NewsmakersJuly 20, 2023

Lagging Governmental Commitment to Reduce Inequality Must Be Acted Upon, Top Economists Say

Group assembled by Nobel winner Stiglitz chides governments for ignoring pledge they signed to fight global poverty.

Reported by Larry Light

In 2015, 193 countries, including the United States, meeting under the auspices of the United Nations, pledged to meet 17 goals aimed at wiping out such social ills as poverty and hunger by 2030. Needless to say, none of the 17 goals is even close to being achieved.

So 230 economists and political leaders, organized by Nobel Prize-winning economist Joseph Stiglitz, just issued an open letter to the U.N. and the World Bank, urging them to back stronger goals and better metrics for measuring inequality globally.

The letter decried that Sustainable Development Goal 10, to “reduce inequality within and among countries,” as written in the 2015 agreement, “remains largely ignored.” The letter lamented that “extreme poverty and extreme wealth have risen sharply and simultaneously for the first time in 25 years. … The richest 10% of the global population currently takes 52% of global income, whereas the poorest half of the population earns 8.5% of it.”

While no asset allocators were among the signatories, there has been widespread support among public pension plans, in particular, for boosting equality. The New York City Retirement Systems, for instance, have long pushed to combat inequality, climate change and discrimination.

Among those signing the open letter were Ban Ki-moon, the U.N. secretary-general when the 2030 Agenda for Sustainable Development document was approved, and Thomas Piketty, a French economist at the London School of Economics and other universities, who has been a staunch advocate for reducing inequality. Many former heads of state from Eastern European nations, like Albania and the Czech Republic, signed the open letter.

Stiglitz, a Columbia University economics professor, was the top economist in Bill Clinton’s White House and has argued that governments should be in charge of resource allocation, not private enterprise.

The U.N. and the World Bank “are uniquely placed to offer the rallying call for a reduction in inequality that our divided world needs so urgently today,” the open letter argued. “SDG10 is not a separate, standalone goal: all economic, financial, and social policies should be assessed in terms of their likely impact on this goal. This would clearly signal our collective ambition to forge a more equal world.”

The World Bank acknowledged in a statement that “we need to do more to address inequality, and to do better in measuring progress.” The U.N. has, as yet, issued no response to the letter. But the body in April stated that the world has fallen short on SDG 1 from the 2015 agreement, which called for ending poverty, in all forms, everywhere. Current U.N. Secretary-General António Guterres issued a call earlier this year for creating a $500 billion fund from wealthier nations to bolster the finances of poorer countries.

The open letter urged the U.N. and the World Bank to get moving: “This summer we have a critical opportunity to strengthen our resolve to reduce this deep divide and send a clear signal to people around the world that the institutions designed to serve them are serious about ending this crisis of extreme inequality.”