This is the moment to think about the big picture, to protect and advance human development

This is not a good moment to come with small improvements to the definition of human development says Isabel Ortiz – Governments are facing an unprecedented high level of debt and fiscal deficits because of the COVID-19 emergency, we need to watch out that it does not result in a new round of austerity cuts undermining human development.

During May and June, the ISC will be featuring content by experts on Rearticulating Human Development. This is a joint project with the UNDP. ISC members and your networks are encouraged to participate. This interview was conducted by Asun Lera St Clair @AsunStClair

Isabel Ortiz is Director of the Global Social Justice Program at Joseph Stiglitz’s Initiative for Policy Dialogue, based at Columbia University.

You have a long experience in various UN agencies, in particular in the International Labour Organisation (ILO), the UN Children’s Fund (UNICEF) and the UN Department of economic and Social Affairs (UNDESA), how should we in your view rethink of 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, to polish with minor improvements here and there, I believe it is not the right moment.

Now is the time to think on the big 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. Now the COVID-19 crises is creating a new social and economic crisis on top of the existing crisis. Countries are getting 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 debt, leaving national budgets very small. To me this is a bad context for rearticulating human development.

The human development concept came out in the 1980s, at the time of the Third World external debt crisis.  Many developing countries implemented dramatic austerity cuts to service external debt. The 1980s were the so-called “lost decade of development,” a title also well earned by the 1990s. The solution to external debt came to be known as the “Washington Consensus,” a formula that proposed structural adjustments requiring drastic cuts in public expenditures, 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 development priorities. As President Julius Nyerere from Tanzania demanded publicly, “Must we starve our children to pay our debts?” Critics argue that structural programs’ primary purposes were to protect banks and investors from developed countries, at huge social costs. Poverty, infant mortality and other social indicators worsened. Is in this context that the concept of human development was created, to ensure necessary investments in education, health, social protection, water supply and others.

Now it is going to be worse. The levels of external debt have reached unprecedented historical levels. We know the orthodox way in which organisations like the International Monetary Fund (IMF) and other international financial organisations tend to solve debt and fiscal deficits. They do so with adjustment programs, 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 with small additions is not going to do the work.

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 mind set. We need not only protect human development expenditures in their current levels, but to ensure that governments invest in universal education, universal health, universal social protection and others, in accordance with human rights, the 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 are 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 last decade. Under IMF guidance, for example, governments reduced health budgets, 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 in the horizon. To me, this means this is not a good moment to come up with an intellectual exercise to polish and improve the definition of human development adding small things, in as much as it may be correct. In front of a 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 a rearticulating of human development but to protect and advance the core elements of our current understanding.  How can we communicate better to policy and decision makers this urgency?

Crises are always a big opportunity for transformation. I suggest what we need to look at this opportunity for transformation from a human development lense, 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 the priority and the importance of those human rights is made clear at all decision levels and 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 for human development. It is not that governments oppose 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 developing countries. Even authoritarian governments have been calling to respect human rights. But their importance is undermined by the pressures coming from austerity cuts, reducing fiscal deficits and servicing debt.

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, additionally rising people’s incomes generates domestic demand and consumption. Thus human development may not only alleviate human suffering, a goal in itself, but also has a primary role to sustain growth.  And third, there are important political arguments, all governments aim to be re-elected and providing citizens with their rights demonstrates the well-functioning of any administration.

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 from the emergence of the concept of human development versus the emergence of the SDGs is that the concept of development no longer applies to developing countries but also advanced economies. How can we make this more visible and thus ensure stronger commitments for the protection and advanced 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 evidenced that some Southern countries have done better than Northern countries; so indeed, there are lessons to be learnt.

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

Thanks for asking this question. 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 UNDP, which is in charge of the HDI and the annual Human Development Report (HDR), wants to consider social protection as part of the index, the best will be to work with International Labor Oranization. The ILO is the UN agency with the mandate on social protection, and the custodian of the SDG 1.3 that looks at progress on the coverage of social protection systems. ILO also produces the World Social Protection Report, with the most comprehensive set of social security/social protection indicators that review progress across the world.

The HDI and HDR could look at progress of countries achieving universal social protection coverage, and the adequacy of benefits.

Now, what it is very important is to avoid an HDI indicator based on the Washington Consensus notion of minimal safety nets only targeted to the poor; this is a concept based on keeping social expenditures 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 targeted to 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 for those without jobs. So you understand me, everybody needs an adequate pension when becoming old, it should not be just a hand-out for the poor.

So if social protection was to be incorporated into the HDI and HDR, it should be in accordance with UN principles agreed by al countries, and in collaboration with ILO that 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 organisations to ensure the protection and advancement of human development and its human rights. Can you give us some 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. Like health, years of austerity reforms in the majority of countries have undermined the 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, securing 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. In 2013-2019, she was the Director of the Social Protection Department at the United Nations’ International Labour Organization (ILO). Earlier, she was 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). Isabel Ortiz has worked in more than 50 countries in all world regions, providing advisory services to governments and engaging in high level initiatives at the United Nations, G20, BRICS, African Union and UNASUR, among others. Additionally, she actively supports policy advocacy work of civil society organizations.

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