Recovery with a Human Face
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Recovery with a Human Face

A discussion on alternatives for a socially-responsive crisis recovery
 

June 25th, 2013

6/25/2013

 
Dear colleagues,
 
The recent global crisis has raised a lot of interest from academics, governments, and policy institutions in the economic consequences of financial crises. However, we know far less about how financial crises affect society at large.

In a new paper, my aim is to extend our understanding of the consequences of financial crises beyond their economic
effects and provide a comprehensive analysis of their social costs. 
 
Using data on 187 banking crises in 126 countries over the period 1970-2009, I examine the impact of a crisis not only
on GDP growth, unemployment, and the financial sector, but also on health, education, poverty, and gender issues. A wider-angle lens exposes broad-ranging implications for society. For example, in the six years following a crisis,
average life expectancy declines by nine months, primary school enrolment drops by 3.5%, and fertility falls by 5.5% (but adolescent fertility rises by 4.5%). I also find a considerable short-run worsening of poverty and income equality, and a lasting 50% increase in outbound refugees and inbound foreign aid. Although output and employment suffer at least as much for developed countries, the social costs of financial crises are much greater for less-developed
countries.

“The Social Costs of Financial Crises” - SSRN
working paper by Mathijs van Dijk, June 2013. 
Available at: http://ssrn.com/abstract=2278526 

Mathijs van Dijk
Professor of Finance
Rotterdam School of Management
Erasmus University
The Netherlands
http://mathijsavandijk.com/
 

June 23rd, 2013

6/23/2013

 
Dear colleagues,

On May 21st, World Bank Group President Jim Yong Kim’s speech at the World Health Assembly in Geneva was notable for his sharp condemnation of health user fees as “both unjust and unnecessary” and for noting that “Anyone
who has provided health care to poor people knows that even tiny out-of-pocket charges can drastically reduce their use of needed services.”

In a report released in the wake of the global financial crisis,
the World Health Organization stated that, “financial catastrophe (for households) is associated with direct payments for health  services” and that “even when relatively low, any kind of charge imposed  directly on households may discourage using health care services or push people close to poverty under the poverty line.”

In contrast to the untested economic theories of the World Bank’s health economists in the 1980s, it turns out the critics had been correct all along: user fees do not raise substantial revenue for the health sector, nor do they make public health interventions more effective. Rather, they turned out to be inequitable and sharply limited access to health care for the poor.

So Mr. Kim is right to decide a change of course. But, if user
fees are unjust and unnecessary today, then arguably they were also unjust and unnecessary in the past.

A new article published in the journal Health and Human Rights suggests the World Bank’s previous conditioning of loans on the implementation of untested user fees could constitute gross negligence and a violation of human
rights (the right to health) under international law, and that the Bank may be legally liable for damages and obligated to provide compensation to survivors.

While the new consensus emerging today in favour of publically financed universal health coverage (UHC) and against user fees is to be welcomed, the many victims of “unjust and unnecessary” health user fees across many developing countries over the last 30 years deserve to have their voices heard and receive adequate and just compensation, while those responsible for the harmful policies are held accountable under international human rights law.

The article proposes that a representative group of previous
victims of World Bank health user fees be established and, with the support of NGOs and international lawyers, the World Bank’s currently unclear liability under international law be tested and clarified with a class action lawsuit
against the Bank.

“The ghosts of user fees past: Exploring accountability for
victims of a 30-year economic policy mistake” by Rick Rowden, Health and Human Rights, Vol. 15, No. 1, June 2013, pp. 175-85 http://www.hhrjournal.org/wp-content/uploads/sites/13/2013/06/Rowden-FINAL.pdf

Rick Rowden is a PhD candidate in Economic Studies and Planning at Jawaharlal Nehru University (JNU) in New
Delhi.

June 15th, 2013

6/15/2013

 
Dear all,

Since the outbreak of the economic crisis in 2008, recovery is announced and expected for “the next
year
”. However, if there was recovery in some OECD countries, it was anaemic to say the least. And in many others, recession has returned. What does this mean for household incomes , especially for those at the bottom of the ladder, and for inequality? Our new  report and comparative data send a warning sign, if not a “red flag” for government policies which aim to bring public spending under control without paying due attention to effects on the income distribution.

In most OECD countries, poorer households lost more or gained less than richer households between 2007 and 2010. The top 10 per cent of the population did better than the
poorest 10 per cent in 21 of the 33 countries we reviewed. The richest 10 per cent of the population earned 9.5 times the income of the poorest 10 per cent in 2010; for comparison: in the 1980s this ratio stood at 7:1 and has been rising continuously ever since. Rising inequality adds to the pressure coming from falling real incomes in many countries, threatening social cohesion and increasing poverty risks.

 We also  looked at how poverty evolved in OECD countries. Using pre-crisis income levels  as a benchmark, the number of people living in income poverty rose during the crisis in most countries. But not all population groups were hit in the same  way. Between 2007 and 2010, average relative income poverty in OECD countries rose from 13 to 14% among children and from 12 to 14% among youth, while it  fell from 15 to 12% among the elderly. This confirms the trend of young people  and children replacing the elderly as the group most at risk of income poverty  which we had already been observing across the OECD. Child poverty has risen in 16 OECD countries since 2007, with increases exceeding 2 points in Turkey,  Spain, Belgium, Slovenia and Hungary. Given the well-known long-term damage  that poverty in childhood can do, it is urgent for governments to privilege spending that targets children and young people; cutting in this area means forsaking investment in the future. 
 
What about the welfare state and its ability to protect citizens from the impact of crisis? Here, the news is better. The report shows that the welfare state has cushioned the blow for many. Without the effect of taxes and transfers, inequality would have increased by more in the first three years of the crisis than it had in the previous twelve years. Automatic stabilisers and stimulus packages in many countries have prevented income inequality going from bad to worse, at least during the first years of the crisis. This is worth underlining since the redistributive effectiveness of tax and benefit systems decreased in the decade preceding the crisis in many OECD countries, with falling tax rates and benefit replacement rates which failed to keep path with real earnings growth. If tax and transfer systems had kept their capacity of redistribution, the welfare state could have been even more effective in countering the initial adverse effects of the crisis on household incomes. 
 
However, our report only tells the beginning of the story, up to 2010. Meanwhile, many households have exhausted their rights to unemployment and other benefits and many governments have shifted their fiscal policy stance toward consolidation, often implying austerity packages. However, further social spending cuts in OECD countries risk causing greater inequality and poverty in the years ahead. Policies which put OECD economies back on the growth path will not besufficient. What we need are policies for inclusive growth which do not leave an increasing number of people on the wayside.

 Michael Förster
 Social Policy Analyst, “Income distribution and poverty”
 OECD Directorate for Employment, Labour and Social
Affairs www.oecd.org/social/inequality.htm


 

June 13th, 2013

6/13/2013

 
Dear All,

Please find below an article of mine about the ongoing
uprising in Turkey, where I argue that  "lack of democratic voice is only a foil; the economic hardships of recent years, too, have angered citizens."

http://www.livemint.com/Opinion/hD0FTB0pkcmWmVUca7IzoN/A-season-of-protests-in-Turkey.html

Best,
T. Sabri Öncü
Head of Research
Centre for Advanced Financial Research and Learning
Mumbai, India

June 11th, 2013

6/11/2013

 
Dear friends,

Many organisations and individuals have made comment on the HLP's report since it was released on Thursday. Our calls focused on ensuring a transformational agenda by supporting goals and indicators on full employment and decent work for all, (not mere "good jobs") with its 4 essential pillars, and especially emphasizing the implementation of universal social protection.

For those interested, the international union movement has
made contributions on strategies to address poverty and inequality in our work to various institutions and intergovernmental processes in recent months including the World Bank/IMF, G20-L20 and the HLP on Post 2015.

The ITUC media release on Friday making mention of decent work and a proper living wage:
http://www.ituc-csi.org/un-post-2015-report-decent-work?lang=en

Here are the links to ITUC documents relevant to Post 2015:

the ITUC post 2015 website
http://www.ituc-csi.org/post-2015-development-framework.html

briefing papers on the post 2015 process
http://www.ituc-csi.org/ituc-briefing-paper-on-the-post

Social Protection
http://www.ituc-csi.org/social-protection-in-the-post-2015.html

Decent Work
http://www.ituc-csi.org/decent-work-in-the-post-2015

Inequality:
http://www.ituc-csi.org/ituc-paper-on-inequality-in-the

Regards,
Alison Tate
Director of External Relations
ITUC International Trade Union Confederation
CSI Confédération syndicale internationale
CSI Confederación Sindical Internacional
IGB Internationaler Gewerkschaftsbund
Boulevard du Roi Albert II 5, B 1, 1210 Brussels, Belgium
www.ituc-csi.org

June 11th, 2013

6/11/2013

 
Dear all,

Here are a few more observations on what
is missing from the HLP Report:
http://www.greenpeace.org/international/en/news/Blogs/makingwaves/missing-a-clear-road-map-thoughts-on-a-new-gl/blog/45398/
Cheers, 

Patricia J. Lerner
Senior Political Advisor
Greenpeace International
Amsterdam, The Netherlands

June 11th, 2013

6/11/2013

0 Comments

 
Dear all,

From Action Aid, here is the link to my blog post on the HLP: http://www.actionaid.org/2013/06/post-2015-development-policy-good-bad-and-ugly. Forgive the unoriginal  title; I thought it would match the lack of creativity in the report  :-)

Sameer Dossani | Advocacy Coordinator, Reshaping Global
Power
ActionAid is a global movement of people working together to further human rights for all and defeat
poverty.

www.actionaid.org<http://www.actionaid.org/>
0 Comments

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    “We, the Peoples” are the first words of the UN Charter. The UN was founded in 1945 and
    mandated to respond to the needs and rights of all persons, in every country of the world. In this spirit of social justice, a real world recovery means a recovery for all
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