Business as Usual Is No Longer an Option—We Need to Re-Think Foreign Aid Policy

We have heard the stories before; about the people who lost everything and ended up on the street. About the men and women who used to be their family’s bread winners, who are now queuing for food.

We have seen the pictures, too. Of frontline workers who are risking their lives for a minimum wage. Of the people who live in favelas outside big cities in Latin America and Africa, unable to afford to bury their dead. People who used to work in clothing factories for a wage they could not live on, while their bosses earned large sums of money.

And then there are all the others. Those who — in the midst of a pandemic — can move to their country houses, do high end shopping on the internet and pay their way to the vaccine.

What used to be huge differences in living standards have become grotesque gaps — also when it comes to health, safety, and survival. This year started off with far bigger challenges ahead than normal. And business as usual is not enough.

Reducing poverty has long been an overarching goal in foreign aid development policy, but in the situation we face today, it is crucial that we address poverty at the same time as polarization and growing social unrest. In other words, we need to put inequality at the top of the agenda — and that includes our foreign aid policies.

Last week, the world’s leaders gathered at a virtual version of the traditional World Economic Forum in Davos to discuss the economic prospects and trade concerns related to growing inequality. Despite these annual expressions of worry, the numbers are clear: inequality is increasing, year by year. The gap between the poorest and the richest is expanding. And the pandemic is making that gap even wider.

Some of the problems we are facing in the world are increasing because of a lack of understanding, or a lack of knowledge or tools to fix them. Not this one. This problem is escalating because leaders have failed to act. And many of those who are trying to do something about it are working to reduce poverty, without addressing what is often a big part of the problem: inequality.

We are in the middle of the worst crisis since World War II and must adjust our internal and foreign aid policies accordingly. Government leaders, political parties, civil society organizations, and the public will all need to consider the challenges and reconsider their priorities.

The world has changed dramatically during the last decades, not least in the past year. The tools, policies, and aid that nations employ must change accordingly. The number of people living in extreme poverty was reduced during the last decades before the pandemic, but most of these people continued to be poor while the rich got richer. The forces of capitalism have broken the boundaries of the national state. Democracy is under pressure or is being undermined from within.

In the coming decades, we will witness growing polarization and instability inside and between countries.

Young people make up the majority of the population in many countries where the competition for jobs is tough. With climate change and population growth comes scarcity in water supply, energy, and food. Migration is increasing, both into cities and between countries. Some big cities are losing control, and violence and murder are now more frequent outside of war zones than inside them.

These megatrends are also leading to increased inequality. The gap was huge even before the pandemic. Last year, before COVID-19 broke out, Oxfam reported that the richest one percent in the world had more than twice as much wealth than the rest of us put together. The world’s twenty-two richest men had more money than all the women in Africa combined.

With growing inequality and distance between people, frustration among those losing out is on the rise. High inequality reduces growth and development, and leads to political instability. In some places, the frustration takes the form of radicalization, anger, contempt of the ruling elites or in surprising results in presidential elections. In other places, frustration is expressed through protest and social unrest. Where uneven distribution of resources also coincides with ethnic background, race, religion, gender — coupled with discrimination of one group, the result is further frustration and anger. Contempt of governments and an erosion of trust in ruling elites and institutions spreads like a plague in many places around the world. And people who think that things are moving in the wrong direction also tend to lose their faith in democracy.

Inequality is not a result of natural laws; it is a result of politics.

Inequality is the result of politics that promote growth and prosperity for the rich and the targeted few. It is a growth and prosperity strategy that some believed would trickle down to other groups in society. Yet that has not happened. The inequality we have seen developing over the past decade is not an engine for growth and development, but a barrier. The upper class is spending the money they save on tax cuts and policy changes on growing their own wealth and on consumption. Luxury goods made by underpaid workers in the South and North. Copies of the luxury goods for the middle class also made by underpaid workers in the South and the North. Inequality has become an overwhelming challenge for sustainable development.

So, what should we do?

The obvious answer is to place inequality and the redistribution of wealth at the top of the development agenda.

After the pandemic, increasing pressure on resources will result in a stronger need to prioritize. Reduction of poverty is the overall goal for many countries’ development aid, which has often resulted in large transfers of aid to low-income countries. But the fact that 70 to 80 percent of people in poverty worldwide are living in countries that are not defined as poor, or low-income, is creating new challenges to this way of thinking.

By placing, instead, the fight against inequality at the top of the agenda, we can simultaneously address poverty, the weakening of democracy, and the growing polarization that is currently stirring unrest and instability. It is not just possible but sensible to support program work that addresses poverty at the same time as we tackle inequality: we can address education for the poorest, while introducing programs for marginal taxation; fight corruption, while strengthening civil society organizations; support the creation of decent jobs at the same time as we strengthen trade unions. In fact, combining traditional poverty measures with those that seek to redistribute income, wealth, and power will lead to more sustainable poverty reduction.

We know what it takes to reduce the gap. All we need is the political will to act — the willingness to prioritize both the fight against poverty and social unrest, and to start acting both in favor of progressive foreign aid policies and our common security. It is not difficult, really — because business as usual is no longer an option.

This piece was originally published in Norwegian in Utsyn — Bistandsaktuelt on 25 January 2021.