Beyond Reid's two-child policy

Ian Boyne

Ruel Reid's non-aversion to a two-child state policy, which has outraged so many, really comes from his non-recognition of an issue now capturing international attention: inequality.

Reid noted in that now-infamous Senate presentation that 50 per cent of our children were on PATH, a startling indication of child poverty. But the answer to child poverty - as indeed to any kind of poverty - is an economic strategy that focuses on inclusive growth, which targets the reduction of inequality, not just an increase in aggregate growth. Draconian measures don't provide the answer to poverty. Sensible, balanced development strategies do. Ruel Reid's heart is in the right place, but not his head (on this issue). Yet he is not alone in misdiagnosing the poverty problem. Indeed, that is the norm. But, increasingly, international discourse is moving in another direction.

The United Nations Development Programme (UNDP) only last month issued a 296-page report on inequality titled 'Humanity Divided: Confronting Inequality in Developing Countries', which shows the kind of unequal development capitalism has been delivering. One per cent of the world's population owns 40 per cent of the world's assets, while the bottom 50 per cent own just one per cent. Some 75 per cent of households in developing countries live in societies where income is today more unequally distributed than it was in the 1990s.

Why should we be too concerned about inequality? "If some work harder than others and accumulate more, or some are more creative than others and they gain far more wealth, what's wrong with that?" many would ask. Isn't the problem that we have so many darn lazy people having too many children they can't afford? The UNDP opines: "High inequality undermines development by hindering economic progress, weakening democratic life and threatening social cohesion. High and growing inequality is not just intrinsically unfair; it also makes the achievement of widespread human well-being more difficult."

The report, rich in data and analysis, shows how development thinking has evolved to put inequality at the centre stage of development studies. Earlier, it was only people on the Left who were talking about inequality. Now conservative, mainstream economists - and even the IMF - are expressing serious concerns about it.

Earlier this month, the managing director of the International Monetary Fund (IMF), Christine Lagarde, delivered the Dimbleby lecture in London. In the lecture titled 'A New Multilateralism for the 21st Century', she confessed: "Let me be frank: In the past, economists have underestimated the importance of inequality. They have focused on economic growth, on the size of the pie rather than its distribution. Today we are more keenly aware of the damage done by inequality. Put simply, a severely skewed income distribution harms the pace and sustainability of growth over the longer term. It leads to an economy of exclusion and a wasteland of discarded potential."

RETHINKING POVERTY

I had to recheck to see whether it was really an IMF representative giving that lecture! Some serious rethinking has been taking place in the IMF, the result of both the chastening of the 2008 global economic crisis and the weight of solid work done by progressive intellectuals and scholars. The IMF, after years of fighting social-protection measures and focusing narrowly on economic growth, has finally realised that poverty and inequality will not go away simply because of economic growth. The IMF itself is now lecturing countries undertaking IMF programmes to be careful to maintain social-protection programmes.

For Jamaica's economic programme, the IMF, not this Government, whose party has a history of socialist thinking, has mandated a basic floor of social spending. Its release last Thursday announcing that Jamaica had passed its third IMF test notes, interestingly, "All quantitative performance targets and indicative targets for end-December were met, including the floor on social spending." The IMF itself is including social spending right up there alongside hard quantitative targets. The IMF has come a long way. Indeed, the IMF is ahead of a number of our local economic commentators who are still myopically focused on fiscal targets and monetarist approaches. They are completely outside of the international dialogue and developments.

Then Lagarde went on to make a stunning statement coming from that neoliberal institution: "We need to get to grips with it and make sure that inclusion is given as much weight as growth in the design of the policies. Yes, we need inclusive growth." And inclusive growth is what the newly released UNDP report spends much time discussing, as the means of reversing the growing inequality. Oxfam reported that the richest 85 people own the same amount of wealth as the bottom half of the world's population.

While President Barack Obama could boast of improved economic performance in America in his recent State of the Union address, Lagarde herself pointed out that inequality there is now back to where it was in the Great Depression of the 1930s, and that the richest one per cent there captured 95 per cent of the income since 2009. Small wonder that Obama himself highlighted inequality in that speech. It's the new global issue, guys. Indeed, because of our high debt and fiscal deficits historically, and our profligacy, much scorn is heaped on social spending and pro-poor policies. They are usually derided as wasteful and populist. You will continue to have recommendations for state action in our bedrooms if we don't address inequality.

We have no credible civil-society group similar to Jamaicans for Justice that lobbies for our underclasses. Independent, intellectually robust progressive voices are all but gone, drowned in the neoliberal flood. Great pity. I am afraid it is not enough to meet IMF targets, set up the fiscal rule regime, and simply "go for growth". We need inclusive, pro-poor growth. Only those strategies can reduce the number of children on the PATH, Senator.

Says the UNDP report: "Transitioning to inclusive growth pathways will require macroeconomic policies that are consistent with promoting the objectives of growth and moderating income inequality. However, the dominant macroeconomic policy paradigm during the past 30 years has not prioritised economic growth and employment creation. Macroeconomic policies in most developing countries since 1980 have focused mainly on stabilisation (defined as keeping inflation at a very low levels) and achieving a primary budget surplus or a very low deficit-to-GDP ratio."

I see that same obsession here now, and while I understand it in light of our history of economic recklessness and adventurism, we must maintain a balance. Says Humanity Divided: "... The Washington Consensus achieved a reasonable degree of macroeconomic (price) stability across developing countries, but it has also come at the expense of higher income inequality." And hear this, my good friend, Damien King: "Indeed, the performance of developing countries in terms of growth and distribution was worse during the Washington Consensus era (1980-2000) than from 1960 to 1980 ... ."

What we need is inclusive growth, not two-child diktat.

Ian Boyne is a veteran journalist. Email feedback to columns@gleanerjm.com. and ianboyne1@yahoo.com.