We know what would solve global inequality: so why isn’t anyone doing it?
I wrote yesterday about the outcome of the Turkish G20 summit, which got close to addressing the gathering economic storms of global recession, but fell short of the action needed. But one area where the G20 did indeed get things right was identifying inequality as one of the main things holding the global economy back, as the global union assessment of the summit communique said.
The OECD has identified the main problem caused by increasing inequality: slower, less sustainable growth. OECD Secretary General Angel Gurria was unequivocal when he addressed the L20 summit of union leaders from around the world this weekend, saying simply that “high inequality reduces growth.” Actually, he was so emphatic that he repeated it, in case people weren’t listening. And Max Lawson recently repeated Oxfam’s concern that the global super-rich are as much of a problem as the poor, reporting that the growth of global inequality had raced ahead of what Oxfam were told a year ago was alarmist propaganda. Two US families now have as much wealth as 150 million of the world’s poorest.
We even know what has caused the growth in global inequality over the last twenty to thirty years (before then, global inequality had been steadily decreasing, ever since World War II.) As reports from the ILO and IMF have demonstrated, it is the decline in power and influence of trade unions that has accelerated the growth of inequality. Note that this isn’t just an association: the IMF’s paper identifies the effect is causal, and that declining trade unionism accounts for 40% of the growth in inequality – the largest single causative element.
There are several ways that declining trade unionism causes inequality. The first and most obvious aspect is that a decline in the coverage of collective bargaining allows top bosses to increase their remuneration and reduce that of the majority of workers. The second is that strong unions promote government policies that redistribute wealth through taxation, good public services, minimum wages and job-rich growth.
But beyond advocating ‘inclusive growth’, neither the G20 nor any of the global economic institutions are doing anything to implement what we know would solve the problem of growing inequality. At the L20 summit this weekend, TUAC General Secretary John Evans asked OECD Secretary General Angel Gurria directly: if you know what would reduce inequality, why don’t you advocate it? What, as John said, is the blockage?
Gurria suggested that the simplest solution to inequality was not necessarily the right one, and that there were other possible solutions. For example, he suggested (as he has done to us when visiting the TUC) that inequality results from things like a lack of skills, despite the current generation being the most skilled in history. Even the IMF paper mentioned above, despite crystal clarity about the causes of inequality, equivocates when it comes to solutions, suggesting that the solution will depend on national circumstances (rather than – oh, just an idea – the evidence!)
Could it be that the reason for not doing the obvious thing and taking steps to restore strong unions and collective bargaining – what John Evans called ‘the blockage’ – is that the main economic institutions and governments have been captured by an ideology that acts in the interests of the rich rather than the many?