Financial Transparency Coalition

This post is part of our series from speakers at the Task Force’s 2011 annual conference, taking place in Paris October 6-7. For more information on the conference and to view live webcasts of the presentations in English and French, click here. You can also follow the conference on Twitter and submit questions for the presenters at #TFConf2011, or #TFConf2011fr for French. 

Large inequalities, both of income and wealth, have been steadily rising since the 1970s and 80s. Today, the top 20 percent of the population holds 70 percent of the total income.

Inequality is far from a phenomenon confined to the boundaries of developing countries, as a survey in the U.S. showed recently. This latter finding should awaken us to two realities. One, inequality is not necessarily produced as a result of economies having limited resources. Second, the magnitude of the problem is not only of global, but also systemic, proportions. Yes, “systemic” is the same adjective one uses to talk about the threat represented by large banks that are “too big to fail.” There is no fault at all in applying the same term to refer to inequality. In fact, so systemic is it that International Monetary Fund researchers have developed models that show how widening inequality is bound to generate financial crises, a model that may well explain the recent 2008-09 severe crisis and, more importantly, why we are not out of it, yet.

States are legally bound, by human rights obligations, to reduce inequality. The Committee on Economic, Social and Cultural Rights stated that “non-discrimination and equality are fundamental components of international human rights law and essential to the exercise and enjoyment of economic, social and cultural rights.” Efforts to increase levels of enjoyment of human rights that ignore inequality are likely to distort conclusions about resource availability and the existing budgetary constraints. It is often argued that states’ obligations regarding economic and social rights are, what is known in legal jargon as, an “obligation of means.”  In other words, to prove a state is in violation, one should not only prove that the result (inequality) has materialized—which is the case for the obligations of result—but also that the state failed to “take steps…, to the maximum of its available resources, with a view to achieving progressively” those rights. The caveat is that the obligation to ensure a non-discriminatory access to economic and social rights has been ruled not an obligation of means, but one of result, regardless of whether the substantive rights in whose enjoyment individuals are being discriminated, fall under those that create an obligation of means.

But, setting that aside, the argument is essentially correct, which is where measures to tackle illicit financial flows come in. Can a state really invoke it has taken all measures at its disposal to reduce inequality if it has failed to, at least, attempt to stop illicit financial flows? Interestingly, obligations are of taking measures individually or “collectively.” So, can states that failed to provide the cooperation for tackling such flows, even if the ensuing result is lack of resources or rampant inequality in another country, be left off the hook? It is time that, when their human rights records come up for review, governments are asked to answer these questions.