Endless Poverty is a Human Rights Failure

December 7th, 2011

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Socioeconomic rights, such as that “to a standard of living adequate for the health and well-being of oneself and one’s family, including food, clothing, housing, and medical care” (UDHR, Article 25), are currently, and by far, the most frequently unfulfilled human rights. Their widespread underfulfillment also plays a major role in explaining global deficits in civil and political human rights demanding democracy, due process, and the rule of law. Extremely poor people — often physically and mentally stunted due to malnutrition in infancy, illiterate due to lack of schooling, and much preoccupied with their family’s survival — can cause little harm or benefit to the politicians and civil servants who rule them. Such officials therefore pay much less attention to the interests of the poor than to the interests of agents more capable of reciprocation, including foreign governments, companies, and tourists.

Contrary to much official rhetoric, these problems are not being overcome. The number of chronically undernourished people, for instance, has risen since the 1996 World Food Summit in Rome where the world’s governments promised to halve it by 2015. Reported at 788 million in 1996, this number has in 2009 broken above 1 billion for the first time in human history.

A key driver of the persistence of severe poverty is rising global inequality. While the top five percent of the world’s population increased its share of global household income from 42.9 to 46.4 percent in the 1988–2005 period, the share of the poorest quarter declined by a third from 1.16 to 0.78 percent — despite all the development assistance.[1] Clearly, and unsurprisingly, the rules of the world economy are better aligned with the interests of the world’s affluent than with those of the poor.

The Task Force on Financial Integrity and Economic Development has been analyzing and fighting some important structural injustices in our global financial system, calling attention, for instance, to how corporate tax evasion in developing countries is facilitated through lax accounting standards for multinational corporations. Since they are not required to do country-by-country reporting, such corporations can easily manipulate transfer prices among their subsidiaries to concentrate their profits where they are taxed the least. As a result, they may report little to no profits in the countries in which they extract, manufacture or sell goods or services, having their worldwide profits taxed instead in some tax haven where they only have a paper presence. Task Force member Global Financial Integrity (GFI) estimates that, during the 2000–2008 time period, trade mispricing deprived developing countries of US$382.6 – US$405 billion per annum.

Even more important, as seen over the last year, existing rules have allowed banks to accept for private deposit funds from public officials in developing countries. The funds found stashed by Gaddafi in various accounts exceed the annual GDP of Libya and are clearly proceeds of corruption.  This type of complicity could easily be avoided: banks are already under strict reporting requirements with regard to funds suspected of being related to terrorism or drug trafficking.  Yet many banks still eagerly accept and manage embezzled funds — and legally so, with secrecy laws ensuring that their banks remain attractive for such illicit deposits.  GFI estimates that developing countries have lost an average of $342- 404.7 billion annually during the 2000–2008 period due to leakages via banking systems—more than four times the amount they have received in official development assistance. The impact of this financial drain on the livelihood of the poor is magnified by the effects of corruption on the quality of governance.

This Human Rights Day, let us be mindful of the ways in which our emerging supranational institutional architecture can be reformed to ensure that the poorer half of humanity, too, can achieve at least a proportionate share of global economic growth.

[1] The data used in this paragraph were kindly supplied (Apr. 25, 2010) by Branko Milanovic, principal economist in the World Bank’s Development Research Group (on file with author). Milanovic is the leading authority on the measurement of inequality, and his published work contains similar albeit somewhat less updated information. See generally Branko Milanovic, “True World Income Distribution, 1988 and 1993: First Calculation Based on Household Surveys alone,” 112 Econ. J. 51, 51-92 (2002); Branko Milanovic, Worlds Apart: Measuring International and Global Inequality (2005); Branko Milanovic, The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality (2011).

Written by Thomas Pogge

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