If inequality widens, who will rewrite the rules?

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By Webdesk


Economic summits in Washington, DC rarely generate much interest on the streets of Khartoum or Karachi. The spring meetings of the IMF and the World Bank, held in the capital of the United States from April 10 to 16, were no exception.

Listening to the varied comments from ministers and other officials throughout the week, one couldn’t help but wonder if we will ever be able to resolve the many crises we currently face. As so often in Washington, there was much talk, but few answers.

Remember how just a few years ago our leaders were determined to find a solution to what was considered a “pandemic of inequality”? How they all talked about tackling the rampant divides in our societies that COVID-19 “exposed”?

Remember how they celebrated our essential workers, praised care and collectivism, and recognized the importance of well-funded public services and social safety nets?

Just three short years into the pandemic, the hope and call for a meaningful reset, for the global pandemic response to become a portal to a better world, is a distant memory.

In fact, today we are in a new era of inequality. The rising cost of living, unemployment, underfunded and inadequate public services, and extreme weather events with devastating consequences are at the top of people’s ever-growing list of concerns.

And not only are fear and frustration reaching a peak, but people are becoming increasingly aware that their governments and the International Financial Institutions (IFIs) whose rules shape the economy on the street do not serve them. They realize that as long as the crushing debt payments continue to be financed by austerity measures, with the poorest and most marginalized bearing the brunt, their societies will remain in perpetual crisis and their lives will be in a state of uncertainty.

When the World Bank and the IMF’s “experts” discussed interest rates and sluggish growth in Washington, DC, last week, their discussions seemed irrelevant to the day-to-day realities of people struggling around the world, such as the Zambians forced to queue to stand for staples. eat regularly. However, the two conversations are well connected. The crushing austerity measures that are devastating Zambian households today – like similar policies worldwide – are exported in ideology from Washington, whether they are “approved” by the national government or not.

Today, all of our economic woes are attributed to “a perfect global storm” with four horsemen of inequality galloping toward us: rising inflation, record prices for food and energy, and most importantly, the war in Ukraine.

There is no doubt that Russia’s offensive has further darkened our prospects. But what got us here was decades of policies and politics that have consistently served the rich and failed the poor. After all, inequality is not new – it is ingrained in the system.

But now the crises have become so dangerous and public anger so widespread from London to Lagos that our leaders are forced to act. Politicians in countries as diverse as Mexico, Zimbabwe, the US and Kenya need to talk about “taxing the rich”. And it goes far beyond a national scale – people are questioning the very systems that underlie the global economy.

In response to the disproportionate impact of the climate crisis on her country, Barbadian Prime Minister Mia Mottley announced the Bridgetown Initiative in November 2022, designed to hold rich countries accountable for their failed climate finance pledges. The proposal aims to substantially overhaul the global financial architecture to make much more money available for climate finance, allow more flexibility in how countries can spend it, and allow international financial institutions to act as guarantors of larger, more substantial financing by the private sector.

Emmanuel Macron is eager to get involved and will host a summit for “A New Global Financial Pact” on climate finance in June. A summit co-chaired by Macron, who is currently cracking down on unions to raise the retirement age against the wishes of the French people, already feels counterintuitive. He will be joined by India’s Narendra Modi, the current G20 president, whose involvement has rightly led to further skepticism about where such a process will lead.

There is a fundamental question to ask about this approach. Can those perpetuating the problem remain at the helm to create the solution? Those who want to fight the inequality crisis are struck by the fact that the people most affected are not considered part of the solutions proposed by political leaders.

Our current situation shows why the rich and powerful cannot continue to speak for the poorest and most marginalized. We can’t get out of this “perfect storm” if we allow the ruling elites to gleefully rewrite the rules while leaving intact the power dynamics that brought our societies to the brink of collapse in the first place.

Politicians must understand that the call for systemic change is increasing. People want to come up with their own solutions and build a new economic system in the process.

This is why when IMF Africa director Abebe Selassie called at the spring meetings for another “Gleneagles moment” (to repeat the G8 summit in 2005 when aid and debt cancellation were on the agenda of the rich countries) to to tackle the looming debt crisis on the continent, he missed the point.

We crossed the Rubicon. Solutions and processes spearheaded by rich countries are simply not enough – there is no return to business as usual.

The pandemic has left scars that will never heal. Our leaders may have forgotten the promises they made, but the ongoing inequality crisis that is devastating the lives of so many around the world continues to defy this amnesia. The toxic combination of lowering taxes on the wealthiest and prioritizing debt repayment over people’s basic needs and rights is unacceptable and fundamentally unfair.

Our greatest failure in the aftermath of the 2008 global financial crisis was not seizing the unique opportunity for systemic change that presented itself. We let those in charge and those responsible for the crisis chart our way forward and ensure more suffering and destruction.

We cannot allow history to repeat itself. The costs of continuing on this path have become too high.

Protesters on the streets in France, Peru, Ecuador and beyond are already saying “enough is enough”. Their cries range from opposition to efforts to raise the retirement age and opposition to government oppression to demanding fair wages and affordable childcare. But the overall message is clear: people want systemic change.

They question the purpose and usefulness of institutions such as the IMF and the World Bank, which are seen as the guardians of the neoliberal economic order. Founded nearly 80 years ago to help countries rebuild after World War II, these institutions are dominated by wealthy countries at every level of their governance. Despite attempting a progressive rebrand in recent years, they continue to dish out the same failed neoliberal policy solutions. So their offers of “aid” and economic interventions are sparking increasing public anger around the world, from Argentina and Tunisia to Sri Lanka and beyond.

Now is the time to have an honest conversation about what is really at the root of our current crisis, and what real change should look like. That’s why groups like Fight Inequality Alliance have started calling for “People’s Alternatives”.

Our current crisis makes it clear that we need systemic change and we need it fast. But we cannot leave the redesign of our economic system to the same governments and IFIs responsible for the current catastrophe – this is really a job for the people.

They say that “economics is too important to be left to economists”. Well, it’s also too important to leave to the politicians and the richest.

The views expressed in this article are those of the author and do not necessarily reflect the editorial view of Al Jazeera.



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