Earth Summit Points Up a Need to Strive for Global Economic Fairness

The Earth Summit in Rio de Janeiro is bringing welcome attention to global environmental problems. But I worry that U.S. debate and media attention to the conference is not yet focusing clearly enough on the hard issues and the hard questions.

Some of the discussion has been preoccupied, of course, with the rhetoric and political posturing destined to swirl around such an important gathering of state leaders focusing on such fundamental and controversial issues. People in the Bush Administration have wrung their hands about excessive restraints on economic growth. Many in the developing world have portrayed the United States, represented by the Bush policymakers, as venal and greedy. Referring to Bush as ‘Uncle Grubby’ and ‘Mr. Smoke,’ for example, one large Brazilian news weekly warned its readership two weeks ago that: ‘Bush comes to Rio as Earth Summit enemy.’

If and when this fog of rhetoric has lifted, substantive responses have been revolving primarily around the simple juxtaposition of the goals of economic growth and environmental protection. Environmentalists have argued that economic growth rates must be curbed in order to preserve ecological balance. The business community has worried about growth prospects, with Bush insisting that growth and environmental protection ‘are twin goals, not mutually exclusive objectives.’ Leaders in the Southern Hemisphere--the developing countries in which many future ecological threats seem potentially most severe--have argued that their poverty requires placing highest priority on growth, at least in the medium run, until they reach levels of affluence at which they could afford to divert resources to safekeeping of the environment.

This attention to the objectives of growth and the environment is important. But it tends to obscure an issue which may provide the key to finding the right growth-environment balance--the issue of equality.

Why should the problem of equality be so important in this context? Let’s assume, for the purposes of discussion, that the risks of environmental degradation and ecological imbalance require a gradual reduction of global economic growth goals over the next 50 years, that ‘sustainable’ growth requires slowing growth. (I am aware that even this starting assumption is debatable, but let’s at least introduce it in order to explore its implications.) What would it take to achieve that gradual reduction?

In a global context, people in the south legitimately argue that northern demands for slower growth in the south are inappropriate for at least two reasons. First, poverty is so widespread in many developing countries that they must seek increased growth locally simply to reduce death from starvation and malnutrition. Second, the affluent north’s appeals are a little like the healthy person’s trying to persuade the sick person that health isn’t all it’s cracked up to be: it’s one thing for the north to address its own growth objectives, but it’s quite another for the north to insist that the south should not aspire to the same level of affluence the north already enjoys.

Domestically, some of the same conflicts resonate within the United States. More than 30 million people in America live in poverty, as defined by the meager ‘official’ poverty index, and millions more live in near poverty. Such meager livelihoods contribute to devastating educational, health and crime problems, to name only a few. Are we to proclaim a new ‘zero-growth’ regime which condemns these tens of millions of Americans to persistent poverty for the foreseeable future?

Critical to these conflicts is the question of growth for whom: If we were to take the present distribution of income as given, both within the north and between north and south, then continued and rapid growth is the only possible antipoverty strategy. But this begs a fundamental question: What is so sacred about the present distribution of income?

By contrast, if we were to combine the strategies of income redistribution with environmental protection, this would create the possibility of simultaneously reducing global growth rates, motivated at the least by environmental objectives, while attacking domestic and global poverty. Greater income equality would make sense, both for its own sake and to advance environmental concerns.

Faced with the need for income redistribution, however, many people in the United States cringe. My impression is that two reflexes dominate these apprehensive reactions.

First, thanks to decades of right-wing ideological assault, redistribution strategies are associated with “the dole”--with unproductive government transfer programs domestically, and wasteful foreign aid. But redistribution can be accomplished through an entirely different route, by promoting faster wage and employment growth for the vast majority. With rising wages and expanding employment opportunities, millions of people in the United States and hundreds of millions internationally could approach levels of economic security that would create space for higher priority on environmental protection.

Second, again largely thanks to insistent propaganda, many believe that greater equality impedes economic growth and efficiency, that reduced income differentials undermine economic incentives. Recent research strongly suggests, however, that this “equity-efficiency trade-off,” as it is often labeled in economics literature, is a myth. If we look across the leading advanced countries, for example, there is a positive statistical relationship between productivity growth and economic equality, not the negative relationship that conventional wisdom would lead us to expect. In short, moving toward equality appears to support improved economic effectiveness, not to obstruct it.

So, following this chain of argument, it would appear that we could best foster increased receptiveness to policies aiming to protect the environment, as well as improve economic performance, if we sought to promote greater economic security through broad-based enhancement of wage and employment opportunities for those not now enjoying them.

This conclusion assumes urgent importance because both domestic and international economic policy have shifted radically over the past decade, in precisely opposite directions. In the United States, real wage growth has declined for the average employee while economic inequality, by almost any measure, has soared. Throughout the developing world, the World Bank and International Monetary Fund have promoted austerity programs that have contributed to wage and consumption squeezes for hundreds of millions of people.

The occasion of the Earth Summit in Rio should therefore remind us, once again, of the critical importance of reversing economic priorities, of placing fairness and democracy at the center of our economic agenda. We need greater fairness and democracy for their own sake. We need them to boost economic performance. And we need them, as I have argued here, in order to create room to maneuver in addressing environmental problems.

We desperately need such a shift in economic priorities. Where is the leadership that will help promote it?