs adequately).

5.     These problems are embodied in, and perpetuated by the prevalence of “XXX growth”terminology in development programmes – starting with “growth-oriented adjustment”, through “sustainable growth” and “pro-poor growth” to “green  growth”, “inclusive growth” and now “inclusive green growth”. This skews the way we look at development policy towards growth and away from distribution (and
non-material aspects of well-being). (I have a further blog on this at http://www.worldwewant2015.org/node/340200, but it doesn’t add much to the three Broker blogs.)

Re China: I would totally agree. Part of the reason for my
scepticism about the benefits of the North-South shift in power is precisely  that the BRICS and other emerging market economies who have gained in this process have done so by reaching the point at which they too have a stronger interest in global growth than in reducing global inequality. The low-income and least developed countries remain totally excluded.

David Woodward
Economist 

David

While I think we all appreciate the call for increased attention to global inequalities, I do think that you slightly simplify the 'complacent world-view', and I don't think that this helps advocacy. Much of the rich debate that the Broker hosted was actually about whether inequality should be
added as goal beyond the current MDGs, including the one on poverty. There is a lot wrong with the current MDG framework, but it would be unfair to argue that 'growth' is still the predominant paradigm (or to ignore the role of the UN) - and if anything emerging economies particularly China (and changing politics in countries of 'like-minded donors' perhaps) have been most vocal to bring growth back on the agenda, even if this retains a critical role of the state.

Before we throw away the baby with the bathwater, it'd be good to consider the successes of the MDG framework of the aid industry, and under what conditions these have been achieved. Moreover, in the Broker debate, Martin Ravallion and  Stephan Klasen made very important points about the difficulty of using inequality as a measure. For me, the question is not whether inequality should be put on the agenda, but who would bring it on which agenda. Historically, inequalities have started to be addressed by social movements,  often under specific conditions where addressing inequality made sense for elites too and the nation as a whole (something we now I believe are witnessing in China for example). Except for support to social protection schemes, which play an important but small role for example in the declining inequality in
Latin America, the processes that address inequalities are quite different from the kind of transfers the aid industry has specialized in. 

It’d be worth re-reading Kasirim Nwuke’s reaction to the debate on social protection, on this same email network a few days back, where he emphasized the need for
citizens to reassert their voice, over a globally defined agenda.

Arjan de Haan
Supporting Inclusive Growth
International Development Research Centre Ottawa 

Dear friends,

Inequality, Poverty and Climate: Global inequality is greater than that in the most unequal country. While this is nothing new, climate change, and the continued failure of the global community to take any effective action to reduce global carbon emissions, transforms the issue into one of vital importance. 
 
If global economic growth resumes at its pre-crisis rate,
 even limiting global warming to 2°C will require what we currently produce and consume with 40 units of carbon, by
the 2040s, to be produced and consumed with one. This seems unimaginable with known and anticipated technologies, even setting aside the risk of unanticipated side-effects (eg of biofuels on food prices). 
 
Equally, even a return to the pre-crisis growth scenario
would have little effect on poverty. 1993-2008 saw major improvements in development policy (debt relief, aid and aid effectiveness, PRSPs, the MDGs, etc); yet incomes of the poorest 10% of the world population (excluding China)
greaw at barely half the rate rate of global GDP per
capita.

Extrapolating this trend, it would take more than 100
years to eradicate poverty, even based on the $1.25-a-day poverty line, and much longer at a more reasonable poverty line of, say, $5-a-day. And this assumes, not only that the 1993-2008 rate of improvement in development policies can be  maintained indefinitely, but also no greater impacts on the poorest as a result of climate change. 

Thus the complacent world-view in which global inequality
can be ignored, and poverty reduction can be left to trickle-down from global growth is tenable only if one considers as morally acceptable the perpetuation of poverty for centuries, and of the most extreme ($1.25-a-day) poverty for several generations. The only alternative is to address the issue of global  inequality directly, by shifting decisively from a global economy focused primarily on global growth irrespective of who benefits towards a system aimed more directly and explicitly at increasing the incomes, and meeting the needs
of the poorest.

Inequality and Economics: This is just part of a wider problem. It is conceptually incoherent to treat growth and distribution – two summary indicators of the same matrix (of household incomes) – as separable and quasi-independent.
Policies designed to promote economic growth inevitably affect the incomes of  different individuals in systematically different ways, and hence also affect distribution.

It is equally erroneous to give growth primacy, as a
matter of efficiency, and consider distribution as a secondary issue, limited to equity considerations. It is self-evident that an extra $100 of income has an immeasurably greater impact to a landless labourer living on less than a dollar  a day than on a billionaire. Thus the value of the additional income generated by economic growth is critically dependent on who receives it. Distribution has a major effect on the efficiency with which aggregate income is translated into  human well-being additional to considerations of equity in the distribution of material well-being. The scale of global inefficiency suggests that such distributional efficiency may well be as important as productive  efficiency.

Moreover, if we accept that the value of each dollar of
income varies (inversely) according the total income of recipient, this not only undermines the usefulness of aggregate income as an indicator or policy objective – it also requires us very largely to rethink economics as it is
generally used in policy. Markets and “market-based” responses to externalities, cease to be optimal: it is the most beneficial consumption –that of the poor – not the least, which is discouraged.

In a relatively equal society, this might not matter very
much. But in a world where 1.3 billion people below the $1.25-a-day line, with an average purchasing power of around $300 per person per year, must compete in
an increasingly globalised market with 1,426 billionaires, with a combined net worth of more than $5,300,000,000,000, it matters very much indeed. 
 
Economic and Political Inequality: Why, then, do we retain growth as our primary objective and free markets as our primary means of achieving it, using “market-based”
mechanisms to correct for externalities? The answer lies not in economics, but  in politics. 

Political systems in practice give greater power to the
wealthy (and to corporate and financial interests) than to the poor; and this allows the former to skew decision-making to their own economic advantage. 
 
This phenomenon arises as much as the global as at the
national level. In the IMF and the World Bank, inequality of power is institutionalised in “economically-weighted” voting systems unthinkable in any democratic society, which give a substantial majority of the votes to a rich minority of developed country governments representing less than one-sixth of  the world population, reinforced by a number of other mechanisms which further disempower the representatives of low-income countries in particular.

The WTO is no better. Impeccably democratic as its one-member-one-vote formal structures may be, effective decision-making takes place behind closed doors in secretive processes outside these rules, governed by systematic arm-twisting and pay-offs by the developed countries. 
 
The inevitable result – from the debt crisis through structural adjustment to the WTO Agreements – is a process of commercial  globalisation which has systematically favoured the financial interests of (mostly rich-country) elites at the expense of the disadvantaged, particularly
in the poorest countries.

Even the recent partial shift in favour of the “BRICS”
leaves their influence far short of their share of the world population – even collectively, they at best have the power to say no to an agenda driven by the North, which is a recipe for inertia rather than progress. Worse, low-income  and least developed countries are still clearly excluded. This is critical: not only are their needs greatest (and least well served by global governance as it stands), but their interests are often diametrically opposed to those of the “emerging market” economies.

Breaking this vicious circle requires breaking the formal
links between economic power and votes in institutions such as the IMF and World Bank, establishing democratic decision-making systems, and ensuring that decisions are made through these mechanisms. 
 
However, as long as national governments are themselves
disproportionately influenced by elites and financial and corporate interests, merely shifting power among them will have a limited effect. While this can only be resolved by reforms within each country, a first step might be to shift the accountability of global institutions from governments to Parliaments. Coupled with greater transparency (eg live web-casts of major discussions) and
more effective accountability mechanisms, this could start to move power in global institutions towards where it belongs – with the world population as a whole.

Then, and only then, when we at least begin to weaken the
avaricious circle of economic and political power, if not to break it, might we expect to see some real progress on global inequality. 

David Woodward
Economist

See:  
Inequality, Growth and Poverty Eradication in a Carbon-Constrained World
http://www.thebrokeronline.eu/Blogs/Inequality-debate/Inequality-Growth-and-Poverty-Eradication-in-a-Carbon-Constrained-World

The Failure of Economics in an Unequal World
http://www.thebrokeronline.eu/Blogs/Inequality-debate/The-failure-of-economics-in-an-unequal-world

Breaking the Avaricious Circle of Global Inequality
http://www.thebrokeronline.eu/Blogs/Inequality-debate/Breaking-the-avaricious-circle-of-global-inequality

Dear all,

I use this channel to share with you our recent comments on the emerging new (or rather old...as it turns out)
development strategy of the World Bank (The Common Vision of the World Bank Group).
http://www.recoveryhumanface.org/letters-to-policy-makers.html 

Beyond recovery the longer term development policy ambitions seem rather modest and the development policy paradigm behind them appears very traditional. Others may wish to comment as well....Next week the Spring meetings
are on.   

Best regards,
Michael Cichon
President, International Council on Social Welfare

Dear Colleagues,

I hope we will continue with this very interesting conversation regarding global fund/s for social protection floors, something that Global Unions is very interested in.

Since we are on the topic of social protection floors, below are links to two letters Global Unions sent this week to the IMF and World Bank that raise the issue of social protection floors with both institutions:
http://www.ituc-csi.org/letter-to-the-world-bank-2013

http://www.ituc-csi.org/letter-to-the-imf-2013-spring

(The complete ITUC-Global Unions Statement to the 2013 Spring Meetings of the IMF and World Bank can be seen
here:
http://www.ituc-csi.org/statement-by-global-unions1-to-the-13055)

We have also raised with the IMF the issue of fiscal space for social protection, including in the MENA region. Below is a link to a report on fuel subsidies the Fund issued last week. The table in Annex 3 of the report is interesting because it gives an indication of the fiscal space that energy
subsidies occupy in national budgets. Nevertheless, in the letter linked above to the IMF we have raised very serious concerns about how these subsidies are being removed, emphasizing the need to put into place mitigating measures prior to their removal. 
http://www.imf.org/external/np/pp/eng/2013/012813.pdf

If you have feedback or questions, please feel free to post or to contact me at pgomez at globalunions-us.org. You can follow us on Twitter at @itucglobalunion.

Best regards,

Pamela Gomez
Research Officer
ITUC/Global Unions - Washington Office
888 16th Street NW, Suite 400
Washington, DC 20006
E-mail: pgomez@globalunions-us.org

Dear friends and colleagues

It is refreshing to see the attention being given to inequalities in the post-2015 development discussions, and the strong support being given to this topic by prominent development experts such as through the recent letter
sent to the high level panel from economists, academics and development experts that was previously circulated on this list (http://www.post2015hlp.org/wp-content/uploads/2013/03/Dr-Homi-Kharas.pdf). This is an idea whose time has finally come.

But I'd also like to add that a fundamental aspect of inequalities is inequality in voice. Much of the discussion on the post-2015 agenda is still dominated by experts and by political elites. The message on inequality will carry more weight, and will be more legitimate if it was also backed up by grassroots support i.e. the voices of the poor
themselves. I think it is important that whatever is done in the name of the excluded also include, as far as possible, the voices of the excluded.

A central part of addressing inequalities once the post-2015
agenda is agreed will need to be listening and responding to the needs and aspirations of the people for whom we are advocating, even when their aspirations are not always congruent with our own. Similarly governments who are charged with implementing the post-015 agenda should ultimately be  accountable to their populations for their action or inaction, rather than to experts or technical and intergovernmental bodies. This accountability can be
strengthened by greater participation of the excluded.

I'd therefore urge that in advocating for inequality to be a goal in the new post-2015 development agenda that we should also be advocating for more equal participation and accountability to the poor as a means to achieve it.

As you may know the UN and civil society are working together to help foster a “global conversation” on the post-2015 agenda known as “World We Want 2015” which is hosted online at http://www.worldwewant2015.org. This also hosts the online component of the Global Thematic consultations and the national consultations being supported by the UN Development Group. In addition the UN, The World Wide Web Foundation, ODI and Ipsos MORI have organized a global vote on the post-2015 agenda known as
MyWorld2015 http://www.myworld2015.org/

The UNDG recently released a report which summarizes the inputs received to date through these consultations and also made available all the raw data on which this is based so that it can  be downloaded and used by researchers – see here http://www.worldwewant2015.org/the-global-conversation-begins

I'd  like to encourage you all to individually share your
views  on the "World We Want" public conversation platform supported by and use it as an additional avenue to advocate for the inclusion of inequality and the voices of the poor in the post-2015 agenda, but also to ask for your help to
share widely the two platforms and encourage others to participate in them to share their views and to help us reach out beyond our usual audiences of development experts.

Best regards 
Ian Thorpe
Team Leader, Knowledge Management, Monitoring and Evaluation
UN Development Operations Coordination Office
One UN Plaza, DC1-16-48,
New York, NY 10017
ian.thorpe@undg.org
The United Nations Development Group
www.undg.org

Dear friends

I would like to add a few thoughts and experience to the
discussion on Global Funds. What happened in the education sector with the Global Partnership for Education (GPE), which also has a fund, is quite interesting in this respect.

Originally (as the Fast Track Initiative, the predecessor
of the GPE) , there was no fund. The Initiative aimed to help countries develop sector plans to enable all children to have a quality education. These are inevitably and rightly context-specific. It was soon realised that there was no incentive to do this so a fund was introduced, in fact originally several funds, aimed at capacity development, actually developing the  plan, and finally, implementing part of it, which essentially remains the structure now although the articulation is different.  

Unlike many of the funds in the Health sector, this, the
main Global Partnership and Fund for Education has chosen to back sector plans; indeed having a sector plan is a pre-requisite for further funding. Countries in a fragile state are given more flexibility and technical assistance is available to enable plans in all contexts to be developed. There is no
blueprint either for an education plan nor a proposal to the GPE Fund. Partner Agencies unite behind the effort at all levels and provide technical assistance, while the Partnership Secretariat provides intensive advice on the whole process. Board members comprise an equal number of donor and partner country constituencies and include civil society, foundations and the private sector. It is largely the donor countries who supply the funds but others are aligning their programmes more to country policies and the Partnership enables  sharing of innovation and experience.

It is not without its issues but a genuine attempt has been made to build capacity, hear all voices, and not to fragment a sector with  projects. As an erstwhile Board alternate, I hold it in very high regard both for those lofty goals and for trying to iron out the bumps that inevitably appear with such a diverse membership.

Relating that experience to a Global Social Protection
floor and Fund, I would make a couple of comments:

1. Pleased to see education as part of this, we know that
education as one example cannot be achieved without broader social protection measures. But not all that is planned or ideal needs to be funded separately. The issue is to build on and utilize what is already happening. For example,  early childhood education has been funded by the GPE in some countries (a predictor of future performance in the education sector and a real need for progress in other areas of life), as have measures for girls, as well as other
more formalized education efforts.

2. Experience in the GPE has shown that there is a need for an incentive  to develop a plan. Social protection is more
encompassing than any one sector but an overall plan is needed. Such a plan  could be a pre-requisite for funding not necessarily by a new fund but encouraged for other existing sources of funding.

3. Social Protection may or may not need a global fund of
its own. Funds run separately are expensive to manage and often have a self-perpetuating side and ambition of their own. Funds located in a partner institution also have their issues (as does that of the GPE hosted by the World Bank).

4. On balance I would probably not go for a new fund,
though I am cautious about expressing an opinion in a field in which I have limited experience. Rather, I would chase an MDG or something similar which encourages and supports countries to have a Social Protection Floor in place.This is a natural extension of the equity discussion underway and
could be built into the principles recently discussed by the High Level Panel.  Regional  Political organisations are a very good entry point for peer support, setting of regional goals and other processes. I would lean on donors to provide technical assistance to countries and make available the sort of information which "sells" this to countries by showing how the package aids social and economic development as well as addresses equity and rights, and
goals in other sectors. Cooordination of aid is sorely needed but donors and others have bought into the Paris Agreement (Accra and Busan also), which should require this, although we know that this commitment is not always 100% on the ground.

5. Secondly I would encourage more sharing from countries
that both do this already and monitor and evaluate it well.

6. On all counts I would discourage the emergence of new
projects and particularly of donor pet projects and approaches.

7. A very real partnership to which countries could belong would give them crucial expertise, information, and incentives around the Social Protection Floor and which encourages donors to build this into their packages of support.

8. One very real concern, however, are the countries
where the need is greatest and donors and domestic financing is not so available. Ignoring this aspect would increase inequity between countries. To me this is a crucial issue to be discussed.

So, I am not strongly "for" or "against"a fund, I am
definitely for a Social Protection Floor at national level, working with what is already in place, and influencing it, and giving serious attention to equity considerations at very level.

I hope this adds a bit of sector experience to the
discussion. 

Susan Durston (just in case you need some credentials I am a recent former Head of Education in UNICEF, with a lifetime of national planning and implementation experience, but the views above are entirely my own). 

Dear Urban,

This is all well and good. But only citizens of a country have the sovereign prerogative to make their own laws and policies, including redistribution policies. For some reason, many of us engaged in the international development
business appear to forget this.  The good news is that the situation is gradually changing.  Citizens of "poor" countries are increasingly re-asserting their sovereignty over their nations’ policies. Like their counterparts in richer countries.  And they are doing so through elections (since political parties are a summary of policy options) and civil actions. To ignore the agency of citizens of poor countries as in the proposal for a Global Social Protection Fund, is a big mistake. 
 
I have not seen any strong and persuasive argument for a global social protection fund.  And there is no reason to assume that citizens of poor countries want it.  In my view, it will be one more avenue through which obnoxious
policies will be imposed on poor countries. And could be, like the Global Fund another avenue for allegations of corruption against countries. Rather than create yet another fund with all the difficulties that its implementation will
raise, efforts should instead be focused on how best to assist countries manage their new found mineral wealth.  Recent advances in mining and drilling technologies have made (or will make) many of Africa's poor countries immensely rich. For these countries, what is required is better contract terms with oil and mining firms and better management of revenues, not yet another “global”
institution that reinforces their constructed status as poor. Through better management of their mineral resources and revenues accruing from them as well as through enhancing regional trade integration, citizens of these countries, rich
and poor alike, will improve their material circumstances.  There is need to temper the urge that sees the creation of new “global” institutions as the panacea to poverty.
 
Kasirim Nwuke,
Chief New Technologies and Innovation Section
United Nations Economic Commission for Africa (UNECA),  Addis Ababa. 

Dear Friends,

There seems to be an increasing agreement that the Post-2015 Agenda should focus on inequalities and be based on human right.

Regarding inequality earlier contributors have emphasised what I call disparity, which more that ‘inequality’ refers to the fact that we must simultaneously focus on both people living in poverty and people who are richer. For example Richard Kozul-Wright says “devoting attention to those at the bottom has resulted in insufficient attention being paid to those at the top with access to the resources needed to drive investment and create jobs”. It is indeed a matter of fact that apart from a few countries almost all countries in the world that have managed to eliminate poverty has done so primarily by redistribution of resources, primarily through progressive income taxation. For example, none of the Nordic countries would have managed to eliminate poverty without the adoption of a relatively strong progressive taxation policy. Originally this was the result of workers’ struggle and solidarity, now we know that there are also
significant economic benefits from reduced inequality.

Olivier de Schutter and others have proposed the creation of a Global Fund for Social Protection, arguing“would allow poorer States to draw on international funding to meet the basic  costs of putting social protection in place”. I believe that before we discuss how such a fund would function, we need to agree on the concept of social protection. The concept of ‘social protection’ has very different meaning and consequences of the selection of priority action, depending on whether we assume a Basic Needs Approach or a Human Rights-Based Approach (HRBA). The latter approach is well described and explained in a recent UNDP report (“Mainstreaming Human Rights in Development Policies and
  Programming: UNDP Experiences”). It is very important that one clarifies  explicitly the type of development approach one has in mind before discussion how to undertake and support development.

In a Basic Needs Approach a comprehensive set of
interventions based on assessed needs and context are identified and implemented, while in a HRBA human rights relationships are identified between claim-holders and duty-bearers (Pattern Analysis), followed by an analysis of
the capacity gaps of the claim-holders to claim their rights and of duty-bearers to meet their duties (Capacity Analysis). Actions are selected to reduce or close these gaps.

Bob Deacon brings up the important issue regarding the use
of a Social Protection Fund by suggesting “redistribution
from a global fund to support poorer countries develop a SPF should be in the form of matching funds. Every dollar in revenue raised by a country by its own fiscal policy which is earmarked for spending on its own social protection floor could be rewarded with a dollar from the fund”.  This
has already proven to be true for the several cash-transfer programmes in Latin  America and Africa. 

I believe that it is high time to introduce some human rights-based conditionalities in international development cooperation. As is well known the Paris Principles on
Aid Effectiveness deliberately avoids any reference to human rights. I would like to suggest a Sixth Paris Principle: In order to continue receiving un-tied development assistance recipient countries must demonstrate a reduction in disparities.

Finally a word on the use of the term “the poor” (or even worse “the ultra-poor”). When I went to primary school in Sweden in the mid 1950s we were forbidden to use the term
‘disabled people’, and were taught to use the more proper term ‘people with disabilities’. Since then I never used the term ‘the poor’, but instead‘people who are poor’ or even better ‘people who live I poverty’. This is not just a play of words – it reflects a clear ideological position on
society.



Urban
  Jonsson


Executive Director
The Owls


Former Regional Director UNICEF

Dear friends, 
 
Contrary to public perception, austerity measures are not limited to Europe; in fact, many adjustment measures feature most prominently in developing countries. According to IMF data, 119 countries will be adjusting public expenditures in 2013, increasing to 131 countries in 2014 and the trend will continue at least until 2016.  
 
This is to share with you a global update on austerity,
co-published by IPD and the South Centre: “The Age of Austerity – A Review of Public Expenditures and Adjustment Measures in 181 Countries” 
http://policydialogue.org/files/publications/Age_of_Austerity_Ortiz_and_Cummins.pdf
 
The paper: (i) examines the latest IMF government spending projections for 181 countries by comparing the four distinct periods of 2005-07 (pre-crisis), 2008-09 (crisis phase I: fiscal expansion), 2010-12 (crisis phase II: onset of fiscal contraction) and 2013-15 (crisis phase III: intensification of fiscal contraction); (ii) reviews 314 IMF country reports in 174 countries to identify the main adjustment measures considered in high-income and developing countries; (iv) discusses the threats of austerity to development goals and social progress; and (v) calls for urgent action by governments to adopt alternative and equitable policies for socio-economic recovery. 
 
In a first phase of the global economic crisis (2008-09), most governments introduced fiscal stimulus programs and ramped up public spending, as the world was able to coordinate policies. However, premature expenditure
contraction became widespread in 2010, which marked the beginning of the second phase of the crisis, despite vulnerable populations’ urgent and significant need
of public assistance. In 2013, the scope of public expenditure consolidation is expected to intensify significantly, impacting 119 countries in terms of GDP,
and then steadily increase to reach 132 countries in 2015. The latest IMF projections suggest that this trend will continue at least through 2016.

One of the key findings of this analysis is that fiscal
contraction is most severe in the developing world. Overall, 68 developing countries are projected to cut public spending by 3.7% of GDP, on average, in the third phase of the crisis (2013-15) compared to 26 high-income countries, which are expected to contract by 2.2% of GDP, on average. Moreover, comparing the 2013-15 and 2005-07 periods suggest that a quarter of countries are undergoing excessive contraction, defined as cutting expenditures below pre-crisis levels. 

In terms of population, austerity will be affecting 5.8 billion
people or 80% of the global population in 2013; this is expected to increase to  6.3 billion or 90% of persons worldwide by 2015.

Regarding austerity measures, a desk review of IMF country
reports published between January 2010 and February 2013 indicates that governments are weighing various adjustment strategies. These include: (i) elimination or reduction of subsidies, including on fuel, agriculture and food products (in 100 countries); (ii) wage bill cuts/caps, including the salaries of education, health and other public sector workers (in 98 countries); (iii) rationalizing and further targeting safety nets (in 80 countries); (iv) pension reform (in 86 countries); (v) healthcare reform (in 37 countries); and (vi)
labor flexibilization (in 32 countries). Many governments are also considering revenue-side measures that can adversely impact vulnerable populations, mainly through introducing or broadening consumption taxes, such as value added taxes (VATs), on basic products that are disproportionately consumed by poor households (in 94 countries). 

The paper questions if the projected fiscal contraction
trajectory—in terms of timing, scope and magnitude—as well as the specific austerity measures being considered are conducive to socio-economic recovery and the achievement of development goals. The worldwide propensity toward
fiscal consolidation can be expected to aggravate the employment crisis and diminish public support at a time when it is most needed. The costs of adjustment are being thrust upon populations who have been relentlessly coping
with fewer and lower-paying job opportunities, higher food and fuel costs, and reduced access to essential services since the crisis began. In short, millions of households continue to bear the costs of a “recovery” that has largely
excluded them. 

It is imperative that policymakers recognize the high human and developmental costs of poorly designed adjustment strategies and consider alternative policies that support a recovery for all.

Please disseminate through your networks
Thank you
Isabel Ortiz and Matthew Cummins 
 
Isabel Ortiz
Director Global Social Justice Program
Initiative for Policy Dialogue, Columbia University


http://policydialogue.org/programs/taskforces/global_social_justice/

Dear all

Since the earlier Recovery e-discussion group was wound up over a year ago events have predictably only confirmed that there is no prospect, in the foreseeable future, of recovery from the Global Financial Crisis through application of conventional economic means (fiscal and monetary policy). As I  attempted to point out in my earlier contributions this is because no such conventional strategy could deal with the central obstacle of the crippling burden of debt (public and
private) that is paralysing the world's major economies. Equally, any substantial write-off of this debt, such as would be needed in order to permit an eventual return to sustained economic expansion, will entail a massive
collapse of asset values and destruction of capital, with dire economic consequences in the short / medium term.

As explained in the latest installment of my blog - http://harryshutt.com/#/blog/4558256536/Last-days-in-the-bunker/5060934
- any such debt write-off would result in huge loss of wealth by the ruling elite. Hence their reluctance to embrace any policies (e.g. as a rise in interest rates) which would precipitate such a market meltdown, as well as a world-wide global depression. Yet since such a crash is ultimately unavoidable in any event - as persistent stagnation brings only ever higher levels of public debt - we must recognise that a) it is going to occur sooner rather than later and b) in that event total economic and social collapse will only be
averted by establishing a command economy regime to impose tight controls in the immediate aftermath (see also my blog).

If this scenario is realistic it has obvious major implications for any proposals we might advance for such inherently desirable measures as a Global Fund for Social Protection -
as proposed by Olivier de Schutter et al. For if the type of command economy I envisage were established it would need to be in place for several years at least and would have to be set up on a national rather than a transnational
basis in the first instance. Hence cross-border transfers of resources to poorer countries would need to take place bilaterally for the most part. Furthermore, the certainty that there would be little or no GDP growth for the indefinite
future - if not permanently - implies the need for a quite different ideological basis  for resource allocation (much more egalitarian) than under the present order.

It is obviously difficult to envisage how such proposals
as the GFSP might be implemented under conditions of such profound change as now confront us. But I would respectfully suggest that we cannot make any realistic
contribution to solving the plight of the world's poorest unless we take account of them.

Best wishes
Harry Shutt
Economist