Inequality and the Sustainable Development Goals

One of the aims of the Sustainable Development Goals (SDGs) is to reduce inequality. But how, when this is rising in most countries? Professor David Hulme, Executive Director of the Global Development Institute, tells us more.

For a generation or more prior to the announcement of the SDGs in 2015, any meaningful mainstream discussion regarding inequality and its reduction was off the table. Governing elites and international institutions would barely acknowledge it as relevant to development, often dismissing inequality-focused academics and activists as hard-leftists.

Thus, the very inclusion of SDG 10, which specifically calls for “reduced inequalities”, is a game-changer, and signals a paradigm shift in how the international community perceives and approaches development. The global financial crash of 2008 and its ongoing fallout has changed the conversation. 

David Hulme

Professor of  Development Studies

Executive Director of the Global Development Institute

www.gdi.manchester.ac.uk

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A fresh consensus

Existing evidence of the damage to society caused by high levels of inequality is being re-examined, while new research and popular campaigns have seen a fresh consensus form relatively rapidly as to the negative impacts of persistent, extreme income inequality – for individuals and the social fabric more broadly, in ‘rich’ countries as well as ‘poor’.

SDG 10, with its specific target to “progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average”, encapsulates this broad acceptance of the perils of inequality – not just between countries, but within them too. 

However, this is not a radical goal – as arguing that the highest incomes must be capped, or that Gini coefficients must be reduced annually, would be. Rather, it is a modest, reformist target that seeks to ensure that those with the lowest incomes are not ‘left behind’ as economic growth moves forward. In other words, we still want our cake and to eat it too.

Since 2000, the rate of growth of the incomes of the bottom 40% has slowed year in, year out. Inequality is rising at spectacular rates. While different measures (wealth or income), different datasets (national accounts or taxation) and different analysts disagree on the detail, all agree that the wealthiest are getting richer faster than anyone else – except in Latin America. The real income of the global top 1% rose by more than 60% between 1988 and 2008.

Contemporary capitalism

Contemporary capitalism is based on economic processes that mean the returns to capital are greater than the returns to labour. The rich get richer, and when they do they are able to shape national and international public policies and law in ways that protect their interests. To top it all, by gaining control of sympathetic media plutocrats the super-rich can even persuade the public that inequality improves everybody’s prospects. Billionaire Donald Trump somehow becomes the voice of those left behind.

What can be done? Few support the 20th century revolutionary solution of seizing and redistributing land and assets, as happened after WW2 in China, South Korea, Japan and Taiwan. But in most low-income countries, effective public expenditure on domestically financed education, health and social protection would raise the prospects for sustained growth, structural transformation and welfare advances.

Significantly reducing inequality in every country, and between countries, will require a Herculean shift in how economic and political systems operate, but it doesn’t have to be the stuff of utopian dreamers.

Humanity has made amazing progress in reducing income poverty and raising health standards. The next big task is reducing inequality so that we can all enjoy a better life. A growing tide of protest – sometimes socially progressive and sometimes regressive – may persuade the 1% that they will not get the world they want for their grandchildren if business continues as usual.

This is an edited version of ‘How has billionaire Donald Trump become the voice of those left behind?’ which was published in the Guardian on 22 October 2016.