From aid to global justice

Development aid is becoming a hot topic. William Easterly and Dambisa Moyo
almost made us believe development aid was totally useless and should be
abandoned. I am very grateful to the authors of the Dutch report of the Scientific
Council for Government Policies to have combined a critical approach to
development policies with a positive solution for more and better solidarity.

This is also the objective of a website I set up a couple of months ago on Global
Social Justice: www.globalsocialjustice.com. It is difficult indeed to uncritically
continue with the current aid policies or to simply abandon them. Easterly and
Moyo have many good arguments but there are also many good reasons for a
stronger solidarity and most of them have been explained in the Dutch report. As
for the MDG summit in September, I really do not see how one could, once again,
lower the ambitions. We come from economic development in the 60s, to social
development in the 70s, to poverty eradication in the 90s and to halving extreme
poverty in 2000… How low can you get?

In this contribution, I want to briefly highlight two reasons that justify another
approach on development and cooperation. The first is globalization and global
public finances, the second is sustainable development.

Whatever definition one has of globalization and whatever course globalization

policies may take in the near future, it is undeniable that we live today in one
global interdependent world. This does not mean that national states lost their
importance. It does mean that states have to cooperate more than in the past
and that the borderlines between domestic and international issues are
constantly moving.

One of these issues is linked to finances and taxes. Capital mobility makes it
impossible to tax goods and services, wages and profits in the same way as in
the past. People live in one country and work in another, transnational companies
work with transfer prices that allow to avoid taxes everywhere, profits are
expatriated from countries where taxes are considered to be too high. This has
serious consequences for the public revenues of national governments that are
supposed to deliver public investments, public services and social policies.
Looking at public finances from an exclusive national vantage point is becoming
an illusion. Poor developing countries have no power over capital movements and
are severely restrained in their possibilities to pursue development policies.

One solution can be to also look at global finances and global taxes. This
certainly does not solve all problems and even creates some new ones. But is
does open a new horizon for mobilizing capital and for organizing a structural
global solidarity. Looking beyond the too limited poverty reduction policies, one
can imagine a global solidarity based on a global financial transaction tax in
order to fund a global social protection floor. This is not utopia but an idea based
on existing instruments (World Solidarity Fund at the UN) and existing proposals
of the UNDP on public finances and of the ILO on social protection. The Financial
Transaction Tax is currently discussed even at the IMF. In this way, the problems
of geopolitically-induced, donor-driven and highly fragmented development aid
could be solved. One could develop a system of global redistribution of incomes.

Sustainable development is the second point I want to focus on. Much has
been said about the responsibility of the developed and industrialized countries
for the deterioration of our environment. And much has been said on the growing
income inequalities between countries of the North and the South. There are only
two ways to reduce these inequalities: either by lifting poor people out of poverty
and up to the income level of the rich countries, or be reducing incomes of
people in the rich countries. The first solution is ecologically speaking
unsustainable. The second solution is politically speaking impossible. The only
way out is a limited rise of incomes in the South and a fundamentally different
development paradigm in the North.

In other words, both the South and the North need development policies. In fact,
one can think of globalization as being synonymous with development, if we
understand these concepts as aimed to create one integrated world community.
Both the North and the South will have to re-think their economic and social
policies. As the Dutch report rightly states, the South definitely needs growth in
order to give its peoples social protection, education and health services. The
North may have growth but will definitely have to reduce its ecological footprint.

This probably comes down to a redistribution of economic activities. Innovative

economic policies can help the North to maintain a good standard of living, while
helping the South to develop industrial activities.

Again, this implies a global vantage point in a world where people can move
freely and where development is a shared ambition.

These approaches are not compatible with so-called aid policies. There is not a
rich North that has to help a poor South. There is one interdependent world with
local, national, regional and global political levels that have to complement each
other. Then, we not only need a global solidarity fund but also global financial
resources to help these policies come about. It all points in the direction of i.a.
global taxes, not only on financial transactions but also on transnational
companies.

I realize that many political hurdles will have to be taken. However, extreme
poverty and income inequality are unsustainable. Climate change is threatening
us all and we do not have unlimited time.

Maybe these ideas will never become reality. But they certainly should be part of
any serious debate on the future of development and cooperation.

Francine Mestrum, lecturer Université Libre de Bruxelles,

www.globalsocialjustice.com