Wealth Redistribution and Wholesale Political Reform

23rd February 2011 - Published by Share The World's Resources

In a dramatic series of events since late 2010, a new and intensified phase of public protest has erupted across both wealthy and poor regions of the world. Right across Europe, harsh programs of financial austerity have led to escalating protests and mass public campaigns; in the Middle East and North Africa, a revolutionary wave of civil unrest is gripping the international media; and less reported are countless smaller anti-government demonstrations taking place across diverse continents. As commentators struggle to keep up with the rapid unfolding of these events, it is worthwhile to reflect on the basic connections between these varied struggles, and to pose a simple question: are we witnessing the birth of a truly international public voice calling for wealth redistribution and wholesale political reform?

The pan-European protests were sparked by government plans to cut public spending, slash welfare benefits and freeze pay in response to economic recession and the debt crisis. With European Union finance ministers agreeing rules that would punish countries that fail to bring their debts under control, a new austerity drive swept across the 16-nation eurozone as governments struggled to trim their huge budget deficits. Both the German and UK coalition governments approved their biggest austerity plans since World War II; Italy and Spain joined Europe's austerity club with massive cuts to public services; France announced its controversial plans to cut spending and raise its retirement and pension ages; while the most debt-stricken countries in the EU - Portugal, Greece and the Irish Republic - committed to draconian austerity packages to please international investors, not to mention the ongoing budget cuts in various other EU countries such as Hungary, Latvia, Romania and the Netherlands.

What's most striking about the public outcry that followed is not only the vast scale of civic protests, but the sense that a majority of European people believe that government austerity measures are unnecessary and deeply unjust. On 29th September 2010, the European Trades Union Confederation (ETUC) organised coordinated demonstrations in European cities, with hundreds of thousands of union members across the region amassing under the banner 'No to Austerity'. Countless new campaign groups and social movements have also highlighted the distorted priorities of governments who cut public spending as opposed to targeting the excesses of big corporations, bankers and international investors. This included the voices of leading economists such as Joseph Stiglitz, Paul Krugman and Christopher Pissarides who argued that austerity measures go in exactly the wrong direction, and are more likely to result in lower economic growth, worsening unemployment and protracted recession. In the words of Attac, the French campaign group who stood by the anti-austerity protesters across Europe: "The radical austerity policies now demanded by the EU are a solution in the interest of the wealthy and the financial actors alone. EU governments intend to implement austerity policies everywhere. ...Their policies can only deepen social inequalities and the present crisis, while making the economic situation in Greece and the rest of the EU even worse."

Out of the scores of anti-cuts groups still springing up at a local and national level across Europe, one that has captured the public imagination more than most is UK Uncut. In late October 2010, a group of London-based young activists thought up an ingenious way of highlighting an alternative to the British governments harsh austerity measures. Rather than simply protesting against public spending cuts, they focused upon the tax-avoidance strategies of rich individuals and big corporations. In a series of direct action protests organised spontaneously through the internet, the informal group has mobilised local protests and temporarily closed down more than a hundred stores in towns and cities across the country. The message of an alternative to austerity measures was brilliantly straight-forward: if the government clamped down on corporate tax avoidance, it would greatly reduce the need for public spending cuts. As the fastest-growing protest movement in the UK, its focus is now shifting to the greed and reckless practices of high street banks. And it's now emerged that similar protests are being organised in North America under the banner US Uncut , with more than 30 demonstrations planned for 26 February - the date of UK Uncut's second "day of action" against the banks.

No to Austerity and Ideology

Common to all the protests in Europe is a recognition of the pro-market ideology that is driving government policies to the detriment of the public good. Since the world stock market crash of 2008, it is increasingly evident that a number of governments are using the economic crisis as an excuse to re-shape the economy in the interests of business. In the UK, for example, George Monbiot recently wrote an article in the Guardian showing how the Chancellor of the Exchequer plans to allow money that has passed through tax havens to remain untaxed when it reaches the UK, accompanied by a rapid reduction in the official rate of corporation tax - the lowest rate of any major Western economy. At the same time, the British government is slashing social benefits and public-sector jobs, cutting budgets for government departments, transferring the onus for creating new jobs onto the private sector, and incrementally privatising the National Health Service and state education (with an attempt to privatise thousands of hectares of England's national forests being recently defeated in Parliament). There is no shortage of commentary in the UK pointing out that such policies are ideologically-driven, opportunistic while the country is on the brink of bankruptcy, and even wider in scope than Margaret Thatcher's swingeing program to cut government presence in the economy during the 1980s.

Meanwhile, Greece's 110 bn euro rescue package was agreed on the back of a huge austerity drive, civil service and pension cuts, the easing of restrictions on private-sector layoffs, and a large privatisation and structural adjustment programme that is geared more to saving European banks than protecting the livelihoods of the Greek public. The Irish Republic is suffering a comparable fate in return for a joint EU-IMF bailout package worth 85 bn euros. Alongside the harshest tax hikes and budget cuts in the nation's history, the terms of the bailout stipulate that Ireland must get its budget deficit to 3 percent of GDP by 2015 - promising further budget cuts year-on-year regardless of the effect on jobs, welfare rights or the living standards of the majority. Portugal, Spain and possibly Belgium are all lined up for similar treatment. The message is clear: it is not the nation's people that must be bailed out but the financial plutocrats who hold the nation's debt, even if this spells the destruction of the entire post-war European social welfare system.

As many analysts are now pointing out, these savage austerity packages being unleashed across Europe mirror the fate that many developing nations have faced for decades. Scores of indebted countries in Africa, Latin America and Asia have long endured the savage IMF structural adjustment programmes that Ireland, Greece and other EU countries are now suffering. A recent briefing by the Jubilee Debt Campaign (JDC) explains the similarities and differences between the sovereign debt crisis in Europe, and responses to the debt crisis in the Global South by international financial institutions since the late 1970s. Zambia, for example, made extreme cuts in government spending throughout the 1980s and 1990s under pressure from the IMF, yet the cuts failed to prevent the country's debt from doubling while its economy plunged into recession.

A similar logic was applied to Asian countries following the financial crisis in 1998; foreign private lenders were bailed out, government spending was severely cut back, public companies were further privatised, yet the economy still continued to decline. According to JDC, a common theme is that the public face the costs, not private lenders. And not only is private debt paid for by the public, but the cut-backs in public spending by no means guarantees a reduction in national debt. In effect, ordinary people are forced to pay for the reckless behaviour and mistakes of the financial sector - a reality that is now shared and understood by citizens in both the Global North and South.

Growing gap between rich and poor

A major difference for people in the South is that there is often no guaranteed state provisions or social safety nets that exist for them in the first place. Even in those developing countries still experiencing economic prosperity, most notably in the globalisation "success stories" of India and China, rapid GDP growth is being matched by deepening inequalities and social insecurity. As we know from the World Bank's global poverty statistics, at least 80 percent of the 1.1 billion people who live in India somehow manage to survive on less than $2 a day. In China, still 36 percent of its population survives on less than $2 a day, while the rural-urban income gap has continued to widen alongside increases in inequality of health and education outcomes. As what some call "the greatest migration in world history" continues across China, rural migrant workers arriving in industrial areas often find themselves trapped in abysmal working and living conditions, many without basic health and safety protections.

This definite growth in inequality and the lack of economic opportunity and social security that underpins it has long been a recurring theme across the world. A recent UNCTAD report revealed that there are now twice as many low-income countries than there were 30-40 years ago, and twice as many poor people living in them. Even more indicative of this worrying trend in global inequality is the evidence that a new 'bottom billion ' of the world's poor live in middle-income countries - a dramatic change from just two decades ago when the majority of the poor lived in low-income nations. A growing gulf between the rich and poor is also continuing in many high-income countries, not least in the United States where the top 20 percent of wealthy individuals own about 85 percent of the wealth, while the bottom 40 percent own very near 0 percent. As the Economist magazine is keen to point out in a special report , there is an ongoing rise in the share of income going to the very top - the highest 1 percent of earners - who constitute a global power elite or 'superclass' in many countries. At the other end of the scale, evidence suggests that the number of people living in relative poverty could possibly be 4 billion and rising.

This is the context in which we can better understand the sudden eruption of civil unrest across North Africa and the Middle East. Whilst much of the mainstream media focussed on the repression of public freedoms, corruption and a lack of democracy as the main cause of popular insurrection, common underlying factors also include the growing levels of inequality, ongoing hikes in the price of basic food and energy, and poor access to housing and welfare services. Whilst Mubarak left office in Egypt with a reported $70 bn dollars of stolen public money, citizens remain saddled with $30 bn of debts despite a poverty rate of 1 in 4 and a recurring food crisis. Tunisia, a regional poster child for the success of pro-market reforms, is in a similar predicament with crippling graduate unemployment rates of up to 46 percent , despite strong GDP growth. This underlying pattern of protest against social and economic deprivation alongside political repression is being repeated across Libya, Bahrain, Yemen, Saudi Arabia, Algeria, Syria, Iran, Morocco, Oman, and a number of other countries in the region. All have been spearheaded by the countries' youth, fuelled by social media and television, yet broadly supported by the middle class. In an unprecedented outpouring of goodwill and solidarity, these millions of people on the streets are claiming their democratic right to a fairer share of the vast wealth that their rulers have hoarded for decades.

The pan-Arab protests clearly have much in common with those reacting to austerity across Europe, as well as the millions who have mobilised in support of debt cancellation and an end to 'economic adjustment' in the South. In every country, the widespread outcomes of debt, austerity, poverty and inequality are the product of political choices - the consequences of a disastrous neoliberal approach to managing a nation and its finances. What we may be witnessing in the popular responses to these hardships is an emerging global consensus in favour of a fundamental reordering of government priorities. In the space of barely a few months, the rapid growth of anti-austerity demonstrations across Europe and massive anti-government protests all over the Middle East indicate the potential for public opinion to take on an international dimension. Given the determination of policymakers across the globe to continue with business as usual, the strengthening of a world public opinion in favour of a more equitable distribution of resources may constitute the first step toward meaningful reforms.

As this increasingly global call for justice unfolds across several continents, an underlying demand being voiced by protesters in different countries is the urgent need for redistribution. Calls for an end to austerity measures, more progressive taxation and the cancellation of debt in the developing world all reflect the need to redistribute wealth and political power downward. An implicit understanding common to all these demands is that governments are better able to secure basic human needs for their citizens through the provision of more effective welfare and social services. The question that remains is whether the need for redistribution can be recognised at the international level where the unequal distribution of power and resources manifests in extreme differences in living standards between the richest and poorest nations. If the case for international sharing captures the public imagination as quickly as the calls for distributive justice in individual countries, the elimination of global poverty could finally become a realistic possibility.

ENDS

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