Icefi: Social justice is not a commodity
By Carlos Alfredo Gossmann Zarazúa, Research Assistant, and Jonathan Menkos Zeissig, Executive Director, Icefi (Central American Institute for Fiscal Studies)
Globalization is thought of as an engine for the liberation of people all over the world through access to knowledge, cultures, technologies, territories, resources, and better forms of production. But it has been reduced to a financial and mercantile globalization that increases inequality, creates tax havens, and transfers the right of states to make decisions regarding the well-being of their citizens to multinational businesses and local economic elites.
The world recently celebrated the 10th International Day for Social Justice, a day to remember that every society should distribute among all of its members the fruits of economic progress, in the name of its own unity and success. This can only be done when a society guarantees respect for all human rights: civil, political, economic, environmental, cultural and social.
Over the last 30 years, the deterioration of the public sphere – spaces, ideas, and institutions dedicated to the common good – driven by neoliberal fundamentalism, has damaged social justice with different intensities in different Central American countries. This can be seen in the lack of social investment and the elimination of the spirit of fairness in policies on education, health, social security, and employment, among others.
The reduction of the role of the public sphere has also condemned government economic policy to initiatives of limited impact. Our monetary policy is limited to the prevention of inflation. Our productivity policy is limited to a disordered search for commercial arrangements that lacks scientific criteria. Our economic policy is limited to control of the deficit and public debt, even as a handful of elites benefit from increasing fiscal privileges as they use their economic power to prostitute political power that is in many cases more responsive to money than any ideology. All of this has brought with it a threatening deterioration of democratic ideas.
GRAPH I: Indicators of social well-being in Central America. The graph columns are (from left to right): Country; Population (in millions); Poverty as a percent of the total population, divided into poverty and extreme poverty; Percent of labor force in the informal economy, divided into productive informality and legal informality (Productive informality applies to workers who work for a micro-business of under 5 employees, work odd-jobs, or have zero income. Legal informality applies to workers who lack a contract that guarantees their labor rights like benefits, social security, and vacation.); How many times more income the top 10% of income earners receive compared to the bottom 10%; and Inequality as defined by the Gini coefficient applied to households (a higher number represents less equality). Source data: Official government and international research data.
The present scene is crowded with politicians whose speeches are full of hate and ignorance. This, along with anti-immigrant and anti-diplomacy rhetoric, is precisely the consequence of a political and economic system that hurts the vast majority of the world. Globalization is thought of as an engine for the liberation of people all over the world through access to knowledge, cultures, technologies, territories, resources, and better forms of production. But it has been reduced to a financial and mercantile globalization that increases inequality, creates tax havens, and transfers the right of states to make decisions regarding the well-being of their citizens to multinational businesses and local economic elites.
This globalization measures competitiveness by how little time it takes to do business, how little time businesses spend paying taxes, and how simple the process of exportation is, while ignoring the growing problems of poverty and the failure of democratic institutions. As obstacles to business are torn down, the walls that delay the advance of current civilization are built: social injustice, inequality, and irresponsibility in the face of climate change.
If Central Americans want to live in democratic states with the certainty that future generations will be better off, it’s necessary to decide on the social justice standards we want to achieve and build on, recognizing appropriate rights and obligations. This isn’t a decision that can be left to the market or to that farcical invisible hand.
Social justice isn’t a commodity, it’s the backbone that gives shape to democracy and development. Its goals require a broad political discussion that forges concrete agreements, on economic growth, environmental protection, job creation, and income guaranteed to every citizen; on fairness through the standardization and improvement of public goods and services; and on the role of the State and especially of economic policy.
Economic policy should also be reformulated to promote social justice. First, public spending should be focused on achieving development objectives and should be subject to evaluation. Second, public revenues should be based on the principles of progressive taxation (higher rates for higher incomes), equality (uniform tax rates for similar salaries across industries), and sufficiency (revenues should cover spending). Third, citizen participation should be encouraged in formal spaces for public discussion of local and national budgets, and revenue and spending data should be more easily accessible to the public.
Finally, economic policy should fight all forms of public and private corruption that threaten social justice, by modernizing legal and institutional frameworks, strengthening civil bureaucracy, and establishing higher standards of social integrity.
GRAPH II: Economic policy and social justice indicators in Central America. The graph columns are (from left to right): Country; Government social spending as percent of GDP; Government spending on children and adolescents, divided into total spending and daily per capita spending, as percent of GDP; and Public revenue, divided into tax revenue as percent of GDP and revenue from indirect taxes [i.e., sales tax as opposed to income tax] as a percent of total tax revenue. Source data: Official government and international research data.
Business owners, workers, politicians, academics, students, and the general public have an obligation to agree upon a new social contract that changes the current catastrophic trajectory of the region. Faced with unemployment, corruption, violence, poverty, and the uncertainty in which most people live, we must remember that another Central America is possible: one based on social justice. But this Central America with better quality of life, better opportunity, and greater equality requires a drastic change to put the common good ahead of individual interests.
Manifestación en Xela el 27 de agosto de 2015 por la renuncia del ahora ex-Presidente Otto Pérez Molina. Foto por Patricia Macías.
