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This is the moment to think about the big picture

This is not a good moment to come up with small improvements to the definition of human development, says Isabel Ortiz – governments are facing an unprecedented level of debt and fiscal deficits because of the COVID-19 emergency, and now is the time to solidly make the case for human development, as agreed by governments at the UN for decades.

You have long experience at various UN agencies, in particular the ILO, UNICEF and UNDESA. How should we, in your view, rethink our conceptual understanding of human development, considering the great changes we see in the world today?

The COVID-19 crisis is an unprecedented crisis that leaves governments with many challenges. While I understand the intellectual drive to advance definitions and polish them with minor improvements here and there, I believe this is not the right moment.

Now is the time to think about the big picture. The world never recovered from the 2008 financial crisis and the majority of governments in both the North and the South have been undergoing austerity cuts for a decade. COVID-19 is creating a new social and economic crisis on top of the existing crisis. Countries are becoming massively indebted and we already see major fiscal deficits, necessary to palliate human tragedy. But sooner rather than later – in the next months – there will be pressures to correct these fiscal deficits and service the debts incurred, leaving us with very reduced national budgets. To me this is a bad context for rearticulating human development.

The human development concept was conceptualized in the 1980s, at the time of the external debt crisis in the Third World. Many low-income countries implemented dramatic austerity cuts to service external debt. This solution came to be known as the ‘Washington Consensus’, a formula that proposed structural adjustments requiring drastic cuts in public expenditure, privatization of public assets and services, and a focus on economic growth accompanied by a few minimal, palliative, targeted safety nets. Many have questioned whether paying loans, promoting economic growth and downsizing the state should be the main priorities of development. As President Julius Nyerere of Tanzania demanded publicly, ‘Must we starve our children to pay our debts?’ Critics argue that the primary purpose of structural adjustments was to protect banks and investors in high-income countries at huge social cost in low-income countries. The 1980s were the so-called ‘lost decade of development’, a title also well earned by the 1990s. Poverty, infant mortality and other social indicators worsened. It was in this context that the concept of human development was created, to ensure necessary investments in education, health, social protection, water supply and others.

The situation is worse now. Levels of external debt have reached unprecedented historical levels. We know the orthodox way in which institutions like the International Monetary Fund (IMF) and other international financial organizations tend to solve debt and fiscal deficits. They do so with adjustment programmes, major austerity cuts, privatizations or expensive private–public partnerships (PPPs), and so forth. To me, this means that fine-tuning the concept of human development is not enough.

Rather, now is the time to solidly make the case for human development, as agreed by governments at the UN for decades. The magnitude of the depression that looms should be taken very seriously. A Great Depression requires a New Deal mindset. We need to not only protect human development expenditures at their current levels, but to ensure that governments invest in universal education, universal health and universal social protection in accordance with human rights, the Sustainable Development Goals (SDGs), and other international commitments, advancing human development.

What are the biggest challenges and threats to that core of human development?

In my view, the most important challenge is the limited fiscal space, the limited resources available to invest in what is needed. The conservative mindset, which dominates our world today, prioritizes macroeconomic stability and growth over human development. This was the case when the concept of human development was born at the end of the 1980s and, despite governments being more receptive to social development issues, it still applies today. Even though the SDGs have emerged in the past years as a major global commitment, what we have seen this past decade is the persistence of austerity cuts and this has led to a lot of unnecessary human suffering.

If we look at the health sector, while there was progress in some countries, many others were affected by austerity cuts over the last decade. Under IMF guidance, for example, governments reduced health budgets, and cut or capped public sector wages that limited the number of doctors, nurses and other public health staff. In the name of efficiency, governments – often advised by ‘development’ banks – decreased the number of hospital beds, closed public services, and under-invested in health research and medical equipment. All this undermined the ability of health systems to cope with infectious disease outbreaks, leaving billions of people highly vulnerable during the COVID-19 pandemic.

In the current context, the main challenge is going to be financing – there is a tsunami of austerity cuts on the horizon. This means this is not a good moment to come up with an intellectual exercise to polish and improve the definition of human development, even though this may be moving in the right direction. Faced by this tsunami, what we need to do is to urgently safeguard and advance the core of human development, universal education, universal health and universal social protection, and the other dimensions of human development as we understand it today.

You say the urgency today is not to rearticulate human development but to protect and advance the core elements of our current understanding. How can we communicate this urgency better to policy-makers and decision-makers?

Crises are always a big opportunity for transformation. I suggest that we need to look at this opportunity for transformation from a human development lens, as a collective goal. What is at stake is the survival of the planet.

We have had major agreements put forward by countries at the UN in the last decades, and most of those are based on human rights principles. What we need is to ensure that the priority of those human rights is made clear at all decision levels and that financial support follows those commitments.  

For example, people have a right to health, a right to education, a right to social security, a right to work, a right to drinking water, and so forth. Cutting expenditures and privatizing the social sectors is going to make societies worse off. Privatizing or promoting PPPs in health systems is going to make societies much more vulnerable to diseases, thus what is needed is to invest in universal public health. And like health, in other public goods such as education, social security or water supply.

Lastly, we need to show how austerity cuts have been detrimental to human development. It is not that governments are opposed to human development or human rights. Rather, the problem is that they face multiple pressing priorities while they have very limited budgets. These very limited resources result in poor social outcomes.

Human rights are enshrined in the constitutions of most low-income countries. Even authoritarian governments call for the respecting of human rights. But their importance is undermined by the pressures coming from austerity cuts, fiscal deficits and debt servicing.

There are a number of reasons why governments support human development and human rights. The first one is social: every country wants healthy, educated and prosperous citizens. But there are also important economic arguments. Human development boosts productivity, and raising people’s incomes generates domestic demand and consumption. Thus human development not only alleviates human suffering, a goal in itself, but also has a primary role in sustaining growth. Thirdly, there are important political arguments – all governments aim to be re-elected and granting citizens their rights demonstrates that the administration is functioning well.

These arguments are very important to fight the renewed Washington Consensus and pressures to implement austerity cuts. At stake is the world’s survival.

One of the big changes since the emergence of the concept of human development and the emergence of the SDGs is that this no longer applies only to low-income countries but also to advanced economies. How can we make this more visible and thus ensure stronger commitments for the protection and advance of human development for all?

Yes, currently there is no such divergence. Poverty is re-emerging in high-income countries. Three decades of Washington Consensus policies, and the previous decade of austerity cuts, have eroded the living conditions of citizens in the North, and increased inequality to unseen historical levels. So human development, like the SDGs, applies to both North and South.

Further, the COVID-19 crisis has demonstrated that some Southern countries have done better than Northern countries; so indeed, there are lessons to be learnt.

You have a strong background in social protection. Can you elaborate on social protection and human development?

Social protection is part of human development. However, it is not part of the Human Development Index (HDI), which remains a high-level tool to compare countries.

If the United Nations Development Programme (UNDP), which produces the HDI and the annual Human Development Report (HDR), wants to consider social protection as part of the Index, it should work with the ILO. This is the UN agency with the mandate for social protection, and it is the custodian of SDG 1.3, which looks at progress in the coverage of social protection systems. The ILO also produces the World Social Protection Report, which uses the most comprehensive set of social security/social protection indicators to review progress across the world. The HDI and HDR could look at the progress of countries in achieving universal social protection coverage, and whether the benefits provided are adequate.

Now, what is very important is to avoid an HDI indicator based on the Washington Consensus notion of minimal safety nets only targeting the poor; this is a concept based on keeping social expenditure cheap and contained. This would be a disservice to human rights and to all the conventions and recommendations signed by all governments, workers and employers of the world. Social protection is not only about minimal safety nets targeting the poorest; this is its minimal expression. Social protection includes child benefits, pensions for older persons, and benefits for people of working age in case of maternity, disability, work injury or unemployment. So you understand me, everybody needs an adequate pension when they become old, it should not be just a hand-out for the poor.

So if social protection were to be incorporated into the HDI and HDR, it should be in accordance with UN principles agreed by all countries, and in collaboration with the ILO, which is the custodian of the social protection SDG 1.3. and has all the necessary data, collected from countries in the World Social Protection Report.   

Thus you argue for coordinated work across the different UN organizations to ensure the protection and advancement of human development and human rights. Do you have any closing thoughts?

Indeed, the concept of human development is supported by all UN agencies. The COVID-19 pandemic has evidenced the weak state of overburdened, underfunded and understaffed health systems. As in health, years of austerity reforms in the majority of countries have undermined other areas of human development.

Now more than ever, at this time of historically high debt levels and austerity cuts, it is essential that the UN joint work continues, working with governments to ensure that human development and human rights are protected and advanced, as well as to create new fiscal space and resources for human development and human rights, and to secure adequate investments in universal education, universal health and universal social protection and the other dimensions of human development as we understand it today.

Isabel Ortiz is Director of the Global Social Justice Program at Joseph Stiglitz’s Initiative for Policy Dialogue, based at Columbia University. She was previously the Director of the Social Protection Department at the International Labour Organization (ILO), Associate Director of Policy and Strategy for UNICEF (2009–2012) and Senior Advisor at the Department of Economic and Social Affairs of the United Nations (2005–2009). Along with providing advisory services to governments and engaging in high-level initiatives at the United Nations, G20, BRICS, African Union and UNASUR, she actively supports the policy advocacy work of civil society organizations.

Image by markgranitz on Flickr

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