Looking Beyond Income Inequality Global Consultations

DISCLAIMER: The findings, interpretations and conclusions expressed in this paper are those of the author and do not necessarily reflect the policies or views of UN Women, UNICEF or the United Nations.

ADDRESSING INEQUALITIES The Heart of the Post-‐2015 Development Agenda and the Future We Want for All

Global Thematic Consultation

LOOKING BEYOND INCOME INEQUALITY Taimur Khilji

United Nations Development Programme

November 2012

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Abstract

Income Inequality is often framed as an income problem, and for good reason; the commonly used measure-‐the gini coefficient-‐is income based. The way the issue of inequality is framed determines the scope of the solutions proposed. By viewing inequality through the narrow lens of income, we merely address visible manifestations of a potentially deeper societal issue. The symptom (differences in income) is articulated as the main policy problem, while the underlying causes of inequality are left unresolved. For a sustainable solution, we need to carefully analyze the prevalent value system of a society, and see whether it encourages a sense of equality between individuals. If not, what can we do about it through public policy? The paper therefore focuses on between-‐group inequalities based ethnicity, caste, and gender drawing on research conducted during 2008-‐2011.

About the author

Taimur Khilji works as a policy specialist at UNDP’s Asia Pacific Regional Centre in Bangkok, Thailand. His area of work covers social and economic inequalities, hunger and food security, and social protection. He has a BA in philosophy and mathematics from Williams College and Oxford University, and a post graduate degree in economics from the New School.

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The Asian Context If we don’t change our direction, we are likely to end up where we are headed. Chinese Proverb The word ‘Asia’ is a European construct, and perhaps a misplaced one, as it encompasses the most diverse of all continents. In terms of language, religion, history, culture, geography, and endowment of natural resources there are wide variations across countries. China, the world’s most populated country, has had continuous self-‐government stretching back more than 4,000 years, whereas Timor-‐Leste has been independent for just a decade. Indonesia comprises over 17,000 islands, consists of hundreds of distinct ethnic groups, and at the same time is the world’s largest Muslim country. Nepal, a landlocked country, has eight of the ten tallest mountains within its territory including the tallest, Mount Everest. On the other hand, Maldives, one of the least populated countries, boasts the lowest maximum elevation in the world at 2.4 metres above sea level. This diversity, apparent both across and within countries, is also reflected in how countries have made economic progress. The region still includes 13 Least Developed Countries (LDCs), including Bangladesh, which has a population of over 150 million. India, the world’s largest democracy and also one of the largest economies in terms of total GDP, is a country with the largest number of poor and hungry. In fact, the majority of poor in Asia-‐Pacific now reside in Middle Income Countries (MICs). And although China has embraced globalization and the market economy, it is still a communist state. A salient social feature, which gets seldom reported, is that the majority of countries in Asia-‐Pacific are battling conflict and armed resistance within their borders. These facts sit uncomfortably alongside the standard development narrative, which, while noting growing levels of income inequality in Asia-‐Pacific, gives greater prominence to the region’s unprecedented economic performance over the last quarter of a century. Inequality in the context of Development While a growing level of inequality is a widely accepted development concern, it continues to be approached through an economic lens. As a result, ‘solutions’ to reduce inequality suffer from a strong economic bias as well. For example, the commonly used measure for inequality—the Gini coefficient—is income based. And the oft-‐proposed solutions rely on ‘redistributing’ a form of income (i.e. national revenue) through targeted public spending to achieve greater income equality. The common set of public policy interventions tend to focus on increasing the earning potential of low income households by allocating resources towards 1) improving the

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conditions where the poor live (i.e. rural areas and urban slums); 2) transforming the factors of production they possess (i.e. unskilled labor); and 3) ensuring access to good and services they consume (i.e. food, healthcare, education, etc.). All these solutions share a common thread: they either require or rely on income. As overall income level came to singularly define the level of development, inequality has been primarily assessed for its instrumental value. That is, whether more inequality is bad for GDP growth rather than for its intrinsic value; that is, whether greater inequality is bad in itself. This is also true of how gender inequality gets treated. Development literature continues to put forward the instrumental case for gender equality, emphasizing gender equality as being good for economic growth, rather than stating its intrinsic value from the outset.1 This framing can be captured another way as well; (in)equality has come to be assessed for its value as a means to economic growth rather than as an end in itself. However, framing the issue in such a way allows for a questionable assumption to be smuggled through: certain (indeterminate) levels of inequality may not pose a problem and in fact may be beneficial for economic growth. The inequality debate tends to be cast in terms of efficiency vs. equity, where inequality is to be tolerated and indeed accepted as a trade-‐off to efficiency and economic growth. Posner (2007) has argued, ‘income inequality is not bad in general when it does not involve any reduction in the incomes of a substantial fraction of the population.’ His rationale is quite simple: in the event that incomes of the bottom quintile increase by two percent while incomes of those in the top quintile increase by ten percent, everyone is better off even though inequality has increased. Thus conceived, the end—achieving sustained and efficient economic growth—has come to justify the means, and there is little, if any, room left to consider the moral and ethical basis for equality. This manner of thinking is pervasive primarily because our development taxonomy is firmly underpinned by level of income, and we have come to believe the quicker we achieve a higher level of income, the better. As higher GDP is still the established end to achieve, and while accepted country classifications are still based on level of income (i.e. LICs, LDCs, MICs, etc.), the philosophical and ethical underpinnings of equality, which view equality as a worthwhile goal in itself, has limited space in current development discourse. In fact, much of the development discourse can be characterized as a discussion broadly about means rather than one on ends (Marglin, 2010). Contested issues tend to be confined to identifying efficient and effective means to achieve higher levels of overall income. Arguably, the narrow focus and

1 Read Naila Kabeer (2005), UNDP (2010), The Commission on Growth and Development (2010) 2 Read Asian Development Bank, 2007, 2012; World Bank 2009; Saad-‐Filho, 2010; Kanbur, 1998; Kaplinsky, 2005; Pasha & Palanivel, 2004; Ravallion, 2004; Cornia, 2004 3 The Muslims make up 4.3 percent of the total population. The national figure for the Dalit population is 13.8

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widespread consensus on achieving a higher level of income has hampered alternative approaches from being conceived. One criticism of adopting such a narrow focus is that it tends to overlook the multidimensionality of inequality—the way in which inequalities actually manifest themselves in society. Non-‐income based social exclusions, for example, persist and crosscut each other, interacting with other social aspects to reinforce systematic and cumulative disadvantage over generations (Stewart 2002). Marginalization of certain groups in society based on creed, ethnicity, sexual orientation or gender can lead to longstanding grievances among the excluded group. Not only do significant differences in income and consumption emerge between excluded and non-‐excluded groups, but inequalities also surface in a number of other areas including health, education, citizenship rights, mobility, social capital, and social relations. It is critical to realize that groups facing discrimination often do so across a range of areas in the public and private sphere affecting their overall well-‐being. Moreover, marginalization is not limited to the developing world, but is a feature of the developed world as well. Despite the civil right movement of the 1960s, discrimination against African Americans in the United States continues to persist, revealing itself in stark wage gaps between white and black males and as inequalities in health and education outcomes (Mckinsey and Company, 2009; Williams & Collins, 1995). And despite the passing the 19th Amendment to the US Constitution in 1920, which granted women the right to vote, women as a group continue to face discrimination in the work place, earning measurably less than men for similar work 90 years later (Getz, 2010). It is therefore worth expanding the scope of ‘development’ to also look at the non-‐income aspects of inequality that often lead to the more visible and measurable form of income inequality. Not only are social, cultural, and political inequalities bad from an instrumental point of view (as historically marginalized groups, for instance, are not able to meaningfully contribute and participate in the growth and decision making processes as a result) but also, more importantly, such inequalities are unjust and morally wrong. Is the current Inclusive Growth narrative sufficient to address Inequality? The development narrative employed for income inequality in Asia and more generally is fairly standardized and has been in currency at least since the early 2000s, when inequality began to rise in Asia, especially among emerging economies.2 Briefly, this narrative, which incorporates ‘inclusive growth’ as a remedial strategy can be articulated as follows:

2 Read Asian Development Bank, 2007, 2012; World Bank 2009; Saad-‐Filho, 2010; Kanbur, 1998; Kaplinsky, 2005; Pasha & Palanivel, 2004; Ravallion, 2004; Cornia, 2004

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• Asia-‐Pacific has had tremendous growth, averaging above six percent over the last four decades (World Bank 2012).

• This level of unprecedented growth has lifted several hundred million people out of poverty, in large measure due to China (World Bank 2010).

• Economic growth has been driven by manufacturing and industrial activity, along with services in line with conventional development trajectory.

However,

• Asia is still home to the largest number of poor and hungry—about two-‐third’s of the global total (World Bank 2012);

• the majority of the poor reside in rural areas and rely on agriculture, although increasingly urban poverty is on the rise (Asian Development Bank 2007); and

• the manufacturing and services sectors are capital intensive and labour shedding, whereas agriculture is relatively more labour intensive, although those employed in agriculture tend to be underemployed.

Therefore, what is needed is

• ‘inclusive growth’ strategies with a focus on employment, especially tapping into growth sectors that are relatively labour intensive;

• a renewed focus on agriculture and the rural sector (i.e. increased investment and improved technology yielding increases in income); and

• improved access to basic goods and services including food, education, health, and financial services for the poor.

Finally, increased government spending should be met through improved domestic tax revenue collection. While the inclusive growth narrative is appealing and easily comprehensible, there are five critical flaws with this dominant narrative. First, the narrative presents a general and simplified analysis on growth, inequality, and poverty, which culminates in a standardized and formulaic set of solutions meant to be applied across the board, from Papua New Guinea to China. Country differences in history, religion, culture and culture, governance and institutional structure, geography, and ethnic diversity are generally neglected, or are presented as inconsequential.

Second, the solutions often come in the form of directives that are almost always antithetical in composition; that is, countries need more inclusive growth (because there is a lack of it);

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growth needs to be broad-‐based (because it is not broad-‐based); and there needs to be a focus on (a) productive employment (because the poor are unproductive), (b) increasing incomes of the poor (because they do not earn enough), and (c) creating equal opportunity for all (because there isn’t equal opportunity). Finally, the benefits of growth need to be shared more equally through various channels (because benefits of growth aren’t shared widely, i.e. there is rising inequality). The logic of such arguments tends to be circular and tautological. Third, there is little or no discussion about the failures of the market system in addressing the basic needs of the poor, and how it inherently preserves a certain form of inequality. That is, the poor are unlikely to be employed in any ‘competitive’ job due to their lack of skills, productive capacity, and lack of social capital at any given time. The market includes and excludes based on achieving greater overall efficiency. Fourth, the inclusive growth narrative neglects the political economy dimension of development. As the narrative simplifies the issue (i.e. income inequality) and standardizes the solutions (i.e. inclusive growth), the difficult and intractable issues related to the social and political conditions under which economies are organized and have to operate, and the implications these conditions have in terms of development outcomes, is not given due attention. Taking into account the political economy dimension would require a nuanced and considered approach, where a closer look at the governance dimension would be desirable. On-‐the-‐ground conditions and context matter, and should influence the specific measures and solutions. Finally, the current narrative, for the most part, attempts to address only income inequality. Income inequality tends to be an outcome of other forms of inequality; for example persistent exclusion of certain groups (based on caste, ethnicity, religion, etc.) from the economic, social and political processes tend to widen income disparities (Stewart 2002, Stewart and Brown 2006). Looking beyond Income Simon Kuznets, who famously argued that income inequality is a common feature of a developing country, also noted “it is only through contact that recognition and tension are created, […] the tension created by the observation of the much greater wealth of other communities may have only increased” (Kuznets 1965). Images of wealth and affluence are instantaneously transmitted over television screens across of the globe, making interaction between global communities—the rich and the poor, advantaged and disadvantaged, those that have opportunities and those that continue to be marginalized—inevitable. The social

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landscape of cities, in both developed and developed countries, is characterized by deprivation existing in close proximity with immense wealth. Few opportunities and persistent discrimination on the one hand, and limitless choice and ample freedom on the other, form the basis of large differentials in health, education and income across social groups. The people living in the projects of New York City, the favelas of Rio, and the vast network of slums in Bombay bear witness to the ever-‐increasing affluence that surrounds them. But what drives these inequalities? Addressing this requires going beyond differentials in income and wealth and looking at broader structural elements that are often difficult to measure and assess. We can certainly probe through asking the right sort of questions: do all ethnic groups have status, rights and are they recognized? Is a democratic set-‐up able to guard against the persistent marginalization of minority groups? What are the dominant values of the society in question? Does it promote empathy, co-‐operation, and religious and social diversity? How are immigrants treated? Some of these questions may help us identify causes of inequities that continue to fracture society. Curiously, there is a dearth of studies that analyse the nature and causes of non-‐income inequalities and their potential adverse consequences to development (Stewart, 2002). Tracking non-‐income development outcomes such as education, health, and gender equality are likely to fall within the domain of specialized UN agencies (UNICEF, WHO, and UNWOMEN, respectively). Depending on the level of disaggregation, data on these non-‐income dimensions can uncover inequalities that may be the result of persistent marginalization and stigmatization of certain groups based on religion, gender, location, caste and ethnicity. Behavioural patterns that erode trust between communities, break down channels of communication, and reinforce dominant negative sterotypes can lead to systemic exclusionary practices and measures, the extent of which are partially revealed through development deficits across a range of socio-‐economic outcomes/indicators (UNDP 2009; Gunewardena, 2009; Stewart, 2002). More extreme cases of persistent inequalities may lead to social unrest and political instability (Tadjoeddin 2007; Sriskandarajah 2005; Posner 2007; Mancini 2005). While several countries in Asia have taken steps to collect quantitative and qualitative data on such inequalities, there is much left to be desired in terms of data collection and monitoring. Assessing inequalities across social groups is a politically sensitive and charged issue. Fundamentally questioning the status quo, especially with the objective of tacking inequalities, is not in the interest of elected offcials as it may draw support away and weaken the vote bank. Weak democracies with fragile institutions are especially susceptible to look the other way. Even mature democracies are finding it difficult to tackle inequality.

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Examples of group-‐based Inequalities The country examples that follow are meant to illustrate how inequalities manifest themselves. The list is not intended to be comprehensive, nor is it intended to reflect inequality in all its forms. By showing certain group-‐based inequalities, we should hopefully begin to uncover some of the structural and underlying causes that lead to the more visible and measurable forms of inequality. This exercise should help to carve out a space for approaching inequalities through a broader lens that goes the traditional and conventional income-‐based approach. Nepal Nepal has over 100 caste, ethnic and religious groups, and about the same number of spoken languages. Historically, indigenous and religious groups have faced various forms of cultural discrimination (language-‐, religion-‐, and citizenship-‐related) while the Dalits have faced caste-‐based discrimination (UNDP Nepal, 2009). Caste-‐based discrimination stems from the hierarchies stipulated by the Muluki Ain (the national code of 1854) that characterized the Dalit as an “untouchable” (UNDP Nepal, 2009). In fact, the Muluki Ain was instrumental in organizing society by rank, with Brahmans and Dalits occupying the top and bottom rungs of the social ladder. Subsequent State provisions and interventions that further cemented social divisions included the 1960 Panchayat system, which declared Nepal Hindu Kingdom” and Nepali or Khas “the only official language” (UNDP Nepal, 2009), thus neglecting the diversity in religions practiced and language spoken. To get a handle of the scope and depth of discrimination faced, there was a survey conducted (2002) that outlined 205 existing practices of caste-‐based discrimination (UNDP Nepal, 2009). Data on representation of different groups in various influential state and society sectors reflects overwhelming domination of the caste hill Hindu elite males (Neupane 2000). The two worst off groups in society—Dalits and Muslims—continue to be marginalized in the economic, social and political spheres. The average per capita income among the Dalit and Muslim population tends to be about half that of the Brahman/Chhetri caste and almost one-‐third that of the Newars (Tiwari, 2010). The 2009 Human Development Report on Nepal estimated the Human Development Index (HDI) for major ethnic and religious groups in Nepal. It found that HDI varies more widely by caste and ethnicity than by geographical location. The Dalits had the lowest HDI, and among the Dalits, the Madhesi Dalits had the lowest HDI (0.383), followed by the Muslims (0.4). On the other end of the spectrum, the Madhesi Brahman had the highest HDI (0.625), followed by the Newars (0.616). The HDI for Nepal stood at 0.509. Not surprisingly, poverty incidence also seems to be most acute among the Dalit and Muslim populations at 45.5 and 41.3 per cent, respectively, and least among the the Brahmin/Chettri groups at 18.6 per

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cent (Sharma 2009). Poverty reduction efforts also reflect a bias along ethnic and religious lines; poverty incidence among Muslims reduced by a mere two percentage points, from 43.7 to 41.3 per cent over the period, 1995/96-‐ 2003/04, while among the Brahmin/Chettri poverty incidence reduced from 34.1 to 18.4 per cent over the same period (Government of Nepal 2005). In terms of political representation, as late as 1999, Muslims had just 2 seats in Parliament, while the Dalits had no representation although they collectively accounted for alomost 17 percent of the total population.3 The Dalits did however gain representation in the parliament after the most recent elections, as of June, 2012, the parliament had been dissolved. India The Indian Government’s Sachar Commission Report (2006) sought to study the Social, Economic and Educational Status of the Muslim Community of India. It also looked at how other minorities in India were fairing from a social, economic and political standpoint. The commission found that the literacy rate for Muslims (2001) was far below the national average, and the disparity between Muslims vis-‐à-‐vis average literacy level was higher in urban areas vis-‐à-‐vis rural areas. Moreover, 25 percent of Muslim children in the 6-‐14 age group either never went to school or dropped out at some stage. In terms of employment, Muslims had a considerably lower representation in government jobs, including those in the public sector undertakings compared to other Socio-‐Religious Categories (SRCs). In fact, the unemployment rate among Muslim graduates is the highest among all SRCs, poor as well as non-‐poor. With regard to matriculation, graduation and employment in the formal sector all Other Backward Castes (OBCs) lag behind the all-‐India average. In West Bengal and Kerala, where almost 25 percent of the population is Muslim, Muslims’ share in government jobs is just 4.2 and 10.4 percent, respectively. In terms of health, a Muslim child has a significantly greater risk of being underweight or stunted than is the case with other Socio-‐Religious Categories: the risk of malnutrition is also ‘slightly higher’ for Muslim children than for ‘Other Hindu’ children. In terms of access to services, many areas of Muslim concentration have been marked by banks as ‘negative’ or ‘red’ zones where giving loans is not advisable. In terms of poverty, the Scheduled Castes (SCs) and the Scheduled Tribes (STs) together are the poorest groups with a Head Count Ratio (HCR) of 35 percent, followed by Muslims who record the second highest incidence of poverty with 31 percent of people below the poverty line. The Hindu-‐General category was the least poor category with a HCR of only 8.7 percent while OBCs hold the intermediary level with

3 The Muslims make up 4.3 percent of the total population. The national figure for the Dalit population is 13.8 percent of the total population (2001 Census), but the Dalits contest this number, estimating it to be closer to 25 percent of the population (UNDP, 2008).

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a HCR of 21 percent, close to the all-‐India average. Furthermore, a larger proportion of the Muslim households in urban areas are in the less than Rs.500 expenditure bracket. Indonesia Indonesia, a resource rich country of over 15,000 islands, approximately 1000 ethnic groups, and a population of close to 240 million presents a complex picture. While national figures suggest that inter-‐ethnic disparities are fairly low and stable over time and inequalities are more apparent across geographical locations (SMERU Research Institute, 2006), some have suggested that local conflict and greviances are partly driven by different types of inequalities (Mancini, 2005; Brown, 2005; Tadjoeddin, 2007). Groups that have been identified as marginalized include Dayaks in Kalimantan, native Papuans, and tribal groups in Riau. As Tadjoeddin notes, “Dayaks in the mid-‐1990s were relatively poor compared with the 1960s when they enjoyed the richness of their forests, the place where they previously had their cultural, social and economic lives […] A similar situation was faced by the indigenous Papuans. They have been declining as a proportion of the Papuan population, due to the incoming of migrants.” A point worth noting is that in resource-‐rich regions, namely Aceh, Papua, Riau and East Kalimantan, recorded respective GDP per capita was much higher than the national average in the 1990s4, but these regions continued to be relatively deprived; the household purchasing power for each of these regions was lower than the national average (Tadjoeddin 2007). Another curious trend, noted by Stewart and Brown (2006), is the high degree of inequality in agricultural holdings among the outer islands5. The transmigration programme in Indonesia, which relocated hundreds of thousands of families from over-‐populated Java and Bali to the more sparsely populated outer islands, resulted in an unequal distribution in land holdings in favor of the migranting Java/Bali transmigrants. They note that “based on 1990 census data […] larger land holdings were concentrated among Java/Bali-‐born agriculturalists. Overall, the interpolated median landholding of Java/Bali-‐born agriculturalists in the outer islands was 1.17 hectares, some 44% higher than that of local-‐born agriculturalists, at 0.82 hectares.” Moreover, Mishra (2009) also highlights the highly skewed assest distribution by pointing out that the “Market capitalization in the hands of the top ten families accounted for as much as 57.7 percent of the total in Indonesia compared to 46 percent in Thailand, 24.8 percent in Malaysia,18.4 percent in Taiwan and around 2.4 percent in Japan (based on Claessens, Djankov and Lang (1999)).”

4 In some cases (e.g. Fak-‐Fak, in Papua), the GDP per capita was 16 fold higher than the national average, but the household purchasing power was lower than the national average. 5 That is, all of Indonesia except Java and Bali.

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Sri Lanka While the 25-‐year ethnic conflict between the Tamil Tigers and Sri Lankan military may have ended in 2010, reconciliation between the two main ethnic groups is yet to materialize. Disparities in development outcomes between the Tamil minority (approximately 18 percent of the population) and the Sinhalese majority (70 percent of the population) are wide, and point to long-‐standing discrimination and marginalization experienced by the Tamil minority. Tamil marginalization permeated every sphere of life, including the economic, social, political and the cultural. The Tamil minority has been systematically marginalized, leading to sustained development deficits. The marginalization began with the introduction of 1956 Official Language Act, which instituted Sinhala as the official language of the country. This action was followed by sweeping education reforms biased toward the Sinhalese. Politically, the two main Sinhalese came to dominate completely, which led to economic development and investment concentrated in Sinhalese-‐dominated areas (Sriskandarajah 2005). While outcome level data vis-‐à-‐vis education, health, wage levels in the north and east of the country (Tamil-‐majority areas) has been unavailable since the civil conflict started in 1985, some insights can be gleaned using proxies. Gunewardena (2009) notes that labour force data reveals “Sinhala-‐favouring wage gaps throughout the wage distribution”. In addition to differences in resource access and outcome between ethnic groups, Tamil men in the public sector were underpaid by as much as 28 percent, and in the private sector by 9-‐14 percent, compared to their Sinhalese counterparts with similar education and experience (Gunewardena, 2008). Moreover, based on 2003-‐4 data, nothern and eastern parts of the country were estimated to have absolute and relative poverty rates just above or similar to the poorest provinces in the rest of the country. Similarly, the limited data on education reveals that barely 18 percent of the population in the eastern part of the country has had secondary level schooling, compared to the national average of 25 percent. In the western part of the country, which includes Colombo, the percentage jumps to 35 percent (Department of Census and Statistics, 2008). These are just four examples from within the region to illustrate the persistent marginalization of certain groups within a given country, which in turn lead to low levels of development among the marginalized group/s as compared to the national average. Other examples of groups that have been historically marginalized include the Baluchis in southwest Pakistan, the Rohingya community in the Rakhine state of Myanmar, the Hazaras in Afghanistan, and the ethnic minority groups6 in Vietnam.

6 By definition, except for the Kinh group, all ethnic groups can be considered ethnic minority groups because of their small size.

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Towards an Analytical Framework for Inequality—An Initial Sketch Man is by Nature a Political Animal

Aristotle

The post-‐2015 development agenda presents an opportunity to broaden the scope of development. With regard to inequalities, the real challenge is to take bold measures that tackle the structural and underlying causes of persistent inequalities. This requires us to go beyond measurement and analyses, to grasp the social dynamics, history, cultural practices and other dominant factors that are likely to influence persistent discrimination and exclusion in a society—an essential task if we are to tackle inequalities in a fundamental and comprehensive way. With slight modifications, the three dimensions of sustainable development—economic, social and environmental—as put forth in the Rio+20 Global Forum outcome document (United Nations, 2012) can be used as a starting point for categorizing different types of inequalities. It would be worth adding the political dimension as critical to achieving sustainable development, for it is in the political and governance spheres where public policy is crafted, negotiated, approved and finally implemented. It is also an area where inequalities are endemic as minorities tend to be underrepresented and political power concentrated among a select few. Inequalities related to, and emerging due to, environmental factors can be subsumed under the social, economic, and political dimensions. Therefore, to avoid redundancy, income and non-‐income based-‐inequalities can be categorized along economic, social and political dimensions (Figure 1). “Economic inequalities are income and assest-‐based and include inequality in access to or ownership of a variety of assets as well as opportunities for their use (i.e. employment), and current resources that flow from these assests (i.e. income). Social inequalities look at disparities as to how practices and beliefs of different ethnic and religious groups are treated, as well as related inequalities in access to a variety of services. Outcome indicators such as, maternal mortality, literacy, and life expectancy, also fall under the social dimension, while political inequalities consider the distribution of political power and opportunities”.7

7 This categorization to a large extent follows Stewart (2002).

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Figure 1: Categorization of different types of Inequlaities

Not only do inequalities cut across several development areas, inequalities in one area influence outcomes in another. For instance, political power affects economic and social dimensions and also vice versa; in most societies, the rich tend to influence political outcomes that favour them. Human and social capital affects employment opportunities and therefore ability to earn a living. Marginalization of groups (based on creed, ethnicity, race, gender, etc.) can limit employment opportunities, political participation and representation. Focusing simply on economic or income inequality gives us partial access to a much wider societal issue that needs to be tackled in a more comprehensive manner. For example, while greater fiscal spending may ameliorate the plight of the Dalits in Nepal and provide them with better access to essential goods and services, it is unlikely to put a stop to the discrimination they face from society at large. In fact, discriminatory practices against them may even intensify based on the perception that the Dalits are being given preferential treatment by the state. The sort of interventions required to change behaviour patterns, perceptions and norms are not dependent on targeted government spending, but come down to a seemingly unlikely set of factors, including provisions to recognise status, citizenship rights, providing opportunities, building trust between groups, and, more generally, between the government and the public.

Inequalities

Economic

• Income and wealth • Access to or

ownership of assets (financial, natural resources, human capital, etc.)

• Employment

Social • Treatment based on ethnicity,

race, religion and gender (recognition/treatment of language, religious practices, dress and behaviour, etc.)

• Access to services (education, health, housing, etc.).

• Outcome indicators including those of health and education

Political

• Political Power (representation at various levels—national, regional, and local—so as to influence policy decisions and their eventual outcomes)

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A new way of approaching and addressing inequalities The future is not some place we are going to, but one we are creating. The paths to it are not found, but made. Peter Ellyard (Australian physicist) The country examples discussed earlier in this short paper emphasize how inequalities manifest themselves in a particular social milieu. Nonetheless, one can draw out common themes and concepts across the set of countries, which may be generalizable to others: ‘marginalization,’ ‘discrimination,’ ‘low social status,’ ‘lack of education,’ ‘lack of opportunities,’ etc. However, each of these concepts tends to display a degree of heterogeneity, specific to place, history, culture, and political structure. For example, members of an ethnic group in Nepal may face discrimination due to the color of their skin, others on the basis of creed, and yet others may encounter hostility simply because they are migrants. The solutions to address the different manifestations of a common issue—‘discrimination’—therefore must be very specific. The focus on specificity vis-‐à-‐vis the form inequality takes requires that a comprehensive understanding of history and political economy of the country in question, leading to identification of important group distinctions and characteristics. Given that such an approach assesses how the state relates to certain groups, and also explores the social and economic interactions between groups, it is worth emphasizing the cross-‐disciplinary nature of the exercise. Anthropology, sociology, politics, law, economics, psychology and history all have a role in comprehending inequalities and adequately addressing them. Therefore, it would be prudent to assess and address inequalities in a cross-‐disciplinary manner. This also has implications for how development agencies function; it would be useful to pool our human resources, bringing together experts from different fields of knowledge to analyze and address the issue. In terms of policy solutions, inequality and poverty have historically been grouped together, which has led to the development of a common set of policies. Addressing inequality demands a structural change in policy thinking and design, from devising ways to reduce absolute poverty to addressing differences in levels 8 (in access to services, political power and

8 Narrowing differences can sometimes lead to waste. Consider the case where A has good healthcare, while B doesn’t. If we cannot improve the level of healthcare for B (for some reason), then one option is to reduce the quality of healthcare A receives such that conditions between A and B tend towards greater equality. In such cases, it is always better to improve conditions for B and therefore it is more useful in terms of policy to focus on narrowing differences with relation to services such as health, education through improving the overall level of the worse off population such that, over time, differences narrow between them and the better off. However, in terms

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representation, status and recognition, etc.). This signifies a shift from viewing inequality as part and parcel of a static income problem to treating it as a dynamic issue. Poverty, and by association inequality, has traditionally been viewed in absolute terms, where the focus has been on reducing the number of poor. Inequality, however, requires focusing on difference in levels between individuals and across groups in society. It requires looking at society at large and identifying the sources that lead to vastly different social, political and economic outcomes. In a rapidly globalized and connected world, mechanisms that perpetuate inequality are also cross-‐border and international. Trade policy decisions taken in Geneva can have dire effects on the farmers in Orissa. Monetary quantitative easing in the United States can appreciate the value of other currencies, in effect increasing the prices of staple commodities in local markets in developing countries. Unfettered speculation with food commodities such as soybeans, corn and wheat arguably contribute to global rise in the prices of these commodities (Food Watch 2011). With communication, information and knowledge sharing having become a virtual enterprise; the digital divide between those with web access and those without is widening, leading to unequal access to opprtunities, goods, services and even political voice9. The flipside of greater connectivity is that greviances and feelings of despondency can be compounded through instant transmission across the world, in effect quickly mobilizing local communities and groups at a global scale. Thus, the transmission channels that perpetuate and reinforce inequalities are cross-‐border and global in nature. To address inequities would require broad coalitions and partnerships and more responsive global governance mechanisms. The current global governance system is percieved as fragmented and ineffective. There is an opportunity to strengthen global mechanisms to be more organized, coordinated and responsive. Focused and specific network-‐based approaches focusing on values and norms through dialogue, such as N-‐Peace10—a multi-‐country initiative bringing together women leaders across countries in Asia Pacific to prevent conflict and build peace through dialogue—are yeilding results. As the earlier country illustrations showed, inequalities emerge in a social and cultural milieu accepting of inequality; sometimes discriminatory practices against groups is consciously promoted through the state apparatus with public constent. Addressing deeply imbeded forms

of political representation, status and recognition it is reasonable to narrow differences by taking away from the better off group. 9 Several governments, in both developing and developed countries carry out feedback surveys on the worldwide web. For example, In India, the national economic and developing planning process was open to the public through the web (see http://12thplan.gov.in/). 10 For more information of N-‐Peace, please go to www.n-‐peace.net/

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of discrimination in a sustained manner requires that the multi-‐lateral system work, along with local partners, with the norms and values of societies, so as to ecourage behaviourial shifts that lead to more equal outcomes over time. Along with longer term goals such as environmental sustainability, addressing the underlying structural causes of inequality should also be a priority. Shifting away from the standard economic assumptions of scarcity of resources, efficiency, and maximizing individual interests and utility, to a more cooperative and public oriented approach is likely to help redefine the political and social space and discourse, making gross inequities less tolerable. Overcoming longstanding inequalities in education, health and access to other services is not an issue of lack of resources per se, as is commonly cited, but more a reflection of the pervailing set of priorities.11 Finally, commited leadership is needed to overcome some of the underlying causes of persisent inequality. As is usually the case, it is the minority groups, even in largely democratic set ups, that bear the brunt of continued discrimination and marginalization. Bold actions, challenging the status quo and pervailing social practices, would be required. Governance sturctures would need to be reassesed and altered to cater to the neglected groups. Affirmative action policies, of the sort promoted in Malaysia, United States, and India would need to underpin a renewed social compact between the government and those governed. So what is needed is nothing less than a shift in how we approach inequalities. A shift away from addresing the outcomes and symptoms of inequalities (i.e. income inequality) to addressing the structural and root causes (patterns of behaviour). Unless a post 2015 development agenda pays attention to the underlying behavioural issues, inequalities are likely to persist. Both rationality and emotional sensibility will be necessary for this endevour.

11 Often military budgets account for large fractions of the total budget in many developing countries. A shift in priorities by setting aside additional budget towards educating and providing health services to the neglected population would go a long way in narrowing disparities.

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Looking Beyond Income Inequality Global Consultations

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