Inequality and protest – getting it right

Sara Burke and Rosemary Bechler

We are making a choice, “Can we live with the outcomes of this economic system? Or are we going to have to change this system?”

Rosemary Bechler (RB): Sara – You are in charge of global economic and social policy issues at the New York office of the Friedrich Ebert Stiftung (FES), and I believe your office is the foundation’s liaison point to the United Nations, World Bank, and the IMF?

Sara Burke (SB): Yes, FES has more than one hundred offices around the world that deal with bilateral issues between the country where the office is located and Germany. Two of the offices, in Geneva and New York, focus specifically on global issues and institutions. This division of labour makes New York the point office for the UN in New York and the IMF and World Bank in Washington.

RB: You are very involved in researching income inequality and probably many other kinds of inequality as well. Has inequality travelled much higher up the agenda of global governance and sustainability concerns in these institutions over the last period?

SB: Absolutely, and Occupy Wall Street had a lot to do with that.  When I first came to the New York office in August of 2008, we were just beginning to realise that something was going terribly wrong, at least in the economies of the north Atlantic countries, the US and the UK in particular. At that time inequality was not an issue that was on the radar in any significant way because international organizations were focused on the financial crisis. And since international cooperation in the G20 coalesced around stimulus for the next couple of years, the issue remained off the table. Only when a set of countries in the G20 became worried about rising government debt due to the stimulus and decided to contract their budgets, or impose ‘austerity’, in 2010 did we begin to see social protests. But the concerns around inequality didn’t make their way onto the global governance agenda until the Occupy movement made inequality its signature issue.

In a meeting we convened in the context of the annual meetings at the IMF in 2011, in which we were discussing the need for the IMF to forecast the social outcomes of its policies, Christia Freeland, who at the time was Reuter’s global editor but is now Canada’s trade minister, was somehow rattled leaving New York for Washington that morning. As chair of the opening panel, she described a cab ride down Broadway that took her past Zucotti Park, which is where Occupy had set up camp just a few days before, and apparently into an impromptu march that blocked the street so that her car was mobbed as the driver inched along.  Soon this phenomenon was on the minds of everyone at UN, at the IMF, at the World Bank. This gave the Occupy media team a willing ear to hear their messages about inequality. The UN Secretary General even sympathized with Occupy in public statements.

I think one of the great successes of Occupy was that it made it possible to talk about economic issues in a way that we hadn’t before, and this registered in the institutions to the degree that – in the IMF for example they began to do some research into inequality, asking “Does it impede growth? Does it contribute to economic fragility?”

RB: Was this a debate that took place in the context of investigating the background to the financial crisis in the US and the UK?

SB: That was the genesis of it. The Occupy movement specifically referenced a document by a group called the May 12 coalition. There is a ritual that goes on in New York politics every spring. The city drafts it budget in May and June, so in the period leading up to that, the different agencies that get city money to provide services to people – housing, food, services for the elderly and disabled, etc. – embark on a lot of different kinds of lobbying activities including organizing rallies and marches. In 2011, the May 12 coalition put out a document that explicitly laid out a set of policies to curb the actions of the big banks headquartered in New York City that were involved in the financial crisis. These proposed to stop subsidies the banks had received which had not resulted in the numbers of jobs agreed to. This was one of the demands, and curbing the special treatment of hedge fund managers who did not have to pay tax at the same rate as other income earners. They proposed a set of policies crafted to target the banks, and inequality was the issue that tied all the policies together. The report made clear that in terms of income New York was the most unequal city in the United States…

RB: What has happened to that agenda?

SB: The current Mayor has raised these issues, but then there was a lot of concern that if you taxed those hedge funds, they would move out of the city, despite the fact that a number of studies have been done by the Fiscal Policy Institute and others which suggest that this is a very unlikely scenario. So the challenge is not going anywhere at the moment.

RB: Nevertheless, this general alertness to inequality touched all the major institutions? So Occupy really had an impact!

SB: Indeed it did, in opening and changing the debate. Many people would say, even some deeply involved in Occupy, that it was a failure overall. But what it was about was creating space to discuss things that were not able to be discussed in society before, like inequality, like the questions, “What is capitalism? How does it work? And how do we discuss it rationally as a system that has foreseeable and predictable outcomes?” These are the questions that were raised in the changed climate that Occupy made possible.

More effective democracy

RB: So let’s fast forward to today’s FES seminar on the world protest movements and specifically on socio-economic inequality as the context for those movements. What contribution do you want to make to this discussion here today?

SB: One of the things that is of concern to me is a very broad and sweeping discussion about inequality which doesn’t sufficiently differentiate the economic inequalities from the social inequalities that they propagate. One of the things that I would like to do is to help us sharpen our discussion of inequality vis-à-vis the social movements.

The social movements we saw coming out of the end of 2010/2011 – the Arab spring, the social protests in Europe, the Occupy movement – those were largely progressive movements, movements for social justice, and for democracy, explicitly framed in this way. I have participated since 2013 in a research study initially aimed at understanding how austerity was impacting populations and the upsurge in protest we had been seeing for a couple of years and that seemed to be springing up everywhere. Studies were showing that not only was austerity being imposed in the North Atlantic countries, but it was being taken up in developing countries elsewhere in the world. I will show you a graph of the different types of demands and grievances that we found, which group into four clusters.

We had no a priori categories, but by far the largest category to emerge from the research concerned economic justice – everything from better jobs, to protests against wage bill caps, subsidies, and a concern about inequality was among these.

However it was in the second cluster, about failures of political representation, that the most surprising thing was found: the single issue that had triggered more protests around the world than any other was a demand for “real” democracy, or better political participation, more meaningful democracy.

RB: Are you talking about direct democracy?

SB: It was framed differently in different places, but essentially yes. It was always about more or more effective democracy, for the power to have people’s needs addressed by the governments, to make them engage in society’s issues, and for people to have their voices heard. The absence of this was seen as impeding progress on all the economic issues.

RB: They wanted to have a say…

SB: Yes, people want to have a say in the economic policies that impact directly on their lives.

RB: This is not the main message that comes through in commentary on social protest movements is it? That aspect of things tends to get suppressed, wouldn’t you say?

SB: Yes, this is very interesting. There has been both suppression and repression of these movements, from poor or inaccurate media coverage to outright repression by governments.  

The third cluster we found was around global justice issues and very large internationally organised movements, and the other cluster had to do with rights. What I have continued to look at since then is: Why is it that a lot of the protests around economic issues during this period didn’t frame their grievances as seeking legal redress for violations of rights, but instead more directly embraced civil disobedience, direct action, occupying squares and spaces, blockading bridges, going into banks…?

I think we have seen something of a shift back in the ensuing years, particularly in the places where repression has been particularly harsh – think of Egypt for one…  China is another. I have talked to some movement activists who have gone through a great deal of reflection about how they construed “the enemy” and what they were up against, and the naivety that they thought weakened their movements.

Nowadays, in places where there are fewer options for going into the streets, and where repression has become intense, there is some movement back to human rights and seeking a day in court.

RB: But in Egypt it is surely very hard for human rights organisations to be operative today…?

SB: Nationally, it is very difficult, but internationally, and this is one reason why groups take their issues to the UN.

Power and interests

RB: So you think there has been a certain clarification over the years since 2011?

SB: It is about being clear-eyed about power and interests. There is a concern in this conference about whether social movements might be actually propagating more social inequalities, given the rise of right-wing social movements in many different countries.

What we have to do is to think about inequality not only in the many different countries where it is a serious problem, but worldwide for a moment. Take Branko Milanovic’s idea of lining up all the people of the world from the poorest to the richest, and what we come up with is his famous ‘elephant curve’… It looks pretty good in many ways, with the rising middle classes in China, Indonesia, India, etc, in these vast majorities, actually experiencing an upturn in their economic circumstances. But is this coming at the expense of those people at the bottom of the elephant’s trunk which is the working classes in the old rich countries, Europe and North America?

RB: These are the people who fear that their children are going to be worse off than they were themselves…

SB: That’s right and these are also the places where we are particularly concerned by the rise of right-wing movements. So the problem with looking at this globally is that what seems to be a progressive movement with more people internationally having improved circumstances, when you overlay the political, the nation-state grid on all this, one begins to wonder if the global 1%, or .1% shall we say, plays the fortunes of the one off against the other.

RB: Hasn’t capitalism always been producing winners and losers, since its inception?

SB: We know that capitalism churns through economies and that they rise and they fall… but we have a degree of globalisation that we have never experienced before, and so the social consequences of this complex situation of global inequality are propelling some risky things in our world, like migration driven not only by conflict but also by economic circumstances, and political divisions rather than international cooperation. This is creating crises in many countries and is not serving the needs of the refugees and migrants…

RB: But are we dealing here with the effects of economic inequality, or with the misperception by these many sections of national majorities that their ills lie at the door of migrants and refugees?

SB: This is partly what I wanted to say broadly speaking about inequality. Economic inequalities that are driving this migration are also being hit upon to fuel right-wing ideas regarding social divisions that may or may not exist. Many social inequalities are all too real: between men and women; between all kinds of social groups. But others are falsified to exaggerate differences that may exist between different ethnic groups.

RB: Such as the threat attached to Islam. Surveys suggest, for example, that millions of European citizens have a distorted view of how many Muslims there are in Europe. In France, with one of the largest Muslim populations, those asked imagined something like four times as many…

SB: Thanks to the attention paid this issue by Donald Trump this has now become a threat in the US too!

RB: So you are arguing that it is very important to get your understanding of inequality straight, since what is at stake is your ability to define the enemy and to decide what needs to be changed and how?

SB: Precisely, and I think we have to have a conversation about what our economies produce before we rush into policies to combat inequality.

Economists who study economic inequalities will talk about market inequality – what comes directly out of a system without taxes and transfers to correct it afterwards.  There is a worry that partly because of a lack of a climate for international cooperation, we may be at a point where we are at the end of what we can really do with taxing and transfer. We are seeing a massive pushback from the rich all over the world to paying more taxes.

So if we are looking at what different economies produce in terms of market inequality what we are doing is actually evaluating economic systems themselves. We are making a choice, “Can we live with the outcomes of this economic system? Or are we going to have to change this system?” This is one of the key things that I want to bring out in our discussion. Because, countries of the OECD have a lot of information about income, less information about wealth, a lot of information about consumption, a lot of microdata so that we can drill down to the individual level of family groups, and see different people’s behaviors… But if we are at a point where even that knowledge doesn’t help us craft policies that will result in meaningful change for people, then we have to move on to something else.

RB: It’s very interesting that this coincides with a moment when more and more people across the world are beginning to share an understanding of how the system works and for whom.

SB: Yes it is a very interesting moment./OD