Contribution to the

Social Forum

Of the

Human Rights Council

Geneva, 31 August – 2 September 2009

Francine Mestrum, PhD, for CETIM

Negative impacts of economic and financial crises on efforts to combat poverty

Since we live in an interdependent world, we are faced today with a global crisis.It is ‘global’ not because it emerged at a global scale, but because it started inthe United States and has severe consequences all over the world. Needless tosay, I guess, that the majority of poor Africans, Asians and Latino’s have noresponsibility at all for this crisis. Nevertheless, they are the main victims of it,because their governments have less revenues to spend on social policies andbecause they are losing their jobs and their livelihood, because remittances arefalling and because ODA risks to be declining. The negative impacts of thecurrent economic and financial crisis are indeed to be found at the level of incomes.In this contribution, I would like to mention four points:1)The importance of social and economic rights, especially in times of crisis;2)The importance of social security and cash transfers;3)The possibility for a human rights approach to illegal practices on thefinancial markets;4)The need for re-thinking global solidarity. In this way I hope to answer thequestions that have been addressed to this meeting.1)It is amazing to see that the G8, the G20 or even the UN conference on theimpact of the crisis on developing countries do not mention the importanceof social and economic rights for a solution to the current crisis. They dostress the importance of poverty reduction policies, as a means to protectthe most vulnerable in our societies. But they seem to have forgotten that

social rights and social policies can also be an important elementin a stimulus package

. Today, economic growth is slowly recovering butif unemployment and poverty continue to rise, we cannot speak of the ‘endof the crisis’. I guess that we can agree on that point but I am afraid we willhave to repeat it constantly in the coming months. We not only live in afinancial and economic crisis, but also in a

very severe social crisis

withmore than one billion people suffering from hunger, with almost half thepopulation of developing countries living with less that 2 $ a day and half of the working population being working poor with less that 2 $ a day.1

Thousands of people die every year on the shores of Europe, in Spain, Italyand Greece. These are people that have no perspective for a better life intheir home countries They try to migrate to Europe, in search of a future.We let them die on our beaches. The most important

theoretical underpinning

for social justice can befound in the writings of J.M. Keynes and in those of T.H. Marshall. Keynessucceeded in making economic efficiency compatible and even dependenton welfare. According to Keynes, it was the lack of demand thatdetermined the lack of employment and hence of sufficient income. Allwestern European countries with welfare states and relatively high taxesshow that

redistribution of incomes is not incompatible withgrowth

. In Keynesian economies, economic growth and social welfare gohand in hand and reinforce each other. This why a real exit to the crisisimplies to restore trust, to actively promote employment and to strengthensocial protection. Every crisis is indeed also an opportunity. If a real serioussocial protection can be introduced in all low income countries, I think wecan achieve major progress towards a fair globalization.

Socialprotection must be included as part of economic stimuluspackages.

2)What do I mean with a ‘serious social protection’? I do not have to repeatwhat your independent expert on the question of human rights andextreme poverty has brilliantly declared before the UN Conference on theWorld Crisis. I fully share her submission. With ‘serious’ social protection’ Imean something that goes

beyond poverty reduction

and includes

income support

and fully fledged

public services

. In order to be morethan a semantic change, it should be based on citizenship, equality anduniversality. It should protect people against markets and not purelyencourage them to participate in markets. Why? Here I come back to T.H.Marshall who showed that

civil and political rights can never be fullyenjoyed without social rights

. They complement each other. Citizenshipand democracy, and hence, the full realization of human rights, depend onthe way that people can indeed take part in political, economic and sociallife. Growing economic inequalities make this impossible.In this contribution I want to stress the importance of

cash transfers

thatare proving to be extremely efficient in helping people to overcome basicsurvival problems. According to the mainstream discourse, poverty is amultidimensional problem that not only implies an income deficit but alsoeducational and health deficiencies, lack of voice and empowerment, andvulnerability. However, analyzing the World Bank documents on poverty,one clearly sees that the income dimension is mostly forgotten, whereas2

people are living in market economies where you do indeed need money tosend your children to school, to go and see a doctor, and even to go andclaim your most basic human rights. Therefore, I want to argue thatpoverty reduction policies certainly have to be multidimensional, but that

poverty is an income or possibly a capability deficit

. The objective of all poverty reduction policies must be to allow people to have a decentincome, and therefore, certainly in times of crisis, income support is themost direct and most beneficial policy one can have. Therefore, we shouldalso be careful with ‘indicators of happiness’, since the material needs of poor people should be our first priority.Several countries already have introduced such policies. I think of courseof Brazil and Mexico in the first place. Even if those policies remain verytimid and hardly cost 0,5 % of GDP in Brazil and Mexico, they do really helppoor people. Brazil is the only country in the world where inequality isdeclining.3)Income support though, cannot be sufficient. As your independent expertwas saying at the New York Conference, we need to strengthen socialprotection systems. And here, we are faced with the budget constraints of low income countries and the urgent need to find news resources.Current poverty reduction policies are failing. We know the MDGs will notbe met in 2015. The reason why the poverty reduction policies are failing isprecisely because they forgot about development and human rights, andtherefore

we have to put development and human rights back onthe agenda

. Poverty is a

consequence of the violation of all humanrights

, while it is also a consequence of a lack of development. What waswrong about the poverty agenda is that one tried to solve a problemwithout looking at its roots. Poverty reduction can only be the consequenceof a development and a human rights policy, you cannot put the cartbefore the horses, start with poverty and forget about the rest. The failureof poverty reduction policies is that one thought poverty is a problem of poor people, whereas

poverty clearly is a problem of society

, and inan era of globalization, this means also a problem of global society.What the current financial crisis has made abundantly clear is the perversenature of a whole series of global practices on the financial markets. Here,I want to refer to capital flight and tax havens which are particularlyharmful for low-income countries.3