Economic growth and poverty reduction do not always go hand in hand. Katherine Trebeck argues that if we’re serious about tackling inequality we need to rethink our economic model.
You may have noticed that recently Oxfam has been highlighting the stark inequalities of our world. Most notably,(how could anyone not note it?), our inequality report, published for the World Economic Forum in Davos, which stated that 85 people own as much wealth as the poorest half of the world.
Oxfam’s far from the only or the first organisation to point to inequality as a scourge of our time: films are being made, books are being published, presidents are saying they’ll take action, people are protesting, and maybe some politicians are beginning to listen.
But here’s the thing, I’m not convinced that politicians are the only audience for the message that inequality is too high, let alone the only agents of change.
Inequality and economic models
Inequality has a lot to do with economic models (and ‘growth patterns’ as Kevin Watkins highlighted to an internal Oxfam meeting in January).
Let me give you an example for a wee country. Over the last few years Oxfam in Scotland hosted a series of seminars which led to the publication of 17 discussion papers. The project was called Whose Economy?, it asked why, after many years of economic growth in Scotland, many years of anti-poverty policies, and so-called regeneration strategies, has poverty not been tackled
and why have inequalities (particularly those of health) got worse? The Whose Economy? discussions put the economy in the frame for poverty, growing health inequalities, the rise of consumerism, the breakdown of communities, impact on the environment and so on.
Why, after many years of economic growth in Scotland, has poverty not been tackled and why have inequalities got worse?In Whose Economy? I wrote about a ‘pernicious paradox’ whereby the economy we’ve created (dominated by call centres, retail and zero-hour contracts) demands that people are hyper-flexible and hyper-mobile. Businesses
treat people as ‘just-in-time inventory’ – simply another factor of production, the same as nails or pallets of paper or sheets of metal.
Where it gets messy is that not only are people more than merely an input into production, but for people to engage in this sort of economy, they require social assets to support them. For example, friends to mind the kids when you get a three-hour slot on the till at a big supermarket. But social assets flourish in strong communities, they require reciprocity and the economic
model we’ve created in Scotland (and the UK) is undermining their development, hence the pernicious paradox of our economic model.
GDP is not the best measure of a country’s economic success, let alone real prosperityMoreover, what the Whose Economy? project and much other research shows is that the nature of the economy, the type of jobs, who gets them, how they pay, the location of economic development and so on, has a huge bearing on the extent to which poverty will be reduced, even in years of apparent economic growth. (At least growth as measured by GDP, and as I’ve written elsewhere GDP is not the best measure of a country’s economic success, let alone real prosperity…)
The idea that inequality is shaped by economic structures speaks to the redistribution/predistribution debate. Of course both are important (I’m not saying otherwise), but if we only focus on tax to shift about the distribution created by the market and the state to ameliorate the inequality of the market through benefits, social wages and other state spending, we’re missing a trick. We’re not asking the economy to do enough of
the heavy lifting.
I often think it is worth challenging policy proposals by asking ‘is this policy taking the easy option and helping people benefit a wee bit from a flawed system, rather than trying to change the system itself?’ I’m reminded of Archbishop Camara: ‘When I give food to the poor, they call me a saint. When I ask why they are poor, they call me a communist’.
Focusing on why people are poor, why inequality persists rather than just mitigating its effects is about going beyond generosity and getting towards real justice.
- Download our inequality briefing Working for the Few
- Download the Whose Economy? discussion papers
- Read more inequality blog posts
- Follow Katherine Trebeck on Twitter: @KTrebeck
Author: Katherine Trebeck
Archive blog. Originally posted on Oxfam Policy & Practice.