AFD International Conference: There Is Nothing Inevitable About Inequalities
published on 11 December 2018
Inequalities have been increasing and threatening the social link since the 1980s. Development actors are aware of the scale they have reached and have now made them one of the pillars of their actions. The community of researchers is on the front line and gathered in Paris on 7 December at the initiative of AFD and the European Union to provide diagnostics, but also to put forward concrete solutions.
Inequalities have taken center stage in recent weeks, both on the streets and in debates. In this heated social context, on Friday 7 December, Agence Française de Développement (AFD) organized its 13th international conference on development with the financial participation of the European Union. The theme? Inequalities and the social "link".
In the welcoming premises of the Institut du Monde Arabe in central Paris, the top international specialists on these issues held discussions all day, sometimes with contradictory points of view. There was specific concern over the need to have reliable and common measurement tools. Everyone did, however, agree that there are solutions to get out of the rut of inequalities.
The social link and inequalities “are a topical issue for many reasons”, says Rémy Rioux at the start of the discussions. On the eve of further national demonstrations, everyone understood the reference made by the Chief Executive Officer of AFD to the Yellow vests movement. It was a way of showing the extent to which research is intrinsically linked to reality.
It is indeed research that dissects, analyzes, comments on and proposes keys to address the hot topics of inequalities and the construction of the social link, an essential cement for the emergence of sustainable and effective development. In France, of course, but also all over the world, as the divides over there have consequences here and vice versa.
Social link and climate, the same combat
“Inequalities and the social link, it is a new way of looking at our historical mandate”, explains Rémy Rioux, mentioning development banks as a whole. “It is also a Sustainable Development Goal”. In short, “We need to tackle these issues head on”, via an AFD transformed into a platform for the development policy, which takes up the challenge of putting the fight against climate change and the promotion of the social link on an equal footing.
“Inequalities have become a major subject for economists”, then echoes Christian Chavagneux, a columnist at Alternatives Economiques. “The doctrine which states ‘All we need is a bit of growth and it will all work out to settle inequalities!’ is over”, notes the journalist.
Gaël Giraud, AFD’s Chief Economist, starts his argument with an “invisible” subject which is, however, a prerequisite for any effective action in the fight against inequalities: “The issue of collecting reliable data and diverse sources is central, as they alone allow a coherent discourse on trends in inequalities.”
Lucas Chancel, an economist specialized in inequalities and the climate at the Paris School of Economics, does not diverge from this: “We definitely need global standardized measures to measure trends in inequalities”.
The relational capability indicator partly meets this demand. The tool, developed by Gaël Giraud with support from AFD, seeks to measure the quality of the social link within a group and provides information about the social fabric. All the studies conducted show that: “When there are excessive inequalities of income or status – especially between women and men – the social link breaks.”
In this context, there is a strong temptation to drive the climate issue to the background. A serious mistake is the response of the experts present: climate change contributes to breaking the social link and increasing inequalities. Indeed, as Gaël Giraud points out, “the poorest countries pollute the least and are the first victims of climate change.”
Towards a “post-growth” society?
However, we need to be careful not to be too quick in making shortcuts: “The rationale that fewer inequalities will result in less pollution is not obvious”, points out the economist. If tomorrow the entire population of the planet earned the average equivalent of current worldwide income, CO2 emissions would remain the same as today, despite efforts to reduce the human footprint on the environment…
“We need to learn about welcome sobriety”, concludes Gaël Giraud, who believes that for economists, this sobriety opens up “fascinating prospects for a post-growth society.”
Gaël Giraud, unlike some of his colleagues, is convinced that reducing inequalities is compatible with weak growth and highlights AFD’s GEMMES model to affirm this: “There is no intrinsic link between strong growth and the reduction in inequalities.”
In this context, “the Commons become a key issue”, as is the case with the main question related to it: How to manage together resources that are common to all? “It is possible”, replies AFD’s Chief Economist.
A question of justice
“Inequalities have a positive aspect”, dares to say to an astonished public, Branko Milanovic, visiting professor at the Graduate Center of the University of New York and lead researcher at the Stone Center on Socio‐Economic Inequality. But… not for everyone:
Inequalities have a positive relation for the future growth of the rich, but negative for the future growth of the poor. Inequalities mean that the poor are excluded from society. Their future incomes suffer from this.
At the political level, “the rich also have more power, which they use to make decisions that benefit them. This allows them to maintain a position of superiority.” For the researcher, “the existence of inequalities means that there are fewer intergenerational equal opportunities. It is a question of justice, we should all fundamentally have the same opportunities.”
There is an even greater need to fight against these inequalities because “equality pays off”, as explained by Alicia Barcena, Executive Secretary of the United Nations Economic Commission for Latin America and the Caribbean:
Equality is necessary. It is an engine for growth. When you have equal capacities, you have another option, which is youth empowerment.
The same analysis is made by Stefano Manservisi, Director General for International Cooperation and Development at the European Commission: “There is rich and sound evidence that high levels of #inequalities – whether in opportunities or results, economic or social – significantly hinder economic growth and poverty reduction.”
The four divides
Nizar Baraka, President of the Economic, Social and Environmental Council of Morocco, focuses for his part on “divides”. The social divide “which worsens with the increasing job insecurity”, the territorial divide with the increasing number of medical deserts, the digital divide and the climate divide, gaping since the US withdrawal from the Paris Agreement.
All this creates “an exasperation in populations” and great tension between short-term expectations and long-term public policies. We consequently need to work on “social, territorial and intergenerational” cohesion.
Solutions are also to be directly found in the pipes of public policies. For example, Murray Leibbrandt (University of Cape Town) was proud to announce that on the eve of the conference, “the South African President implemented a national minimum wage. This reflects the determination to take action for the entire part of the world of work not covered by an industry-wide agreement. This is very important in the context of reducing inequalities.”
Despite this positive news, the Senior Director for Development Economics at the World Bank Shanta Devarajan considers that in a number of societies, in particular in the Arab world, “the social contract has been broken”:
The social contract with the State has been broken with the rise in unemployment in educated classes. The State must no longer be an employer, but a facilitator for the private sector.
This social contract needs to be reinvented with a central role for the State, reacts Murray Leibbrandt: “We cannot rebuild a social contract using old rules. The government must above all fulfill its essential role of providing access to education, health and transport for all.”
A problem of perception
Discussions resumed in the afternoon with this observation: there is sometimes a gap between the reality of inequalities and the way in which they are perceived.
“If I don’t say anything, you don’t see the extent to which I may be frustrated by the situation. We often only notice the anger when people take to the streets”, says Alice Evans, professor at King’s College in London, excitedly in the microphone to get the public going.
The Director General of the Banati Foundation – which works to improve the daily lives of street girls in Cairo – Farida El Kalagy, takes the same view: “ When these girls act as pickpockets, it’s to show that they exist. But little by little, we make excuses to accept this state of inequalities. In Egypt, we often hear that it is economically difficult, whereas it’s the lack of protective measures that creates inequalities and the lack of political will. We don’t understand that these inequalities will end up turning against us."
Inequalities, confidence, identity: these are the points of a triangle drawn by the third expert invited to this panel discussion, Frances Stewart, from Oxford University. Between the three concepts, she explains, we find social cohesion: “A study shows that inequalities strengthen the sense of identity and reduce the confidence that everyone has in society.”
For further reading: Social cohesion, well-being, growth: Seven good reasons to (finally!) fight inequalities
People do not suffer from the same inequalities and have different demands. We consequently see at the moment in France, as in Egypt during the revolution, movements come about with no one leading them.
How to take action on the perception of inequalities? Alice Evans talks about the impact of telenovelas on women’s empowerment in Brazil: “We have seen that the divorce rate was higher in households which have a TV. Why? Because women watch the telenovelas and see other women who get divorced and then manage to live on their own.”
For Frances Stewart, there is nothing better than putting children in the same school. “We need respect and good relations between groups. What is happening in Europe today is a bit depressing, but if you look at the progress achieved over the long term, particularly in terms of access to healthcare, there’s something to be pleased about.”
Donors are taking action
Michel Houdebine, Chief Economist of the Directorate General of the Treasury, for his part, identifies five areas of progress in the fight against inequalities:
- Human capital,
- Social shock absorbers,
- The dissemination of technologies,
- The development of local activities,
- International cooperation.
“Even the elites stand to gain from redistribution!”, points out François Bourguignon, Emeritus Professor at the Paris School of Economics, during the last panel discussion of the day. “What we need to do is persevere: put all the possible reforms on the table and speak about them with the various social groups.”
This is precisely one of the pillars of AFD's action. “We are here to promote the emergence of new public policies and support transformations”, points out on the stage Jean-Pierre Marcelli, Executive Director of AFD's Operations Department. “But there needs to be a demand, otherwise they wont't take root.”
He believes that development actors must massively invest in youth, via quality education, vocational training, economic integration and sport. “And improve governance, by strengthening transparency and justice, both for climate and gender. The idea is to move away from haphazard approaches, which create frustration”, observes Jean-Pierre Marcelli.
Preserving the social link firstly means ensuring that we do not destroy it. It is for this reason that AFD, for the projects it supports, endeavors to verify that the impacts for populations are not negative.
“These discussions will all help us better integrate the issue of inequalities in our missions”, concludes Gaspar Frontini on behalf of the European Commission. “We are facing huge problems, but we have an agenda.” The fight against inequalities is continuing.
For further reading:
