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Symposium 2012

Proposal - Reform government budgets to put children and their families first and restore social capital within environmental resource limits

The Challenge

Inequality has increased substantially in many countries in recent decades. Spectacular gains in the incomes and wealth of the richest fraction of the population often contrast with severe poverty in ...

Inequality has increased substantially in many countries in recent decades. Spectacular gains in the incomes and wealth of the richest fraction of the population often contrast with severe poverty in the same country. Inequality of outcomes often goes hand in hand with inequality of opportunities, as poor people endure various forms of social exclusion, including unequal access to education and health care, high rates of youth unemployment or precarious work and an absence of social recognition.

Parliaments, finance ministries, and central banks around the world are working to stabilize government budgets. Success, however, requires acknowledging the true nature of budget crises. Failing in this intensifies opportunity inequality because less economically empowered families lose and constructive education and other reforms are crippled before they can be implemented.

In the current budget fights, income inequality has emerged as a central justice concern. Emphasizing income inequality, however, is incomplete. It too frequently focuses on current adults and not on children and future generations. It too often emphasizes wealth redistribution and not social capital building. And it is usually a discussion about equalizing consumption without regard to environmental resource limits.

Defusing current budget crises is complicated by two facts: Traditional social ties within nations have been eroded in recent decades by information technology and cross-border communications, making national collective action more difficult. Moreover, the world is overleveraged environmentally. There are not enough land and marine resources for everyone in the world to have a “middle class” lifestyle, meaning 20th century ideas of GDP growth are outdated. Restoring budget sustainability and reducing inequality of opportunities require focusing on human capabilities, social capital, and environmental resources in a world of aging populations, diminished traditional institutions, and harsh resource limitations.

Dealing with opportunity inequality requires understanding that government budgets are not about money. They are about civil commitments. They are architectures of the commitments citizens made to each other over many generations. Budgets tell us who gets what and who pays for it -- covering everything from safe milk to national defense. These commitments accumulate slowly over generations and are adjusted and reaffirmed by parliaments year after year. People trust and adapt to the commitments and base their lives, families and businesses on them. A budget crisis is a true “crisis” not because there is a shortage of money, but because the fabric of society is being torn. Budget crises are civil crises. People are no longer sure how they relate to each other. Families are hurt and businesses fail. There is pain and a deep sense of injustice. Fear and anger erupt in response.

The first step in responding to budgetary civil crises is very old: make children and families with children society’s highest priority -- “Women and children on the lifeboats first..!” This does three things. First it focuses policy on securing the most critical core element of economic development. Second, because usually half the people in a country are involved in raising children as family members or providers of child goods and services, putting kids first identifies the center point around which social institutions can be restored and helps build the political support needed to make tough economic adjustments, including painful lifestyle changes required by environmental resource limitations.

Institutions of all kinds working on budget crises and longer term development priorities, including the Post-2015 Millennium Development Goals, should adhere to the following principles:

  1. Human Skills and Capabilities –Unable to predict the future, we must invest in being able to respond to what it brings. From the earliest moments of life children should be raised in ways to maximize their capabilities for trust, persistence, creativity, teamwork, and the other capabilities adults need to be productive adaptive citizens. Because the earliest years are the most important, the early development of children and appropriate support for their families have to be the highest budget priority. The United Nation’s Education First initiative, the World Bank's Global Partnership on Education and other national and global institutions should make early child capability development central to their goals. The findings of INET’s Human Capital and Economic Opportunity Global Working Group can be particularly helpful in this regard.
  2. Social Capital and Interpersonal Trust – Repression and war are final signs of social capital exhaustion. Before war there are street demonstrations, political gridlock, breakdowns of police, fire and emergency services, and a loss of trust. Any hope of restoring trust depends on government being able to show that the core of society -- families with children – is being provided for. From there, as budget resources permit, the needs of other citizens for nutrition, health care, housing, security, education and productive work can be provided, all building on and affirming long-standing community, cultural, church, civil and political processes.
  3. Environmental Protection and Resource Sustainability – Research shows that equalizing worldwide consumption at the average of American and European citizens would five planets. Even if aggressive conservation and recycling measures are taken, three planets would be needed. In allocating the resources of a single planet, the well-known mistakes private-markets and government decision-makers are prone to make, must be avoided. A banking system can be restarted. An extinct fishery is gone forever. International and domestic institutions such as the International Development Association, World Trade Organization and national governments should protect national and global resources by making sustainability their first priority.

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