Fuelling or Fighting? Aid and Inequality
Aid does not have many friends. The right hate it as a wasteful giveaway to corrupt foreigners. The right-wing press in the never calls it ‘aid’ alone, but only ever ‘foreign aid’, with all the racist and pejorative implications that the word ‘foreign’ has.
Those on the left largely dislike aid too. They tend to see it as a relic, used to enforce the will of rich countries on poor ones. They often think the debate over aid obscures more profound structural issues, like trade, or more recently global tax evasion and avoidance. It is seen as at best a distracting sticking plaster.
Here in Africa, the middle and upper classes also often hate aid too, for perpetuating colonial relationships. They feel it can fuel corruption and undermine accountability of their own leaders. They long for their countries to breakaway from the need to beg from rich nations and stand on their own two feet.
I have spent many years fighting for more and better aid and I remain convinced of its critical importance in fighting inequality and ending poverty. I have seen the good it can do. When I lived in Malawi, HIV/AIDS was a death sentence. We lost many friends and colleagues. The price of medicines then collapsed after activists faced down the pharmaceutical companies - a truly magnificent victory. But even these far cheaper drugs needed to be bought and delivered to the millions who needed them for free. Tens of millions of people are alive today because of the role of aid in providing free life-saving drugs for HIV/AIDS. Tens of millions more are protected from hunger or are going to school in part because of aid. This is not something to be thrown away lightly.
Yet, I do think that increasing progressive domestic taxation in developing countries is vital. I think that the richest and wealthiest in countries like Kenya should pay far more tax towards their own national development, and it is a scandal that they feel they don’t need to, or that tax is somehow optional.
But the fact remains that most of the world’s richest people, and most of the the world’s wealth, is found in rich countries. It is also a fact that the wealth of the north, and especially in Europe, is built on centuries of theft, expropriation and slavery. It is no exaggeration to say that much of the opulence of Paris and London can be traced back to the blood of African slaves and colonial theft. And as Piketty shows, the power of compound interest means that this original wealth has since expanded exponentially, ensuring these countries remain among the world’s richest.
This global inequality cannot be fixed simply by developing countries getting richer faster. It must also be fixed by a global redistribution, between the rich in rich countries and the poor in poor ones. So for me, aid should be seen as a form of global redistribution. It is not a gift. It is a reparation.
It can be rightly argued that aid is dwarfed by money flowing the other way, whether through unfair trade, tax avoidance, corruption or debt repayments. Developing countries are still on balance sending more money to rich countries than the other way around. This is terrible, and aid contributes to this in part because it makes rich nations look beneficent and soothes consciousnesses. Nevertheless, the need to redistribute far more from the rich in the north to the poor in the south is unassailable, and aid is one of the primary vehicles for doing this.
There is a parallel with the emergence of welfare states here, I think. Aid remains like nineteenth century type welfare. It assists the poor in part, but not nearly enough, and seen very much through the lens of the charitable rich. But the answer is not to get rid of aid, but to build upon this system to make it fairer, far more generous and rooted in the necessity for redistribution, rights and global solidarity. Climate change, and the damage wrought by the rich in industrialised nations on the planet, makes this ever more urgent.
But what of the role of aid in reducing the gap between rich and poor within developing countries? We recently released an excellent paper looking at exactly this question. It has a very clear ten-point plan on how to do this.
Taking inequality seriously has an impact on where aid is delivered. Currently when countries reach a higher per capita income and become officially known as ‘middle income’ then the aid they receive is reduced, sometimes dramatically. But this is a crude average measure and does not take inequality into account. Hundreds of millions of poor people live in middle-income countries, because of inequality. So it is wrong to stop giving all aid to these countries. The way it is given should change, by supporting civil society to demand action to redistributed national wealth and income, but to cut it off altogether is a mistake.
The paper outlines how the first thing aid can do to tackle inequality is to is do no harm - that is, to do things that would increase inequality. Aid donors need to stop supporting risky and unproven Public-Private Partnerships (PPPs), especially in health and education. You can’t fight inequality by supporting private schools or private healthcare which evidence only increase the gap between rich and poor by favouring the children of the rich.
Aid should stop being used to serve the national interests of rich nations and their companies or be diverted to pay for the hosting of refugees in their own countries. This has been a huge problem in recent years. Aid is also increasingly given in the form of loans, which is not only helping to fuel a new debt crisis, but also completely contradicts the idea of aid as a key form of redistribution from north to south.
Instead, aid should be designed and delivered explicitly in ways that will reduce inequality. We know that universal, free public services are pivotal to reducing the gap between rich and poor; to ensuring that your life chances are not dependent on you or your parent’s bank balance. The best way for aid to support such public services is for it to be given long term, supporting government budgets and plans. Despite this evidence, donors are reducing the amount of aid they give this way, not increasing it. Aid should also be used to support countries to collect more taxes from their own rich people and corporations, and again currently very little is spent in this way.
Aid should be used to give support to civil society groups like churches, social movements and activists demanding accountability and rights. It should specifically give far more support to groups fighting for the rights of women and for other marginalised groups, ensuring that in tackling the gap between rich and poor, aid also helps to fight gender inequality and other inequalities like race and caste.
To achieve this, rich country governments should set themselves twin goals - all of their aid and of their interactions with developing countries should have the twin goals of fighting inequality and poverty. The World Bank has gone some way towards this, with their two goals of shared prosperity and eliminating extreme poverty. The opposition in the UK has said that if elected they will make fighting inequality an explicit goal of all UK aid, alongside fighting poverty. The French this year have made ‘fighting inequality’ the leit-motif of their G7 presidency.
There is no doubt that such a focus is more political and contentious than a simple focus on poverty, as it focuses on those who have as well as those who have not. But using the inequality focus to help shape aid is also extremely practical. We know that focusing aid on fighting inequality is indispensable if we are to end poverty.
Cartoons and inequality
We have been thinking a lot more recently about the best ways to shift the way people are thinking and talking about inequality around the world. One of the key things is the medium through which people get their information. Cartoons, and graphic descriptions of key concepts are a really useful one.
This fantastic cartoon from New Zealand represents wealth inequality as a skyscraper, which is excellent. It was originally published in 2015, but was recently updated by the cartoonist, to show how inequality of wealth in New Zealand has increased in the last few years.